The Big Beautiful Bill, also known as H.R.1, was passed in July 2025 and introduces sweeping changes that may affect what you owe, what you keep, and how you plan for the future. One of the biggest shifts? Personal and dependent exemptions are now permanently eliminated, reinforcing the move toward a larger standard deduction. A new, temporary deduction for certain seniors is the one exception—but for most taxpayers, the old exemption system is gone.
And let’s face it, tax season has a way of sneaking up on all of us. So we’re breaking down the key points of this bill and what it means for everything from your take-home pay to long-term financial planning, helping you get ahead of the game before filing time arrives.
Why the Bill matters
We’re willing to admit taxes aren’t the most exciting thing to think about. But they’re much more than numbers on a form. What you pay in taxes can influence major life decisions, from how much you save for retirement to whether you buy a home or car this year. For instance, a higher child tax credit could free up extra funds for childcare or family activities, while an expanded deduction for seniors might make it easier to cover healthcare costs. The long and short of H.R. 1 is that it extends some existing tax breaks, adds a few new ones, and tweaks others in ways that could meaningfully impact your bottom line.
Here are the details:
Biggest changes that affect most people
1. State and local tax (SALT) deductions
If you itemize deductions, you can deduct a portion of state and local taxes that include everything from property taxes and state income taxes to even a portion of your vehicle registration. With the new legislation, the cap on SALT deductions jumps from $10,000 to $40,000, with small annual increases through 2029. But heads up: in 2030, the cap drops back down to $10,000.
2. Child tax credit updated
If you have children under 17, you can receive a tax credit that has been permanently increased from $2,000 to $2,200 per child. Anyone making more than $200,000 annually for single filers and $400,000 for joint filers, is subject to a phaseout, which means you’ll see your tax credit reduced.
3. Expanded deduction for seniors
If you are 65 or older, you may be eligible for an additional $6,000 tax deduction through 2028. This deduction is available on top of the existing senior deduction, potentially lowering taxable income even further.
The benefit begins to phase out at $75,000 for single filers and $150,000 for joint filers, meaning higher income seniors may see a reduced benefit. As with other provisions, eligibility and income thresholds can affect how much you can claim, so it is worth reviewing how this deduction applies to your specific tax situation.
4. No tax on tips and overtime (temporarily)
This is possibly the biggest change. From 2025 through 2028, tips up to $25,000 may be deductible dollar-for-dollar from federal taxable income. Tips must still be reported, and state taxes still apply.
The deduction begins to phase out for higher earners starting at a Modified Adjusted Gross Income of $150,000 for single filers and $300,000 for married filing jointly, and it is not available for those married filing separately. Because this rule includes several nuances, be sure to research how it applies to your specific tax situation.
5. Car loan interest deduction
If you purchase a vehicle assembled in the U.S., you may be able to deduct up to $10,000 in auto loan interest through 2028. This deduction is subject to income limits and eligibility requirements, so higher earners may see the benefit reduced or phased out. Be sure to review how this deduction applies to your specific tax situation.
Key takeaways
How these tax changes affect you will depend on your personal situation and how you file. Seniors could see meaningful shifts in both taxes owed and benefits received, while workers who earn tips may finally get a long-overdue benefit. The details matter, so understanding the rules can help you make the most of these updates and keep more of your hard-earned income.
What to know at a glance:
- Seniors: Additional deductions could lower taxable income and increase benefits.
- Workers who earn tips: Tips may now be partially or fully deductible from federal taxable income.
- Families with children: Higher child tax credits could provide extra funds for everyday expenses.
- Homeowners / state taxpayers: SALT deduction increases may allow you to deduct more of your state and local taxes.
- Vehicle buyers: Deductible auto loan interest may reduce the cost of financing a U.S.-assembled car.
Final thoughts
Keep in mind, tax situations are as unique to people as their thumbprint. Be sure to consult with a tax professional to determine what these recent legislative changes mean for your specific financial situation.
Be sure to take this as an opportunity to check in with your financial goals and consider your tax strategy. Are your withholdings set up for your expected income? Could small adjustments to retirement contributions, health savings accounts, or charitable giving unlock extra savings? Even minor tweaks now can make a noticeable difference when it’s time to file your return.
Whether it’s maximizing the changes in the Big Beautiful Bill, planning for education, or making the most of your refund, we’re here to support you. Visit our Financial Wellness Center for tools, calculators, and a breadth of resources designed to help you get your money Golden.
