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President Donald Trump’s “Big Beautiful” bill became law when he signed the policy on July 4th. However, Americans will not immediately feel the impact of all the provisions of the bill.
Some provisions are already in effect and taxpayers will notice when they file their 2025 taxes in 2026. Other regulations, including changes to Medicaid, will not be in effect until the end of next year.
This is what we look forward to in the future.
New or expanded tax credits and deductions
Many taxpayers can request new or renewed credits and deductions when they file their 2025 tax returns.
State and local tax credit changes
For the 2025 tax year, filers earning up to $500,000 per year can claim up to $40,000 in state and local tax deductions on federal tax returns, from the past $10,000 limit implemented by the Tax Reductions and Employment Act.
Both the salt limit and income threshold will increase by 1% per year through 2029, with the maximum value returning to $10,000 in 2030.
Expanding child tax credits
The maximum child tax credit rose to $2,200 for the 2025 tax year, with the refund portion of the claims remaining at $1,700. Starting in 2026, both numbers will be indexed for inflation.
Senior “bonus” deduction
Taxpayers age 65 and over can claim a “bonus” deduction worth up to $6,000 for the tax year between 2025 and 2028. A single filer who earns up to $75,000 a year can claim a full deduction for a filer who earns up to $150,000.
Car Loan Interest Deduction
Couples who earn up to $100,000 a year, or earn up to $200,000, can deduct up to $10,000 annual interest on new car loans for the tax year between 2025 and 2028. The loan must be from a vehicle assembled in the US.
There are no taxes as a hint
Workers who obtain tips can deduct up to $25,000 in eligible tip income for the tax period between 2025 and 2028. The deduction stage for individual filers making more than $150,000 a year and the deduction stage for joint filers making more than $300,000.
Overtime wage tax credit
Taxpayers can earn deductions of up to $12,500 or more on overtime revenue for the tax period from 2025 to 2028.
Tax credits for donations of private school scholarships
Starting in the 2027 tax year, taxpayers can claim up to $1,700 worth of credit for eligible donations to nonprofit organizations supporting scholarships for K-12 private school education.
Abolishing tax credits
The law adds a lot of new credits, but also some tax credits enacted by former President Joe Biden will go down.
Clean Car Credit
From September 30, 2025, taxpayers will no longer be able to claim tax credits worth up to $7,500 to purchase new electric vehicles, and will no longer be able to claim up to $4,000 on a second-hand EV.
Since 2024, car buyers have been able to claim this credit at a later point of sale when submitting taxes. The credit was introduced as part of the 2022 Inflation Reduction Act and was expected to remain in effect until 2032.
Energy-efficient Home Improvement Credit
Since 2023, homeowners have been able to request tax credits worth up to $3,200 to make energy-efficient improvements to their homes, including installing solar panels. Initially it was scheduled to expire after 2032, but taxpayers will no longer be able to claim credits after 31 December 2025.
Changes to federal benefits
In addition to changes to federal tax policy, Trump’s law includes several provisions that change changes that allow you to claim benefits such as Medicaid and food stamps.
New Medicaid Work Requirements
Medicaid, which provides health insurance for low-income people, will introduce new effective job requirements rules on December 31, 2026. Beneficiaries between the ages of 19 and 64 must work at least 80 hours a month to qualify for benefits, either as beneficiaries or 64 years old applying for Medicaid or compensation through the Affordable Care Act Expansion Group.
Eligible circumstances such as certain medical conditions or dependent children under the age of 14 may exempt beneficiaries from work requirements. Additionally, states must recertify beneficiaries’ eligibility every six months, rather than their current annual review policy.
Changes in Eligibility for Supplementary Nutrition Support Programs
Americans who received SNAP benefits, previously known as food stamps, expanded their work requirements. Beneficiaries between the ages of 18-54 without dependents must work at least 80 hours a month to receive snaps for more than three months, for at least three months, unless certain factors apply, such as physical or mental restrictions.
The new work requirements apply to beneficiaries between the ages of 18 and 65, and are based on the new law for people with children aged 14 and over. Winners must also be a US citizen or permanent resident to receive benefits.
It is not clear when the new requirements will come into effect, but the USDA will notify states when and how the new regulations will be implemented, according to a department spokesperson.
“Trump Accounting” about children’s savings
The law introduces a new program known as “Trump Accounting,” which allows parents to open tax investment accounts for children born between January 1, 2025 and 2028. The government can deposit the first $1,000 in an account, and parents can contribute $5,000 a year in post-tax dollars. Money is tax-free and beneficiaries have access to funds at age 18.
There is a 10% penalty and income tax for withdrawals taken before age 59½, unless funds are used for higher education, disability, or natural disaster-related expenses. Beneficiaries can also withdraw up to $10,000 on the purchase of a new home, or $5,000 for their own baby. Rescission of eligible costs is taxed at long-term capital gains rates.
Federal student loan changes
The law introduces many changes to the federal student loan system, including renewals of new and future borrowers and currently repaying borrowers.
Streamlined repayment options
Borrowers who take loans after July 1, 2026 have only two repayment plan options: a new standard repayment plan and a new income-driven plan known as the repayment support plan.
As you acquire repayment plans, current borrowers who are registered for valuable education, income dependencies, or payment savings will no longer have access to those plans. These borrowers will also be limited to two new repayment plan options after July 1, 2026. At that point, they will need to choose the repayment plan they have chosen or automatically register with the RAP after July 1, 2028.
Borrowing restrictions
Starting July 1, 2026, graduate students and parents will acquire new or low borrowing restrictions on federal student loans. The annual limit on graduate student loans drops to $20,500, or $50,000 for specialized programs such as medical and law schools. Graduates will have a lifetime limit of $100,000 on federal loans and $200,000 on specialist programs.
Starting in July 2026, parents will be able to borrow up to $20,000 per year per dependency through parents and loans, with a lifetime limit of $65,000 per student.
Students currently in school can complete their studies with the current greater loan restrictions and postgraduate and loan access, which are unavailable to new borrowers after July 1, 2026.
Pell Grants
Students enrolled in a qualified short-term vocational training program are eligible to receive the workforce Pell Grants from July 1, 2026.
Compatible programs have 150-600 hours of instruction or equivalent credit hours, lasting between 8-15 weeks, among other requirements.
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