President Donald Trump’s landmark spending bill is ready to be signed into law after Republicans in both chambers of Congress eked out the necessary votes ahead of the GOP’s self-imposed July 4 deadline to send the legislation to the president’s desk.
At its core, the bill permanently extends the tax cuts introduced in the 2017 Tax Cuts and Jobs Act while introducing a raft of new breaks. Some, such as an expanded child tax credit and an above-the-line deduction for charitable contributions, are permanent changes to the tax code.
Others are slated to expire in 2028, at the end of Trump’s term in office.
That doesn’t mean they necessarily will. After all, the cuts from the TCJA were slated to sunset this year, a reality that “lawmakers across the board and … across the aisle” were hoping to avoid entering budget negotiations, Erica York, vice president of federal tax policy at the Tax Foundation, recently told CNBC Make It.
Still, as of now, four provisions — including some that Trump campaigned on — aren’t slated to stick around for long.
1. No tax on tips
The bill creates an above-the-line deduction for tips earned by workers in occupations that traditionally receive tips. That means a bartender, for instance, would be able to deduct the total amount of their tips from their taxable income in a given year.
The deduction phases out for individuals making more than $150,000 a year, or $300,000 a year for joint filers. Taxpayers can deduct a maximum of $25,000.
The exemption also applies only to federal income tax. Tipped workers would still be subject to state and local income and payroll taxes.
2. No tax on overtime
From 2025 through 2028, workers can deduct overtime pay from federal income tax.
The deduction is capped at $12,500 for single filers and $25,000 for married couples filing jointly. The break begins to phase out for single filers making $150,000 or more ($300,000 for joint filers) and is unavailable to those making more than $275,000, or $550,000 for couples.
3. No tax on auto loan interest
The bill allows for a deduction of up to $10,000 for new auto loans. To qualify, your loan must have been taken out after Dec. 31, 2024 for a U.S.-assembled car, minivan, van, sport utility vehicle, pickup truck or motorcycle for personal use.
The deduction starts to lose value for filers with incomes exceeding $100,000, or $200,000 for joint filers.
The average driver paid $1,332 of annual loan interest charges on new cars bought in 2024, according to AAA. To qualify for the full $10,000 deduction, you’d have to take out a loan of roughly $112,000 — a description of only about 1% of new car loans, according to data from Cox Automotive.
4. Trump accounts
The bill creates a new type of savings account for children, with a one-time deposit of $1,000 from the federal government for U.S. citizens born between 2025 and 2028.
Parents can make an annual after-tax contribution of up to $5,000 to these funds, to be invested in a diversified fund that tracks a U.S. stock index.
If you’re one of these kids, you won’t be able to withdraw the money until you turn 18, and only half the money can be withdrawn between the ages of 18 and 25. Once you turn 31, you’ll receive any remaining funds in your account as a distribution.
Money that you use for qualifying expenses, including higher education expenses and first-time home purchases, is taxed at the long-term capital gains rate. Any other profits are treated as income, and, for beneficiaries under 30, subject to a 10% tax penalty.
Are you ready to buy a house? Take Smarter by CNBC Make It’s new online course How to Buy Your First Home. Expert instructors will help you weigh the cost of renting vs. buying, financially prepare, and confidently navigate every step of the process—from mortgage basics to closing the deal. Sign up today and use coupon code EARLYBIRD for an introductory discount of 30% off $97 (+taxes and fees) through July 15, 2025.
Plus, sign up for CNBC Make It’s newsletter to get tips and tricks for success at work, with money and in life, and request to join our exclusive community on LinkedIn to connect with experts and peers.
Read More Details
Finally We wish PressBee provided you with enough information of ( More heat and humidity on the way for holiday weekend in Chicago area )
Also on site :