President Donald Trump signed the so-called One Big Beautiful Bill (OBBB) into law Friday, a budget that will have far-reaching repercussions on millions of Americans’ bank accounts, for better and worse.
The legislation is extensive, including hundreds of provisions that touch everything from individual rates to student loans to the estate tax. It attempts to pay for the included tax breaks by slashing spending on social safety net programs like Medicaid and nutritional benefits, as well as green energy programs. Even with these cuts, it is expected to add $3.1 to $3.5 trillion to the national debt over the next 10 years.
Along with provisions directly affecting Americans’ personal finances, it earmarks hundreds of billions of dollars for the president’s deportation efforts. It also creates a dual-class tax structure: one for citizens and their families, and another for those with at least one immigrant member, regardless of whether they are documented or not.
Various analyses of the bill’s provisions find it will benefit wealthy Americans far more than lower-income earners. In fact, after-tax-transfer income for the lowest-earning 20% of Americans drops by an estimated $245 next year, increasing to a loss of $1,385 annually by 2033, according to the Penn Wharton Budget Model (PWBM). Future generations are also “uniformly worse off,” according to PWBM.
“All future generations experience one-time welfare losses, ranging from -$22,000 for the lowest income quintile to -$5,700 for the highest,” the analysis reads. “A middle-income child born today would see a $9,800 loss.”
The Yale Budget Lab finds similar outcomes: It estimates changes to taxes and Medicaid and SNAP would lead to a $700 decrease in income for the lowest 20% of earners, while the top 1% would see a $30,000 increase. Republicans say it will have positive effects throughout the economy.
“There’s a view that there’s a lot of potential economic growth from the bill that will have a positive impact on the economy,” says Marc Gerson, member at Miller & Chevalier and former majority tax counsel for the U.S. Ways and Means Committee.
The legislation, which totals almost 1,000 pages, is far-reaching, and the details of how many provisions will be implemented still need to be worked out. For example, while it calls for no federal taxes on some tips and overtime, the IRS still needs to write those regulations for businesses and individual taxpayers to follow. All that said, exactly how it will affect people is unknown at this time.
Additionally, many of the individual tax cut provisions are temporary, lasting generally through 2028 (this differs by provision, though, and will be noted if the information is available).
Here’s what financial advisors and experts say Americans need to know about the OBBB now.
Income tax cuts
The bill makes permanent certain provisions from the 2017 Tax Cuts and Jobs Act (TCJA), including lower individual tax rates compared to what was in place before then: 10%, 12%, 22%, 24%, 32%, 35%, 37%. That said, these rates have been in place since the 2018 tax year, so many taxpayers are already accustomed to them.
It also eliminates personal and dependent exemptions, and some itemized deductions while keeping the doubled standard deduction (compared to pre-TCJA). Under the bill, the standard deduction for 2025 is $15,750 for single taxpayers, $31,500 for joint filers, and $23,625 for heads of household.
“If you don’t qualify for new tax benefits, your tax outcome may look similar to last year’s since many provisions under the TCJA are being made permanent,” notes TurboTax.
Estate tax exemption
For the super wealthy, the bill makes permanent the doubling of the estate tax exemption from the TCJA. For decedents dying in 2026 and beyond, up to $15 million (and $30 million for couples) is exempt from the federal estate tax, and this exemption will be indexed for inflation.
That mostly benefits individuals with estates in excess of $7.5 million, says Jane Ditelberg, director of tax planning at Northern Trust Wealth Management, the old exemption amount.
“Locking in the $15 million exemption indefinitely brings certainty to families planning major wealth transfers,” says Ditelberg. “For more than two decades, taxpayers have faced a moving target, with the applicable rules changing depending on the year of death. This takes that risk off the table.”
Child tax credit
Under the bill, the child tax credit is increased from $2,000 per child to $2,200, and is subject to annual inflation increases. The bill requires the taxpayer claiming the credit, the taxpayer’s spouse, and the child to have Social Security numbers.
Senior tax deduction
In place of eliminating taxes on Social Security, Americans 65 or older will see a temporary “bonus” deduction of up to $6,000 on their income taxes. This will be available to single filers making a modified adjusted gross income up to $75,000, or couples making up to $150,000, for tax years 2025 to 2028.
Car interest deduction
Car buyers will be able to deduct up to $10,000 of interest per year on new auto loans. This is limited by income: it phases out for single filers with incomes above $100,000 (and $200,000 for married couples). It also only applies to cars assembled in the United States. This is available for those who itemize and those who do not.
Tip and overtime tax deductions
The bill provides above-the-line deductions for some tip income and overtime pay for certain workers, fulfilling one of Trump’s campaign promises.
That said, there are important restrictions to keep in mind about both. Those with tip income can deduct up to $25,000 for qualified tips from their federal tax bill, phasing out for those with income above $150,000. This is in place for tax years 2025 to 2028.
“It’s essential to understand that this deduction doesn’t directly reduce your taxes dollar-for-dollar, and your actual tax savings will depend on your tax rate,” notes TurboTax.
Those earning overtime pay can deduct up to $12,500 ($25,000 for married couples filing jointly), depending on income. Like the tipped income provision, this is available for tax years 2025 through 2028 and phases out for income above $150,000.
Because many tipped workers are low-income, almost 40% already don’t pay federal taxes on their tips, says Meg Wheeler, certified public accountant and founder of The Equitable Money Project. Additionally, tipped workers should know they will still technically owe state and employment taxes like Social Security and Medicare on their tips—it’s still reportable income. This is not a total exclusion from paying taxes.
“We know that lots of tipped workers don’t necessarily report all of their tips. So just even right there, that will be an interesting shift,” says Wheeler. “I also am curious about whether or not this pushes more employers or even more employees to want to move to a tipped model, because they think this is helpful.”
Gerson says these provisions—which the IRS will need to write guidance on before they are implemented—may create additional discrepancies on how workers are taxed in the same workplace. That can lead to headaches for business owners, as well as create tension among employees who are compensated differently.
“If you take a restaurant, you have some people who are tipped and will benefit from the exclusion, and then you have people that aren’t tipped and won’t benefit from it,” he says. “It just has an impact on workforce dynamics. Some people [may] no longer want to be salaried because they can get in overtime.”
Student loans
The bill makes a number of changes to the federal student loan program starting in 2026, many of which will make payments higher for borrowers.
The bill reduces the number of income-based repayment plans, phasing out the Income-Contingent Repayment (ICR), Pay As You Earn (PAYE) and Saving on a Valuable Education (SAVE) plans starting in July 2026. Current borrowers will have two years to switch to a version of the Income-Based Repayment (IBR) plan, the standard repayment plan, or the Repayment Assistance Plan (RAP), a new offering. New borrowers, meanwhile, will only be able to enroll in the RAP.
“Many existing borrowers will see higher monthly payments under these new plans, though the current iteration of the bill at least allows more time to change plans,” says Kate Wood, loans expert and writer at NerdWallet. “As of now, student loan forgiveness still appears to be on the table, though RAP requires up to 30 years of repayment first, a longer repayment timeline than any current plan.”
One of the big differences, says Wheeler, is that RAP has a minimum monthly payment. This is different from some of the current income-based repayment plans, which allow some borrowers to pay very low amounts or nothing at all, depending on their earnings.
“Now, all of a sudden they have to jump up to this minimum just because that’s the rule, that’s the law,” says Wheeler. “I think that’s going to be, right off the bat, a huge issue.”
It also lowers the limits on graduate school loans, eliminates the federal Grad PLUS program altogether, and caps Parent PLUS borrowing. These changes apply to new loans starting July 1, 2026.
While the high cost of graduate school has been a target of people who want to reform the student loan system in the U.S., experts say limiting how many federal loans borrowers can take out won’t solve much. Instead, it means they will have to rely on private loans—which have fewer protections for borrowers and potentially higher interest rates—or skip higher education altogether. Those attending professional school for law or medicine may have the most to lose.
SALT Cap
One of the more contentious aspects of passing the bill was what to do with the cap on state and local tax deductions, or the SALT cap. Trump’s 2017 tax bill put a cap of $10,000 on it; that cap has been increased to $40,000.
This is one of the most expensive provisions in the bill. Taxpayers in California, Illinois, New Jersey, and New York stand to benefit the most: They account for 40 of the 50 top congressional districts affected by the cap. The cap reverts to $10,000 in 2030.
“It’s increased relief, but it is temporary,” says Gerson. “And so it’s something that Congress will have to revisit.”
“Trump accounts”
The bill establishes so-called Trump accounts, which are a new type of tax-favored account for newborns. Children born between 2025 and 2028 will receive $1,000.
Medicaid cuts
The bill makes dramatic cuts to Medicaid, which is the health care program for low-income, disabled, and some senior Americans. It will also affect those who have Affordable Care Act (ACA) health care coverage.
People on Medicaid will face strict new work requirements for able-bodied adults, and eligibility checks will increase from every 12 months to every six months. Estimates put the number of those losing health coverage at around 16 million Americans.
“It’s very likely that people will lose coverage even if they still qualify, just due to the administrative burden,” says Kate Ashford, investing specialist at NerdWallet. “It’s also likely that some hospitals in rural areas that rely on Medicaid funding will reduce services or close, meaning that people in those communities may have to travel far or go without care if they get sick or injured.”
Americans with ACA health insurance coverage will have to re-verify eligibility for tax credits each year, adding an additional hurdle to renewing. It also does not extend the ACA subsidies that help many Americans afford their coverage.
“If those expire, ACA health insurance costs will go up substantially, placing real stress on people’s budgets and potentially resulting in people dropping health insurance,” says Ashford. “Many immigrants who are legally residing in the U.S. will also lose access to ACA subsidies, forcing many of them to end coverage and raising rates for people who remain on plans.”
Allowing the subsidies to expire will also raise costs substantially on small business owners who rely on ACA coverage, says Ashford, as will the Medicaid cuts. She says small business owners and other entrepreneurs may find that health insurance coverage is now too expensive to enter the field.
