From tax credits to cuts, how Trump's "big, beautiful" spending bill could impact your money
President Trump is expected to sign the so-called "big, beautiful bill" in a ceremony on Friday at the White House to coincide with the July 4 holiday.
It comes after the House approved the measure on Thursday. The Senate passed the legislation earlier this week.
The bill, , is expected to add more than $3.3 trillion to the national debt over the next decade, according to nonpartisan Congressional Budget Office analysis. That same analysis estimates nearly 12 million low-income people will lose health insurance over the next decade through $1 trillion in cuts from Medicaid.
For others, there are new or expanded tax provisions that could put money back into your pocket.
On average, according to a , households could see about a $2,900 reduction in their federal tax burden in 2026. That will vary widely based on your income.
Katie Lobosco, a tax policy expert with the nonpartisan, nonprofit , argues that many taxpayers may not notice much difference at all.
"What I do like people to keep in mind is that a lot of this is extending tax cuts that they already have, so they may not notice this $2,900 decrease," Lobosco said. "If Congress passes this bill, they are extending tax cuts that were put in place in 2017."
Many of these tax cuts enacted under President Trump's first term were set to expire at the end of the year.
Workers with income from tips and overtime
Workers who receive tips or overtime pay will be able to deduct thousands of that extra pay from their federal income taxes. cap deductions for tipped workers at $25,000 and $12,500 for overtime.
The benefit is phased out for individuals whose income exceeds $150,000. Workers would still have to pay state and local income tax and payroll taxes.
The provision would expire in 2028.
Auto interest loans
Similar to the mortgage interest deduction, a taxpayer can deduct up to $10,000 of auto loan interest from their taxable income in a given year.
The deduction only applies to new vehicles assembled in the U.S. and excludes certain trailers, campers, and all-terrain vehicles. The provision would expire in 2028.
The average driver paid $1,332 in annual loan interest charges on new cars bought in 2024, .
At the same time, the $7,500 EV credit is not being extended.
Senior "bonus"
Seniors 65 and older will now get , referred to as a "bonus" in the bill text, if their modified adjusted gross income is up to $75,000 if single, or $150,000 if married and filing taxes jointly.
The deduction phases out above that threshold. It does not entirely eliminate taxes on Social Security benefits, an idea frequently touted by Trump on the campaign trail. Most seniors — 64% — already don't pay taxes on Social Security, according to White House analysis.
The provision would expire in 2028.
Child tax credit
The current $2,000 child tax credit had been set to return to the pre-2017 level of $1,000 in 2026. This spending permanently increases the credit to $2,200 per child. The initial version of the bill approved in the House had increased the credit to $2,500.
State and local tax deductions
The bill significantly expands the amount of state and local taxes households are able to deduct from their federal taxes from the current cap of $10,000 to up to $40,000.
After five years, it would return to $10,000.
Medicaid restrictions
The legislation includes restrictions on Medicaid, which provides government-sponsored health care for low-income and disabled Americans.
The bill imposes work requirements for some able-bodied adults and more frequent eligibility checks. The Congressional Budget Office estimates that the bill would result in 11.8 million Americans losing health coverage under Medicaid over the next decade.
Restrictions on food stamps
The bill will shift the costs of SNAP, or food stamps, to some states. The program is currently fully funded by the federal government.
Pennsylvania's Independent Fiscal Office estimates this shift would cost the state an additional $130 million annually.
The federal government would continue to fully fund the benefits for states that have an error payment rate below 6%, beginning in 2028. States with error rates above 6% would be on the hook for 5% to 15% of the costs. Pennsylvania's error rate was 10.76% in 2024, down 6% from 2023, .
Consumer protections
Funding for the Consumer Financial Protection Bureau has been cut by roughly half. The small agency was established in the wake of the 2008 financial crisis to police some of the country's biggest banks and tech companies.
The CFPB is funded through the Federal Reserve, not the congressional appropriations process. So funding would be cut from 12% of the Federal Reserve's profits to 6.5% of the central bank's profits, .
