News Summary
President Trump has signed a new tax bill that introduces significant changes to standard deductions, state and local tax deductions, and tax credits for clean energy vehicles. Taxpayers can expect increased standard deductions and a higher SALT cap, while credits for clean energy vehicles are set to expire soon. The Child Tax Credit has been made permanent and increased, benefiting families. These updates create opportunities for savings, although benefits will vary by income level.
Trump’s ‘Big, Beautiful Bill’ Changes the Tax Landscape for 2025
On July 4, 2025, President Trump put his signature on what’s being called the “Big, Beautiful Bill.” This legislative move has introduced some significant changes to our tax system, expanding and extending provisions from the previous Tax Cuts and Jobs Act (TCJA) rolled out in 2018. If you thought taxes couldn’t get any more complex, think again!
New Standard Deductions: What to Expect
First off, let’s talk about the standard deduction, which is a big part of most taxpayers’ returns. Under the new bill, the standard deduction has permanently increased. Here’s how it breaks down:
- $750 increase for single taxpayers and married individuals filing separately.
- $1,125 increase for heads of households.
- $1,500 increase for married couples filing jointly.
And it gets better! Starting in 2025, these standard deductions will continue to rise yearly with inflation—so you can breathe a little easier knowing some relief is on the way.
Let’s Talk State and Local Tax Deductions
Impacts on Clean Energy Vehicle Tax Credits
If you were hoping to snag some clean energy vehicle tax credits, you might want to act fast. Both the $4,000 credit for used vehicles and the $7,500 credit for new vehicles will disappear after September 30, 2025. As for the Residential Clean Energy Credit, which has allowed homeowners to deduct 30% of the installation costs for clean energy improvements, it will also end on December 31, 2025.
What Future Tax Savings Look Like
A recent analysis from the Tax Policy Center indicates that households could save an average of $2,900 in tax payments by 2026, but the benefits won’t be evenly distributed. High-income Americans will likely see larger tax cuts compared to their lower-income counterparts. For example, households in the bottom income quintile might save about $150, while those in the top quintile can look forward to savings of about $12,540.
New Deductions on the Table
The bill also brings some exciting new tax breaks. There’s a “no tax on tips” provision that allows workers to deduct up to $25,000 for cash tips earned. A temporary deduction for overtime pay above the normal rate is also on the list, as well as an increased deduction for personal auto loan interest—now up to $10,000 for new U.S.-assembled vehicles.
Children and Charitable Contributions
Another point for parents is the Child Tax Credit, which has now been made permanent. Not only that, but it has also increased by $200 per child, bringing the total to $2,200. Furthermore, the bill restores the charitable contributions deduction for non-itemizers, allowing individuals to deduct up to $1,000 or $2,000 for couples—a great incentive for those considering philanthropy.
Temporary Deductions for Seniors
For seniors aged 65 and older, the deduction has temporarily increased by $6,000, or $12,000 for qualifying couples—definitely a positive change for many!
What Happens Next?
Keep an eye out for guidance from the IRS regarding which jobs qualify for the “no tax on tips” provision and updated reporting rules expected by October 2, 2025. It seems like we’ve entered a new era of tax changes, so hang tight as these new opportunities unfold!
Deeper Dive: News & Info About This Topic
- CBS News: Big Beautiful Bill Tax Cuts by Income Group
- Wikipedia: Tax Reform in the United States
- USA Today: Trump’s One Big Beautiful Bill Tax Benefits
- Google Search: Trump’s Big Beautiful Bill
- CNBC: Trump Big Beautiful Bill No Tax on Tips
- Google Scholar: Big Beautiful Bill Tax Changes
- Axios: Trump Tax Big Beautiful Social Security Tips
- Encyclopedia Britannica: Tax Cuts
- Kiplinger: How Wealthy Retirees Can Benefit from the Big Beautiful Bill
- Google News: Big Beautiful Bill
Author: STAFF HERE PROVIDENCE WRITER
PROVIDENCE STAFF WRITER The PROVIDENCE STAFF WRITER represents the experienced team at HEREProvidence.com, your go-to source for actionable local news and information in Providence, Providence County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as WaterFire, Rhode Island International Film Festival, and Rhode Island Comic Con. Our coverage extends to key organizations like the Greater Providence Chamber of Commerce and Providence Warwick Convention & Visitors Bureau, plus leading businesses in finance and manufacturing that power the local economy such as Citizens Financial Group and Textron. As part of the broader HERE network, we provide comprehensive, credible insights into Rhode Island's dynamic landscape.
