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Capital Crafters Consulting > Blog > Finance > How the Big Beautiful Bill Will Effect Your Wallet
Finance

How the Big Beautiful Bill Will Effect Your Wallet

Kayne Collins
Last updated: July 7, 2025 5:27 pm
Kayne Collins
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6 Min Read
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How the Big Beautiful Bill Will Effect Your Wallet
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A sweeping new piece of legislation known as the “Big Beautiful Bill” is packed with tax breaks, expanded deductions, and changes to key government programs. This bill could dramatically alter the financial landscape for millions of Americans. Here’s what you need to know.

Read more:

  • Here’s what you need to know before claiming Social Security benefits.
  • Get the highest savings interest rate possible.
  • Here are 10 surprising things Medicare does and doesn’t cover.

Existing Tax Rates Become Permanent

A young couple planning for retirement
PeopleImages.com – Yuri A/shutterstock.com

The lower tax rates from the Tax Cuts and Jobs Act of 2017 were set to expire in 2025. The “Big Beautiful Bill” will make those tax breaks permanent.

Here are the 2025 tax brackets. 

No Taxes on Tips or Overtime Pay

PeopleImages.com – Yuri A/shutterstock.com

Taxpayers who receive tips will be able to deduct up to $25,000 per year in tips from their taxable income, provided they earn under $150,000 ($300,000 on joint returns). A “qualified tip” is money paid voluntarily by the payor; therefore, mandatory service charges do not qualify. Credit card tips are eligible, but the value of gifts are not. The taxpayer must be in an occupation that customarily and regularly receives tips.

For overtime, the deduction is capped at $12,500 ($25,000 for joint returns), provided they earn under $150,000 ($300,000 for joint returns).

Deduct Auto Loan Interest

shutterstock.com

Those with car loans can write off up to $10,000 in interest paid to qualifying car loans for the next three years, and you do not have to itemize to claim the deduction. A key factor, however, is that the car must be new and assembled in the U.S.

Here’s the difference between a tax credit and a tax deduction. 

$6,000 Deduction for Older Adults

Licensed from Shutterstock

The Big Beautiful Bill calls for a $6,000 deduction for those 65 and older who earn $75,000 or less ($150,000 joint). This would effectively eliminate taxes on Social Security for 88% of seniors.

Cap on State and Local Deductions Increases

shutterstock.com

When you pay state and local taxes, you can deduct a portion of those funds from your federal taxable income. The cap on this amount is currently $10,000 but Trump’s bill increases that amount to $40,000 for the next five years.

Medicaid Work Requirement

Server at a coffeehouse bringing two coffees

Medicaid recipients in 40 states and D.C. will have to either work, volunteer, or go to school for at least 80 hours per month to continue to receive benefits. Recipients can receive exceptions, such as being disabled and having young children.

Some recipients may also see a $35 charge when seeing the doctor if their income is between 100% and 138% of the federal poverty line (between $15,650 and $21,597).

ACA Reporting Requirements

woman upset looking at papers
Photo by Nataliya Vaitkevich: https://www.pexels.com/photo/woman-in-black-long-sleeve-shirt-sitting-with-hand-on-her-head-6919757/

Those who receive their health insurance through the ACA marketplace will now have to update their income and other details every year, rather than being automatically re-enrolled.

Boost Child Tax Credit to $2,200

Kids playing in the forest
Photo by Robert Collins on Unsplash

The current child tax credit is $2,000, but that was set to expire in 2025, reverting back to $1,000. The bill permanently raises this credit to $2,200.

Other Posts You May Enjoy:

Retirement Savings Waterfall: In What Order to Make Your Savings Contributions

Saving for retirement can be challenging because there are so many different types of accounts with tax benefits (and drawbacks), here’s a simple ordered list that can help you decide where to contribute next.

Summer Reading Programs for Kids 2025

Our kids’ school sent out a list of summer reading programs that we’ll look to get our kids involved in. It’s great that so many books stores and organizations are getting in on the action that was once the domain of Pizza Hut and their Book It program!

Why Saving The First $10,000 Is Critical

Famed investor Charlie Munger has said that saving your first $10,000 is the hardest but also the most important. If you don’t save and invest your money, you will forever have to trade your time for more money – see why this makes so much sense.

Major Banks with ATM Fee Reimbursement

If you’re paying ATM fees to your bank for accessing your money, you should switch banks immediately. There are many banks that offer ATM reimbursement, sometimes unlimited, as well as a high interest rate.

About Ashley Barnett

Ashley Barnett was born with a passion for personal finance. Even as a kid she would read anything she could find about money. When personal finance blogs started popping up on the internet she jumped on board, starting a personal finance blog in 2008.

In 2013, she pivoted to freelance editing where she spends her days trying to create the best personal finance content on the internet.

She lives in Phoenix with her husband and two children and you can usually find her sitting in her backyard re-reading Harry Potter for the millionth time.

>> Read more articles by Ashley

See Ashley on Instagram | Linkedin | TikTok

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