๐๏ธ Major Tax Changes in the Final Bill
โ 1. Permanent Extension of 2017 TCJA Tax Cuts
Individual tax rates and brackets from the Tax Cuts and Jobs Act are extended permanently, avoiding the previously scheduled sunset at the end of 2025.
โ 2. Standard Deduction Increase
Raised to $31,500 for Married Filing Jointly, $23,625 for Head of Household, and $15,750 for Single filers.
Includes an additional $6,000 bonus deduction for seniors (age 65+), on top of existing age/blind deductions, potentially increasing a senior coupleโs standard deduction to $46,700.
โ 3. Child Tax Credit Expansion
Increased from $2,000 to $2,200 per child, now indexed for inflation.
โ 4. Overtime & Tip Deduction
Allows individuals to deduct up to $12,500 of overtime and tip income ($25,000 for joint filers) from taxable income annually through 2028.
โ 5. Expanded SALT Deduction Cap
Raises the state and local tax (SALT) deduction limit to $40,000 for households with AGI under $500,000. This higher cap is temporary and fully reverts after five years.
โ 6. U.S. Auto Loan Interest Deduction
Enables up to $10,000 per year of interest deduction on loans for U.S.-assembled vehicle purchases through 2028, with income phase-outs.
โ 7. 'Trump Accounts' for Children
Introduces new tax-advantaged savings accounts with a one-time $1,000 contribution credit per child, capped at $5,000 deposited each year.
โ 8. Senior (65+) Bonus Deduction
A temporary $6,000 deduction for taxpayers aged 65+, available through 2028 and phased out above AGI thresholds ($75K individual/$150K joint).
โ 9. Elimination of Social Security Benefit Tax
Nearly 90% of Social Security recipients will no longer pay federal tax on those benefits, thanks to the standard deduction plus age-related bonusโthough it's not a full repeal.
โ ๏ธ 10. Repeal of Energy Efficiency Credits
Revokes clean-energy and EV tax incentives introduced under the Inflation Reduction Act .
โ ๏ธ 11. 529 & Student Loan Adjustments
Updates to 529 plans: up to $15,000 may be used for student loan repayments.
Overhauls student loan programs; income-based repayment limited to two options, with new constraints starting 2026 .
๐ Summary for Individuals
Rating the Winners:
Middle-class & Seniors enjoy simpler filing, bigger deductions, and targeted credits.
High-income earners gain from increased SALT limits and permanent lower tax rates.
Parents benefit modestly from the bump in child tax credits and new savings accounts.
Cautionary Notes:
The energy credit rollback removes preparation incentives for homeowners.
Student loan limitations impact future borrowers.
Social Security beneficiaries benefit from deductions, not full exemption.