Republican “big beautiful” budget bill means your money

House Republicans advanced on Thursday a multi-billion dollar tax and spending package that could have a massive impact on household finances.

If enacted, the law, called “One Big Beautiful Bill Act,” could bring President Donald Trump’s 2017 tax cuts, while also adding new provisions that could significantly overhaul student borrowing, health savings accounts, car ownership and more.

Congressional control allows Republicans to pass the package using “budget adjustments.” But the bill, which is more than 1,000 pages long, could see changes in the upper room before Trump signs the law.

Below are some of the regulations that can affect your wallet.

Enacted via the 2017 Tax Cuts and Employment Act (TCJA) is a $10,000 limit on state and local tax deductions known as salt. Filers must itemize the deduction to charge it.

The bill will raise the saltcap to $40,000 in 2025 and eliminate revenue tax cuts over $500,000. Salt restrictions and income stages will increase by 1% each year from 2026 to 2033.

Before the TCJA, salt deductions were unlimited, but the so-called alternative minimum tax curtailed the interests of some wealthy Americans.

The bill also reduces itemized deductions for certain taxpayers on the 37% income tax bracket and may limit the profits of higher salt caps.

“Changes to lift the cap will primarily benefit higher earners,” Garrett Watson, director of policy analysis at the tax foundation, wrote in an analysis Tuesday.

Trump’s 2017 tax cuts led to a temporary increase in the maximum child tax credit from $1,000 to $2,000. This is an increase that expires after 2025 without action from Congress.

The House bill will make $2,000 in credit permanent and raise the cap to $2,500 from 2025 to 2028.

However, the plan “doesn’t do anything to the 17 million children who are being excluded from their current $2,000 credit,” Chris Cox, director of federal tax policy at the Federal Center for Budget and Policy Priorities, told CNBC previously.

The reason for this means that very low-income families with children are not normally owed federal taxes and cannot claim a child’s tax credit.

To help pay the bill’s tax credit, House Republicans are including roughly $1 trillion cuts in the largest Medicaid Health Coverage and Supplementary Nutrition Assistance Program (SNAP), which is the largest in the program’s history.

While 14 million people could lose their health insurance as a result of changes to the bill, including stricter labor requirements to qualify for the program, 3 million households could go without food aid.

Medicaid labor requirements were scheduled to come into effect in 2029 for each previous version of the proposal, but lawmakers moved that date in last-minute negotiations until that date.

Low-to-middle-income adults age 65 and older can deduct an additional $4,000 on their tax returns under the terms of the House bill. The full deduction, known by law as a “bonus,” applies to individual tax filers of married couples with adjusted gross incomes of up to $75,000 and up to $150,000.

Tax credits can reduce the amount of income for seniors being taxed and therefore lower the tax they ow.

The deduction is in lieu of tax elimination on Social Security benefits. This is a proposal Trump promoted during the campaign trajectory. The Settlement Act prohibits changes to social security.

The proposed $4,000 deduction would save the average senior taxpayer with a small marginal income tax rate about $480 a year on federal income tax, according to estimates from Richard Johnson, a senior fellow at the Urban Institute.

In contrast, Johnson said elimination of federal income taxes on social security benefits would save the average person paying Social Security tax for around $1,440.

The GOP bill has many provisions associated with HSAS. This is the tax account used to pay for healthcare. They bring strong financial benefits to those who are accessing it.

The legislation aims to expand the capacity of households to contribute to HSAs and use those funds without financial penalties, said William McBride, Chief Economist at the Tax Foundation. HSA measures will begin in 2026.

More details from personal finance:
House Republican tax bill gives a “salt” deduction cap of $40,000
The advantages of SNAP are facing “the biggest cut in the history of the program” under the GOP tax bill
The Senate passed a “no tax on tips” bill. What does that mean for workers?

One adjustment allows households to use their HSA to pay sports and fitness-related expenses, such as gym membership and guidance. Eligible costs are limited to $500 per year for individuals and $1,000 per year for couples.

The bill also doubles the annual contribution limit for low-income and middle-aged people, bringing it to $8,600 for married couples and $17,100 for married couples in 2025. This applies to individuals making less than $75,000 a year and $150,000 for married couples.

Trump’s tax package also includes a new savings account for children with a one-off $1,000 deposit from the federal government.

“Trump Account” funded by the Treasury Department (formerly known as the “Account for Growth and Progress” or “MAGA Account”, can later be used as an educational or alternative program for university, a down payment for your first home, or as capital to start a small business.

If the bill passes as drafted, parents can donate up to $5,000 a year, with the balance being invested in a variety of funds tracking US inventory indexes. Earnings will be postponed for the tax increase period, and eligible withdrawals will be taxed at long-term capital rates.

The bill eliminates subsidized federal student loans. This means that while borrowers are in schools and other important periods, the government no longer covers the interest on their debt. The change could increase student loan balances at graduation by about 15%, said higher education expert Mark Kantrowitz.

The U.S. Department of Education’s current income-driven repayment plans for current income-driven student loan borrowers typically conclude with debt relief after 20 or 25 years, but the new GOP plan does not lead to debt cancellations in some cases for 30 years.

“A 30-year repayment term means slavery indentured service,” Kantrowitz said.

The law will also eliminate the delay in unemployment and the delay in economic hardships.

The bill will create tax credits for car owners who pay interest on car loans for the tax year 2025-2028, but only for vehicles assembled in the US.

Tax credits are worth up to $10,000 in interest on annual loans on passenger cars, including cars, minivans, vans, sports utility vehicles, pickup trucks, motorcycles, all-terrain or recreational vehicles. This is a deduction above the line and can be obtained by taxpayers without itemizing the tax deduction.

The value of the deduction begins to decrease when a taxpayer’s revised adjusted gross income exceeds $100,000 or when a married couple filing a joint tax return exceeds $200,000.

Workers receiving tips may receive a tax deduction under the bill that exempts qualifying tips from income taxes until 2028. This is limited to earning less than $160,000 in 2025.

The Senate unanimously passed a similar bill on Tuesday, limiting tax cuts to $25,000.

The House bill means the early end of tax credits for consumers who buy or lease electric vehicles, and other consumers who use their homes more energy-efficient homes.

Many of these credits have been available in some form for decades. Biden-era inflation reduction laws expanded or strengthened them.

The House Act will end tax credits after 2025.

The chopping block includes a $7,500 tax credit for new EVs and leases, as well as a $4,000 credit for used EVs.