In May 22, 2025, the U.S. House of Representatives passed a sweeping new piece of legislation nicknamed the “One Big Beautiful Bill Act.” The bill aims to reshape tax policy for individuals and families — making key tax cuts permanent, expanding deductions, and introducing new types of savings accounts.
But it doesn’t come without controversy. To pay for these benefits, the bill also proposes deep cuts to social safety net programs like Medicaid and SNAP (Supplemental Nutrition Assistance Program), which could affect millions of lower-income Americans.
In this post, we’ll break down the core parts of the bill, who benefits, who might lose out, and what you should do to prepare.
What’s in the 2025 U.S. Tax Bill?
The bill is a combination of tax relief, savings incentives, and funding offsets. Here’s what it includes:
1. Permanent Individual Tax Cuts
The individual tax cuts first introduced in the 2017 Tax Cuts and Jobs Act (TCJA) were originally set to expire after 2025. This bill makes them permanent. These include:
- Lower federal income tax brackets
- Increased standard deduction
- Increased Child Tax Credit
Who benefits?
Middle- and upper-income earners may see continued lower tax bills for the foreseeable future.
2. Increased SALT Deduction Cap
The State and Local Tax (SALT) deduction was previously capped at $10,000. The new bill raises that cap to $40,000, a significant increase.
Who benefits?
This change is especially beneficial for residents in high-tax states like New York, California, and New Jersey — many of whom were previously limited in how much they could deduct on their federal returns.
3. New “MAGA” Savings Accounts for Children
The bill introduces a new savings vehicle referred to as “MAGA Savings Accounts”, designed to help families save money for their children’s future needs. These are proposed to function similarly to 529 college savings plans but could be more broadly usable (e.g., not just for education).
What this means:
If you have children, you may soon have access to a new tax-advantaged way to save for their future — whether for school, a first car, or other major life expenses.
4. Temporary Tax Breaks for Specific Spending
To provide short-term relief and stimulate the economy, the bill includes temporary deductions and credits for:
- Tips and Overtime Pay
- Interest paid on U.S.-assembled vehicle loans
- Disaster-loss related deductions
- Expanded senior tax credits
What this means:
If you work in service industries, do shift work, or plan to buy a car made in the U.S., you might see some short-term tax benefits.
How Is the Government Paying for This?
To cover the estimated $1.2 trillion cost of these tax changes, the bill includes:
- $700 billion in Medicaid cuts
- $267 billion in SNAP cuts
Both would be phased in from 2026 to 2034.
These proposed cuts are among the most contentious parts of the legislation and are likely to face major opposition in the Senate.
Who Wins and Who Loses?
✅ Winners
- Middle and upper-middle class taxpayers: Benefit from permanent tax cuts and the higher SALT cap
- Families with children: Gain new savings tools and extended tax credits
- Workers in tipping or hourly roles: Eligible for new temporary deductions
- Residents of high-tax states: Stand to deduct more in SALT
❌ Losers
- Low-income Americans: Risk reduced access to food and healthcare due to SNAP and Medicaid cuts
- Seniors reliant on public aid: May feel the effects of future Medicaid tightening
- Public health and assistance organizations: Could see reduced federal funding and strain on resources
What You Should Do Next
If this bill becomes law (it still needs to pass the Senate), here’s how you can prepare:
1. Review Your Withholdings
If you’ve been underpaying or overpaying in taxes, adjust your W-4 to match the new tax brackets.
2. Explore MAGA Savings Accounts
Stay informed about when and how these accounts become available and whether they’re right for your financial plan.
3. Plan for Temporary Deductions
If you’re eligible for the temporary deductions (e.g., you work for tips or plan to buy a car), track receipts and prepare to itemize your return.
4. Protect Against Rising Healthcare Costs
If Medicaid cuts are approved, review your health insurance options and consider supplemental or low-cost private coverage.
5. Consult a Tax Professional
Major changes like these are the perfect reason to meet with a CPA or enrolled agent. Tax law is evolving — your strategy should too.
Conclusion
The 2025 U.S. tax bill could bring meaningful savings to many Americans — but it may also reduce support for those most in need. As this bill moves to the Senate, keep an eye on changes and prepare for how it might affect your tax return, your healthcare options, and your overall financial plan.
Need help navigating these potential changes? Check out our Tax Planning section or sign up for our newsletter to stay updated.
