Congress passed President Donald Trump’s “big, beautiful bill” last week. The bill extends tax cuts and introduces new measures like a senior “bonus” and increased state and local tax deductions. Financial advisor Kathryn McCall says the impact will depend on household income levels.
The lowest income households would get a $150 tax cut, less than 1% of their after-tax income. But this may not make up for cuts to Medicaid and food stamps in the bill. “It doesn’t take into account the cuts to Medicaid and food stamps, which create a significant loss of the safety net for Americans relying on those programs,” McCall said.
She also warns the bill could add over $3 trillion to the national debt in the next ten years.
Tax changes and national debt
The key tax changes in the bill include:
– Reduced federal tax rates across income brackets
– A senior “bonus” to offset Social Security taxes
– Higher limits for state and local tax deductions
– Tax breaks for overtime pay
– New tax-advantaged savings accounts for children
– Increased estate and gift tax exemptions
However, the 1,000+ page bill also contains some strange provisions.
These range from incentives for SNAP fraud to subsidies for spaceports and Chinese steel companies. It eliminates a century-old $200 tax on gun silencers. It imposes a cap on gambling loss deductions, so gamblers could owe taxes even if they lose money.
And it allocates $40 million for statues in a “Garden of Heroes” in Washington, D.C.
Almost every Republican voted for the bill, despite parts that could hurt their own districts. Some think they hope the worst parts won’t actually be implemented, like Trump’s TikTok ban that is still not enforced. In the end, the “Big Beautiful Bill Act” is a complex law with wide-reaching and sometimes puzzling effects on many parts of American society and finances.
Time will tell its full impact as the provisions start to take effect.
