The Impact of the “One Big Beautiful Bill Act” on American Taxpayers
U.S. Speaker of the House Mike Johnson (R-LA) speaks to the media after the House narrowly passed a bill forwarding President Donald Trump's agenda at the U.S. Capitol on May 22, 2025 in Washington, D.C. Kevin Dietsch/Getty Images
Written by Chad Gifford
As promised, we are always watching what happens in Washington and the impact it could have on you or the companies we own. Last week, the Trump administration, along with the Senate and House of Representatives, passed “The One Big Beautiful Bill Act.”
In this blog, I will explain how this bill may affect you and what new changes we will see in the future.
The Big Beautiful Bill extends tax cuts that were originally enacted in 2017 by President Trump’s Tax Cuts and Jobs Act. This bill permanently extends lower tax rates that went into effect in 2017 and raises the standard deduction to higher (From $6,350 single and $12,700 MFJ to $15,750 Single and $31,500 MFJ) than the 2017 amount. Additionally, the child tax credit is raised from $2,000 to $2,200 starting in 2025.
Retirees have a chance for an extra bonus deduction of $6,000. This deduction will be effective through 2028. The full deduction is available to individuals with incomes up to $75,000 or $150,000 for joint filers. The deduction fully phases out for individuals earning more than $175,000 and for joint filers earning more than $250,000.
The bill does not fully eliminate federal taxes on tips or overtime, but it does create new deductions through 2028. Tipped workers will be able to deduct up to $25,000 in qualified tips. Hourly workers will be able to deduct up to $12,500 in overtime payments. Additionally, on qualifying car loans you can write off up to $10,000 a year on interest paid. This benefit will also expire at the end of 2028.
The Big Beautiful Bill does make the QBI 20% deduction for small businesses permanent. If you are a small business owner and have not heard of this, please reach out to the Aurora team or your CPA as this is a very helpful deduction for small business owners.
This bill also raises the SALT deduction limit. SALT stands for state and local tax. This deduction is used by people who itemize deductions and can deduct certain state and local taxes. This deduction limit was set at $10,000 and will now increase to $40,000 through 2029. The phaseout on this deduction begins at $500,000.
The Big Beautiful Bill restores a previously implemented 100% expensing of capital investment. The maximum expense cap is increased to $2,500,000. Before the passing of the legislation, you were required to deduct the cost over a 39-year period.
There were many worries about how this bill could affect the Public Service Loan Forgiveness (PSLF) program. After reading through the relevant section of the bill, we can confirm there are no material changes to this program. However, there is a small change in student loan programs that were made in this bill. Now, student loan payments made by employers up to $5,250 are exempt from your income. This amount will be indexed every year after 2026 for a cost-of-living adjustment rounded to the nearest $50.
Were you thinking of buying an electric car or using clean energy to power your home? This bill will eliminate most EV credits. The bill also eliminates the 30% tax credit you could have received for using clean energy in your home. This includes rooftop solar, wind power, and geothermal heating systems.
How does this bill affect Medicaid? There will be funding and work requirements changes imposed due to the new bill being signed into law. The funding changes to Medicaid are not scheduled to take effect until 2028. Medicaid will also see new work requirements, which will require adults aged 19 to 64 to work at least 80 hours a month to qualify for Medicaid. There are exemptions to this rule, which include various medical conditions and dependent children. The new work requirements must be implemented by December 31, 2026, but states may choose to implement the requirements sooner.
Does the signing of this bill also affect SNAP? Yes, there are changes regarding funding and work requirements for the SNAP program. In the past, the federal government, with help from the states, funded the SNAP program. The federal government funded the program while the states took on the costs of managing SNAP. Now, if states have a payment error of 6% or more, starting in 2028, that state will be required to partially fund their SNAP program. What are the new work requirements for SNAP? In the past, most adults had to work until they were 54 to qualify for SNAP. However, adults will now have to wait until the age of 64. You could be exempt from this rule if you have children under the age of 14. Again, this must be implemented by the end of 2026, but it could be implemented sooner.
Do you gamble on sports? If you are like me, then you probably have a losing record and would rather not see your YTD numbers. This bill does affect how gambling losses are taxed. In the past, you could write off 100% of your gambling losses against your winnings. This is now no longer the case as you can only write off 90% of your losses. For example, if you won $10,000 and lost $10,000, you used to be able to call it a wash on your taxes. Now, you can only write off $9,000 of those losses and will have to realize a gain of $1,000 on your taxes. Study hard as those losses just became even larger.
The Big Beautiful Bill” also allocates money to be spent in several different additional areas. This includes energy production, national defense spending, and border protection spending. While this bill will add to the nation's deficit, it is unclear exactly how much it will cost. If you have questions about anything we covered in this blog, please do not hesitate to reach out!
If you have a question or concern about something that was not addressed, please send us a message.
-Chad Gifford