Understanding Trump’s ‘One Big Beautiful Bill Act’: Tax Changes Effective in 2025

Last updated Jul 20, 2025

The “Big Beautiful Bill” Act and Its Implications

Speaker of the House Mike Johnson (R-LA) signs the One Big Beautiful Bill Act with fellow Republicans in the Rayburn Room at the U.S. Capitol in Washington, DC.

Image source: Getty Images News

Two weeks into the implementation of President Donald Trump‘s “Big Beautiful Bill” Act, financial advisors and tax professionals continue to unravel its implications. With the financial implications and tax changes coming into effect in 2025, experts are busy interpreting different facets of the sweeping legislation.

Understanding the Impact of Working Family Tax Cuts

Bill’s impact varies from person to person. Experts are still deciphering the many moving parts of these tax reforms.

Many advisors are running year-by-year projections to see how the bill could impact taxpayers. It’s crucial to foresee any potential reduction in tax benefits.

Key Changes in Taxation Under the Big Beautiful Bill Act

Here are some key changes brought by the Big Beautiful Bill Act in 2025:

Standard deduction increases from $15,000 to $15,750 for single filers and $30,000 to $31,500 for married couples filing jointly.
Maximum child tax credit rises from $2,000 to $2,200 per child.
The cap on the state and local tax deduction (SALT) increases to $40,000 from $10,000.

With these changes, taxpayers need to adjust their financial strategies to maximize their benefits.

New Provisions in the Big Beautiful Bill Act

The act introduces some new provisions that primarily affect older Americans and those with tip income, overtime earnings, and car loan interest. Here are a few highlights:

A $6,000 “bonus” deduction for Americans ages 65 and over, which phases out for higher earners.
New deductions for tip income and overtime earnings.
Car loan interest is now tax-deductible.

Return of Premium Tax Credit ‘Subsidy Cliff’

While the enhanced premium tax credit boosted Marketplace health insurance affordability during the pandemic, it won’t be extended under the Big Beautiful Bill Act. This can potentially raise Affordable Care Act premiums for millions of enrollees.

The so-called subsidy cliff is set to return in 2026, when enrollees above certain income thresholds will lose the premium tax credit. For 2025, the threshold is set at $103,280 for a family of three.