President Donald Trump’s “One Big Beautiful Bill Act” has passed the House and is now under Senate review, promising major changes to taxes and spending that could directly impact your wallet. This massive 1,000-page bill extends the 2017 tax cuts and introduces new provisions, but it also raises concerns about adding to the nation’s $36 trillion debt. Here’s a breakdown of how this legislation might affect you, written for an 11th-grade audience.
No Taxes on Tips
If you work in a job where tips are a big part of your income—like waiting tables or driving for a rideshare company—this bill could be a game-changer. It eliminates federal income taxes on tips through 2028 for workers earning less than $160,000 a year. For example, a server making $40,000 annually, including $15,000 in tips, could save hundreds or even thousands in taxes. However, the Senate is considering capping this break at $25,000, which could limit the benefit for higher earners. While this is great for service workers, critics warn it might reduce government revenue, potentially straining public programs.
Bigger Child Tax Credit and New “Trump Accounts”
Families with kids could see a boost from an expanded child tax credit. The bill makes the current $2,000 per child credit permanent and raises it to $2,500 from 2025 to 2028, before it drops back to $2,000 and adjusts for inflation. This could mean an extra $500 per child for many families, helping with costs like school supplies or daycare. However, very low-income families might not benefit fully since they often don’t owe enough taxes to claim the full credit.
The bill also introduces “Trump Accounts,” a new savings plan for newborns. The government would deposit $1,000 into an account for each child, which parents can add up to $5,000 to annually. These funds, invested in U.S. stock indexes, grow tax-deferred and can be used later for education, a first home, or starting a business. For instance, a $1,000 deposit could grow significantly over 18 years, giving kids a financial head start.
Higher SALT Deduction for High-Tax States
If you live in a high-tax state like New York or California, the bill’s increase in the state and local tax (SALT) deduction could help. The SALT cap, set at $10,000 since 2017, would rise to $40,000 in 2025, with a 1% annual increase through 2033. This is a win for homeowners and high earners who itemize deductions, potentially saving them thousands. But the benefit phases out for incomes over $500,000, and some argue it mostly helps wealthier households, not the middle class.
Interest-Free Auto Loans for U.S.-Made Cars
Buying a car made in the U.S.? You could deduct up to $10,000 in auto loan interest from 2025 to 2028, even if you don’t itemize deductions. This applies to vehicles like cars, trucks, or motorcycles assembled in America, with the benefit phasing out for individuals earning over $100,000 (or $200,000 for married couples). For example, if you’re paying $2,000 a year in interest on a loan for a U.S.-made pickup truck, this deduction could lower your tax bill significantly.
Bonus Deduction for Seniors
Older adults (65 and up) with incomes up to $75,000 (or $150,000 for married couples) can claim an extra $4,000 deduction, reducing their taxable income. This could save the average senior about $480 a year in taxes. While this replaces Trump’s campaign promise to eliminate taxes on Social Security benefits, it’s a smaller benefit—experts estimate that promise would have saved seniors about $1,440 annually.
Health Savings Account (HSA) Expansions
Starting in 2026, the bill makes HSAs more flexible. You could use HSA funds for fitness expenses, like gym memberships, up to $500 for individuals or $1,000 for couples annually. The bill also doubles HSA contribution limits for low- and middle-income earners to $8,600 for individuals and $17,100 for couples in 2025. This could help families save more for medical costs, but you need a high-deductible health plan to qualify.
Cuts to Medicaid and SNAP
To fund these tax breaks, the bill cuts about $1 trillion from Medicaid and SNAP (food stamps), the largest cuts in their history. Stricter work requirements, starting in December 2026, could mean 14 million people lose Medicaid coverage and 3 million households lose food assistance. For example, a low-income family relying on SNAP for groceries might face tougher eligibility rules, making it harder to afford food.
Student Loan Changes
Students borrowing for college could face challenges. The bill eliminates subsidized federal loans, meaning interest will accrue during school, potentially increasing loan balances by 15% at graduation. Income-driven repayment plans would extend to 30 years before forgiveness in some cases, compared to 20 or 25 years now. Plus, the bill removes options to pause payments during unemployment or financial hardship, which could make repayment tougher for graduates.
End of EV and Clean Energy Credits
If you’re eyeing an electric vehicle (EV), act fast—the bill ends the $7,500 tax credit for new EVs and $4,000 for used ones after 2025. It also cuts credits for home energy efficiency upgrades, like solar panels, seven years earlier than planned. This could make going green more expensive for eco-conscious households.
The Bigger Picture
Supporters, like Treasury Secretary Scott Bessent, argue the bill will grow the economy faster than the national debt, which is already at $36 trillion. They say tax cuts will put more money in your pocket and boost American industries. Critics, however, warn that the cuts to Medicaid and SNAP, combined with potential revenue losses from tax breaks, could balloon the deficit and hurt vulnerable families. The Senate may tweak the bill, so its final impact is still unclear.
This legislation could bring real savings for workers, families, seniors, and car buyers, but it also risks leaving millions without healthcare or food assistance and makes college loans tougher. As the Senate debates, keep an eye on how these changes might shape your financial future.