Trump Signs Major Economic Bill Promising Relief for Families
President Donald Trump has recently signed a significant bill, which he describes as “big and beautiful,” aimed at boosting the economy and increasing the financial flow back into American households. While much attention is understandably directed at tax cuts benefiting high-income businesses, there are also provisions tailored for the middle class.
“Most middle-class families will see immediate relief, though the details are more intricate for those living in high-tax states,” said Lisa A. Cummings, an attorney and executive vice president. “Families should take the time to understand how these new rules may specifically impact their situations, and it might be a good idea to consult tax experts to navigate these changes for long-term planning.”
Tax experts indicate that there are several ways Trump’s tax plan could affect middle-class families. One point of note is that the standard deduction is slightly higher than originally anticipated for 2025—$15,750 for individuals instead of $15,000. Additionally, state and local tax credits may be capped at $40,000.
Cummings suggests, though perhaps with some hesitance, that while the new standard deduction will help, it may not fully offset the costs for families, particularly those in areas with higher taxes. The limitations on state and local tax credits could weigh heavily on these households.
“Families could see a benefit of up to $2,200 per child, adjusted for inflation, which is a bit more than what it was,” noted Elina Linderman, a tax expert. However, she did also caution that families without Social Security numbers or in mixed immigration situations may find themselves ineligible for the full credit.
These new regulations also aim to lessen the tax burden on overtime pay, which could be significant for service workers relying on additional shifts. The IRS reports that eligible individuals can deduct up to $25,000 for tip income and up to $12,500 for eligible overtime.
Another part of the bill encourages domestic manufacturing. Linderman pointed out that if you purchase a car built in the U.S., you could potentially deduct up to $10,000 in loan interest per year, although the vehicle must be for personal use only. It’s also worth noting that refinanced amounts may still qualify for deductions under IRS rules.
Moreover, Americans over 65 may find relief through new enhanced tax credits. An additional $6,000 deduction is available for those earning up to $75,000 (or $150,000 for couples) from 2025 to 2028. Interestingly, about 90% of Social Security recipients will no longer be subjected to federal income tax on their benefits.
Starting in 2026, a new account system allows family, friends, or employers to contribute up to $5,000 annually to a savings account for children. By 2025, parents may deposit $1,000 for newborns in these accounts, although they come with stipulations regarding tax benefits that differ from traditional account types.
A tax foundation indicated that while these accounts might seem beneficial, they don’t provide the same tax advantages as 529 or Roth accounts, adding another layer of complexity.
