Q&A – What President Trump’s One Big Beautiful Bill Act Means to You
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
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Today’s Entry: Brian, I’ve found it hard to find good information for what the current version of the BBB would actually mean to me/the average American. I get it that the Trump tax cuts would be permanent and the no tax on tips and overtime but that’s about it. Please address this as I think it would influence a lot of people if they understood it better. Thanks!
Bottom Line: What, you haven’t read the 940-page bill and fully comprehended it? You’re not alone. I’m pretty sure that despite the bill being read aloud, there are still some senators who missed a lot of what is in it too. But with that said I’ve paid close attention throughout the process and with the help of an outstanding organization like the Tax Foundation (among others) to assist with analysis, I can give you a pretty good idea of what President Trump’s One Big Beautiful Bill Act means to you.
The biggest impact to the average person or family is without a doubt on the income tax side so let’s start there:
- Permanent Extension of 2017 TCJA Tax Cuts: The Senate bill makes permanent the individual tax rate reductions from the 2017 TCJA, preventing a scheduled tax increase that would raise federal income taxes by 22% for the average tax filer. This equals savings of $3,908 per year over what would happen if the law expired.
- Increased Standard Deduction: Raises the standard deduction to $16,000 for individuals and $32,000 for married couples filing jointly starting in 2026 ($1000 higher per person than the current law), compared to a potential reduction to half that amount if the TCJA expires. This lowers taxable income for 91% of taxpayers who take the standard deduction.
- No Tax on Tips and Overtime: The bill eliminates federal income taxes on tips and overtime pay through 2028. Average tax savings per eligible employee is $1,750 annually.
- Child Tax Credit Increase: The child tax credit would be permanently set at $2,000 per child, with an increase to $2,500 through 2028, benefiting over 40 million families.
- Senior Tax Break: Raises the standard deduction for seniors 65 and older from an additional $2,000 to $6,000. This equates to an additional tax cut per single filers of just over $1,000 annually and just over $2,000 for a married couple filing jointly.
- New auto loan interest deduction: Would save auto owners with a loan an average of $475 per year in taxes.
Now, not only am I pretty sure that the average person isn’t interested in paying about $3,908 to allow for President Trump’s original tax cuts, the Tax Cuts and Jobs Act, to expire. I’m also willing to bet that even your average Democrat voter, if they’re having an honest moment, wouldn’t want to pay an additional $2,900 per year in federal income taxes to not pass President Trump’s One Big Beautiful Bill Act. Why $2,900? If you add up all of the factors I just broke out for you...an estimated 84% of households would see additional tax cuts beyond the current policy with average savings of $2,900 per year.
So, to summarize the impact for a moment... The average household has $6,808 annually at stake this week based on whether President Trump’s BBB is signed into law or not. We can either have a tax increase of over $3,900 annually or an additional tax cut of $2,900 per year. You choose. Or actually at this point your representatives do – but it would probably be a good thing for you to let your rep know how you want this to go. As always there are two sides to stories and one side to facts. Those are the facts.