Big Beautiful bill: How it Impacts Your Money
On Independence Day, President Trump signed the sweeping One Big Beautiful Bill (OBBB) into law. What a name! At over 800 pages, it is replete with tax cuts, social safety net rollbacks, energy policy changes, and student loan overhauls. The big question on most people’s minds is How does this bill impact me and my money?
Under the “Big Beautiful Bill,” retroactive to the start of 2025 and running through the end of 2028, qualified tip income and the overtime premium are both eligible for federal deductions with clear caps and income limits. You can deduct up to $25,000 of reported tips if your Modified Adjusted Gross Income (MAGI) is $150,000 or less ($300,000 for joint filers). Above that, the deduction is reduced by $100 per $1,000 of MAGI over the threshold, phasing out entirely for high earners. You’re allowed to deduct up to $12,500 for singles (or $25,000 for joint filers) of your overtime premium, subject to the same income limits and phase‑out on tips ($150k/$300k).
Before the “Big Beautiful Bill,” the Child Tax Credit provided up to $2,000 per qualifying child, with up to $1,600 of that refundable for lower-income families. The credit began to phase out at $200,000 for single filers ($400,000 for joint filers). Under the new bill, the credit has been increased to $2,200 per child and is now fully refundable, meaning families can receive the entire amount even if they owe no federal income tax. The income phaseout thresholds remain the same, but this change provides a more meaningful benefit for working-class and lower-income families.
The bill slashes over $1 trillion from Medicaid, instituting work or volunteer requirements for recipients aged 19–64 and imposing co-pays of up to $35 per service. An estimated 10–12 million people could lose Medicaid coverage, with rural hospitals and nursing homes taking major hits. SNAP (food stamps) funding is cut by an estimated 20%, and states must contribute more to the program. If you’re relying on these support systems, expect harder rules, higher costs out-of-pocket, or losing benefits entirely—this may not be a temporary change.
The “Big Beautiful Bill” delivers a seismic shift in federal student loan policy—starting with the elimination of Biden’s SAVE plan (we previously wrote about this plan here), which covered ~460,000 borrowers and kept monthly payments around 5% of discretionary income; these former SAVE users could now see their bills jump by roughly $3-500 per month. It also dismantles most income-driven plans, phasing out PAYE, ICR, and SAVE by mid‑2028 and consolidates repayment into two options: a standard 10‑year plan, or the new Repayment Assistance Plan (RAP), which bases payments on 10% of total income, subtracting only $50 per dependent, and pushes loan forgiveness to 30 years. On top of that, the bill caps federal borrowing: graduate students at $20,500/year ($100,000 lifetime), professional programs (like law/medicine) at $50,000/year ($200,000 total), and a $257,500 lifetime cap overall. For Parent PLUS borrowers, annual borrowing is now limited to $20,000 with a $65,000 lifetime cap. Taken together, these changes make repayment less flexible and often more expensive, especially for low-income, graduate, or professional-degree students, while funneling many toward private loans and adding layers of complexity to federal financial aid. Given the Biden administration’s ultimate failure to get past the legal hurdles of forgiving student loans, it seems all but certain that broad-sweeping student loan forgiveness isn’t happening any time soon.
Proponents of the “Big Beautiful Bill” say the average middle-income American household will gain $4,000 to $5,000 in extra take-home pay each year. Detractors will say that most of the benefits flow to the top earners. The top 20% claim about 72% of the new tax breaks, while the bottom 20% get less than 1%. I believe the bigger concern is the long-term cost of this bill. The Congressional Budget Office estimates $3–4 trillion added to the deficit over a decade , increasing the Debt-to-GDP ratio by roughly 10% by 2034. This could put pressure on inflation in the coming years and lead to fewer resources for programs such as Social Security and Medicare down the road.
At the end of the day, most middle-income families will save a few hundred to several thousand dollars, while the vast majority of the tax windfall is going to the wealthy. The most important thing you can do is understand how this bill impacts your wealth and plan accordingly. If you are taking home more money after taxes, the best thing you can do is save that money. Take advantage of the opportunity rather than put yourself in a position down the road where you are dependent on these social programs that have seen significant funding cuts.
