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Speaker of the House Mike Johnson (R-LA) (C) signs the One Big Beautiful Bill Act during an enrollment ceremony with fellow Republicans in the Rayburn Room at the U.S. Capitol on July 03, 2025 in Washington, DC.<\/p>\n
Chip Somodevilla | Getty Images News | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
It’s been about two weeks since President Donald Trump<\/a>‘s “big beautiful bill” became law, and financial advisors<\/a> and tax professionals are still digesting what the sweeping legislation means for clients.<\/p>\n Meanwhile, several changes are effective for 2025<\/a>, which will impact tax returns<\/a> filed in 2026.<\/p>\n While the Trump administration has been promoting “working family tax cuts<\/a>,” the legislation’s impact depends on your unique situation \u2014 and some updates are complex, experts say.\u00a0<\/p>\n “There are just so many moving pieces,” said certified financial planner Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.<\/p>\n More from Personal Finance:<\/strong> Currently, many advisors are running projections \u2014 often for multiple years \u2014 to see how the new provisions could impact taxes.<\/p>\n Without income planning, you could reduce, or even eliminate, various tax benefits for which you are otherwise eligible, experts say.<\/p>\n When it comes to tax strategy, “you never want to do anything in a silo,” Guarino said.\u00a0<\/p>\n Here are some of the key changes from Trump’s legislation to know for 2025, and how the updates could affect your taxes.<\/p>\n<\/div>\n The Republicans’ marquee law made permanent Trump’s 2017 tax cuts<\/a> \u2014 including lower tax brackets<\/a> and higher standard deductions, among other provisions \u2014 which broadly reduced taxes for Americans.<\/p>\n Without the extension, most filers could have seen higher taxes in 2026<\/a>, according to a 2024 report from the Tax Foundation. However, the new law enhances Trump’s 2017 cuts, with a few tax breaks that start in 2025:<\/p>\n If you itemize tax breaks, there is also a temporary higher cap on the state and local tax deduction<\/a>, or SALT. For 2025, the SALT deduction limit is $40,000, up from $10,000.<\/p>\n The higher SALT benefit phases out, or reduces, for incomes <\/strong>between $500,000 to $600,000, which can create an artificially higher tax rate<\/a> of 45.5% that some experts are calling a “SALT torpedo.”<\/p>\n This creates a “sweet spot” for the SALT deduction between $200,000 and $500,000 of earnings, based on other provisions in the bill, CPA John McCarthy wrote in a blog post<\/a> this week. \u00a0<\/p>\n<\/div>\n Trump’s tax and spending bill also introduced some temporary tax breaks, which are effective for 2025. Some of these were floated during his 2024 presidential campaign.<\/p>\n These provisions include a $6,000 “bonus” deduction<\/a> for certain older Americans ages 65 and over, which phases out over $75,000 for single filers or $150,000 for married couples filing jointly.\u00a0<\/p>\n There are also new deductions for tip income<\/a>, overtime earnings and car loan interest<\/a>, with varying eligibility requirements.<\/p>\n This chart shows a breakdown of some of the key individual provisions that are effective for 2025 compared to previous law.<\/p>\n<\/div>\n During the pandemic, Congress boosted the premium tax credit<\/a> through 2025, which made Marketplace health insurance more affordable.\u00a0\u00a0<\/p>\n But Trump’s legislation didn’t extend the enhanced tax break, which could raise Affordable Care Act premiums<\/a> for more than 22 million enrollees if no action is taken, according to KFF, a health policy organization.<\/p>\n That could impact enrollees when choosing ACA health plans this fall, according to Tommy Lucas, a CFP and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.<\/p>\n<\/div>\n Starting in 2026, enrollees need to prepare for the ACA subsidy cliff, where enrollees lose the premium tax credit when income exceeds the earnings thresholds by even $1, he said.\u00a0\u00a0\u00a0<\/p>\n Currently, most ACA enrollees receive at least part of the premium tax credit. However, the subsidy cliff means enrollees lose the benefit once earnings exceed 400% of the federal poverty limit. For 2025, that threshold was $103,280 for a family of three<\/a>, according to The Peterson Center on Healthcare, a nonprofit for healthcare policy, and KFF.<\/p>\n<\/div>\n<\/div>\n\n
Trump’s ‘big beautiful bill’ caps student loans. What it means for you<\/a>
Tax changes under Trump’s ‘big beautiful bill’ \u2014 in one chart<\/a>
Trump’s ‘big beautiful bill’ adds 45.5% ‘SALT torpedo’ for high earners<\/a><\/p>\nTrump’s 2017 tax cut extensions<\/h2>\n
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Trump’s new tax changes for 2025<\/h2>\n
Premium tax credit ‘subsidy cliff’ returns\u00a0<\/h2>\n
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