The recently passed legislation known as the “One Big Beautiful Bill” is about to reshape the personal finance landscape—and in Episode 110 of Last Paycheck, advisors Archie Hoxton and Emily Leslie walk you through what matters most for everyday families, retirees, and business owners.
Here’s what you need to know—and how to prepare.
Making the Tax Cuts and Jobs Act Permanent
The biggest headline is the permanent extension of the 2017 Tax Cuts and Jobs Act. That means the doubled standard deduction and reduced tax brackets are here to stay. For most households, this helps avoid a major tax increase that was originally expected if the law expired.
However, the flip side is the continued loss of many itemized deductions, especially those in the miscellaneous category. If you were expecting a return to the old deduction system, that’s no longer on the table.
Boosts to the Child Tax Credit
Families will see a modest but helpful increase in the Child Tax Credit—from $2,000 to $2,200 per child, with $1,700 of that amount refundable. Households earning up to $400,000 (married filing jointly) remain eligible, but you must owe federal taxes to receive the refundable portion.
Big Win for Service Workers: Tip Income Deduction
One of the most surprising—and generous—changes is a new above-the-line deduction for tip income. Starting in 2025, eligible workers can deduct up to $25,000 of tip-based income from their taxable income. This is especially helpful for servers, bartenders, delivery drivers, and others who now earn tips through credit card transactions.
The IRS and Treasury will release additional guidance about which professions qualify, but the basic test appears to be “customary and voluntary” tipping.
Auto Loan Interest Becomes Deductible (With Conditions)
For vehicles assembled in the U.S., borrowers can deduct up to $10,000 in interest on auto loans. This deduction applies from 2025 to 2028 and begins phasing out above $200,000 in household income. Buyers will need to verify final assembly location, but for many Americans, this change will offer substantial tax savings on a necessary expense.
A New Tax-Advantaged Account for Babies: The Trump Account
A new savings vehicle—informally dubbed the “Trump Account”—will give newborns a $1,000 federal contribution if they’re born between 2025 and 2028. Parents can contribute $5,000 annually, and employers can add $2,500 per year.
But there are caveats:
- Only U.S. stocks are allowed as investments
- Withdrawals for education, first-time home buying, or small business use are allowed after age 18—but earnings will be taxed
- Early withdrawals come with penalties
This account blends elements of a Roth IRA and 529 plan but comes with unique restrictions that families must consider carefully.
Final Thoughts
While the “One Big Beautiful Bill” offers tax relief and new savings tools, it also brings complexity and confusion. Many of the provisions are time-limited (2025–2028), and several will require additional IRS clarification.
If you’re a tip-based worker, expecting a child, considering a new vehicle, or simply trying to make sense of these changes—now is the time to act.