Key Takeaways:
- The OBBBA made most 2017 TCJA tax cuts permanent, avoiding a scheduled tax increase in 2026.
- New “no tax on tips” (up to $25,000) and “no tax on overtime” (up to $12,500) deductions are now in effect.
- The Child Tax Credit rose to $2,200 per child, and new “Trump Accounts” let families save for kids under 18.
- 100% bonus depreciation is now permanent, giving businesses an immediate deduction on qualifying equipment.
- The tax cuts are partly funded by Medicaid and SNAP cuts, including new work requirements.
One Year of the OBBBA: What It’s Meant for Your Wallet
The One Big Beautiful Bill Act (OBBBA) made some of the biggest tax changes in years, and one year after Trump signed it into law, many Americans are still figuring out what it means for their finances. Here’s a look at some of the law’s biggest financial effects.
The 2017 Tax Cuts Preserved
The tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) were set to expire at the end of 2025, but the OBBBA made most of them permanent, so the current tax brackets and lower individual tax rates remain in place. Without the OBBBA, taxes would have increased for many households starting this year.
The standard deduction also got a small bump. For the 2025 tax year, it was $15,750 for single filers and $31,500 for married couples filing jointly. That amount will adjust each year for inflation.
New Tax Breaks for Workers and Seniors
The OBBBA introduced “no tax on tips” and “no tax on overtime.” Eligible workers can now deduct certain tip and overtime income, up to a specific amount. The tip deduction applies to up to $25,000 in qualifying tip income. The overtime deduction is capped at $12,500 and only covers the extra pay earned from working overtime, not regular wages. Both deductions gradually phase out at higher incomes.
Seniors also received a temporary tax benefit. Taxpayers age 65 can deduct up to $6,000 from their income through 2028 ($12,000 for a married couple). This deduction also phases out at higher income levels.
Larger Child Tax Credit and New Investment Accounts for Kids
The child tax credit was previously set to decrease from $2,000 to $1,000, but the OBBBA increased it to $2,200 per child. This amount will be adjusted for inflation going forward.
Another new feature of the OBBBA is the creation of “Trump Accounts,” a new kind of savings account for kids under 18. Parents and other adults can contribute up to $5,000 to an account annually.
Trump accounts are meant to encourage long-term saving by allowing money to be invested for a child’s future. And children born between January 1, 2025 and December 31, 2028 qualify for a one-time $1,000 deposit from the federal government. Money in Trump accounts can’t be touched until the child turns 18.
Business Tax Breaks Continue
The OBBBA extended or restored several tax provisions that encourage companies to invest in equipment, technology, and research. 100% bonus depreciation is now permanent, letting businesses deduct the full cost of qualifying equipment purchases immediately instead of spreading it out over years. The idea here is to encourage business expansion, job creation, and economic growth.
Medicaid and SNAP Spending Cuts
The price of the tax cuts in the OBBBA was paid, in part, by cuts to Medicaid and SNAP. The changes include stricter eligibility and work requirements for some recipients, along with other policy changes intended to reduce federal spending over time.
Supporters argue that these reforms encourage workforce participation and improve the long-term stability of these programs, but critics warn that it could make it harder for some low-income Americans to access healthcare and food assistance.
One year in and the OBBBA is shaping household finances with lower taxes, larger deductions, and expanded tax credits. And businesses have renewed investment incentives. But some families are adjusting to changes in Medicaid and SNAP. The long-term impact of the OBBBA will become clearer as time goes on.
