Summary
President Donald Trump signed a new tax law called the "One Big Beautiful Bill" on July 4, bringing significant changes to taxes and other financial policies. Some parts of the tax law take effect immediately, affecting 2025 tax returns, while other provisions will be phased in over the next few years. Treasury Secretary Scott Bessent mentioned possible future additional refunds for working families, which would need approval from Congress.
Key Facts
- The new tax law begins to impact 2025 tax returns, with some immediate changes and others phased in.
- The standard deduction increases to $15,750 for single filers and $31,500 for married couples, with annual adjustments for inflation.
- Temporary tax breaks, which begin in 2025 and end in 2028, include exemptions on tip income and overtime pay for certain earners.
- The Child Tax Credit increases to $2,200 per qualifying child with no end date and also adjusts for inflation.
- The SALT deduction limit rises to $40,000 starting in 2025 and will revert to $10,000 in 2030.
- In 2026, further changes include a limit on itemized deductions for higher-income individuals and an increased estate tax exemption.
- Babies born from 2025 to 2028 will receive a one-time $1,000 in a "Trump Account," which tracks a stock index.
- President Trump has proposed sending $2,000 refunds to families, pending Congressional approval.
