What the "Big, Beautiful Bill" Means for Your Taxes and Your Bottom Line

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, ushering in sweeping tax reforms and significant changes to federal spending and entitlement programs. At nearly 900 pages, the bill is broad in scope, but for individuals, families, and businesses, the tax provisions are the headline.

Here’s what you need to know—and how to start planning.

Key Tax Changes at a Glance

1. 2017 Tax Cuts Made Permanent

The bill cements several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that were previously set to expire after 2025:

✔ Lower marginal tax rates across most income brackets
✔ A doubled standard deduction, simplifying filing for many households
✔ Continued suspension of personal exemptions

For both individuals and pass-through business owners, these changes offer continued tax relief and stability for long-term planning.

2. New Exemption for Tips and Overtime Pay

Starting in 2026, up to $25,000 annually in tips and overtime pay will be exempt from federal income tax. This provision sunsets after 2028 unless renewed, but it could significantly boost take-home pay for workers in service and hourly industries.

3. Increased Child Tax Credit

Families will see the Child Tax Credit rise to $2,200 per child, effective for tax years beginning in 2025. The credit is now indexed to inflation, providing ongoing value as costs rise.

4. Higher SALT Deduction Cap for Middle-Income Households

The cap on state and local tax (SALT) deductions increases from $10,000 to $40,000, benefiting households earning under $500,000. This is particularly impactful for taxpayers in high-tax states like New York, California, and New Jersey. The higher cap is set to expire after 2028 unless extended.

5. Social Security Tax Relief for Retirees

Seniors aged 65 and older can now deduct up to $6,000 in Social Security income ($12,000 for married couples), provided total income remains below specified thresholds. This aims to ease the tax burden on lower- and middle-income retirees.

Beyond Taxes: Spending Cuts and Trade-Offs

To partially offset the cost of these tax breaks, the bill includes significant reductions to federal programs:

• Medicaid: $900 billion in cuts over 10 years, with new work requirements beginning in 2027

• SNAP (Food Stamps): Stricter eligibility and asset tests

• Student Aid: Tighter Pell Grant qualifications and limited student loan forgiveness options

While the tax changes benefit many households and business owners, these spending cuts could increase healthcare, food, and education costs for vulnerable populations.

What This Means for You — and How to Prepare

The Big Beautiful Bill locks in tax savings for many, but it also adds complexity and underscores the importance of proactive planning:

✅ Review your tax strategy for 2025, especially if you own a business or qualify for pass-through deductions
✅ Families with children should plan for the expanded Child Tax Credit
✅ Retirees should assess eligibility for new Social Security tax relief
✅ Service and hourly employees should factor potential tax-free overtime into income planning

At Acctually, we’re here to help you navigate tax changes with confidence. Whether you’re an entrepreneur, a growing business, or an individual looking to optimize your tax position, our cloud-based accounting team keeps you ahead of the curve.

Questions about how these changes impact your business or personal taxes? Let’s connect.

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