“One Big Beautiful Bill Act” (OBBBA) Summary: How it Impacts You

It’s taken me a few weeks to dig through, but I’m finally ready to share my summary breakdown of the “One Big Beautiful Bill Act” (OBBBA) tax legislation that was passed on a party-line vote by Republicans in Congress and signed by President Trump on July 4th, 2025. My goal was to make this the most thorough, yet concise summary overview of the OBBBA out there, so I split it up into 5 easy-to-follow categories: the previous tax cuts that were extended, new temporary tax cuts that were created, additional new funding, previous funding that was cut, and the impact on individuals and the national debt.

Unless otherwise noted, the numbers are all provided by the Congressional Budget Office, a team of statisticians that are led by Congressional appointment. Hopefully, this breakdown will make it clear how you will personally be impacted and what the cost will be to the country. I’m intentionally leaving political punditry out of it so that you can develop your own conclusions on the bill. Obviously, this is 1 medium length article and the actual bill text ended up being around 1,000 pages, so I didn’t hit on every line item and every detail – just the most impactful stuff. I’ve already written about a few of the inclusions to the bill separately, so I’ll link to those in the article.

The Largest Prior Tax Cuts from the TCJA that were Extended Permanently by the OBBBA:

By far, the biggest achieved objective of the OBBBA was to permanently extend almost all of the temporary tax cuts created by the Tax Cuts & Jobs Act (TCJA) legislation passed by Republicans and signed by the President in Trump’s 1st term back in 2017. All of the following prior tax cuts, were permanently extended, at an estimated total cost of $4.6 trillion over the next 10 years. This doesn’t include prior tax cuts that were already made permanent by the TCJA (e.g. lowering the corporate tax rate from 35% to 21%, at a $1.3 trillion cost over 10 years).

• Lower Tax Rates: lower tax rates, which were most impactful to those in the top tax brackets, were permanently extended, at the cost of $2.193 trillion over 10 years.
• Capital Gains Tax Rates: tied to marginal tax rates, lower capital gains tax rates were also permanently extended.
• Expanded Standard Deduction Amounts: the expanded standard deductions from the TCJA were permanently extended (and personal exemptions permanently eliminated), at a cost of $1.425 trillion over 10 years. Standard deductions also received a slight bump for 2025 to the following amounts:
  • $15,750 for single filers
  • $15,750 for married, filing separately
  • $31,500 for married filing jointly
  • $23,625 for head of household
• Expanded Child Tax Credit: The increased maximum Child Tax Credit amount was extended and also slightly increases from $2,000 to $2,200 for 2025 (with inflation adjustments each year), along with a new requirement that anyone claiming the credit must have a Social Security number.
• Alternative Minimum Tax (AMT) Exemption: the AMT exemption was permanently extended, at a cost of $1.363 trillion over 10 years.
• Qualified Business Income Deduction (QBID): the TCJA created a new 20% qualified business income deduction for “pass-through” business entities. The OBBBA permanently extended this, at a cost of $737 billion over 10 years.
• Estate and Gift Tax Exemption: the much higher new caps for the estate and gift tax exemption passed in the TCJA were permanently extended, at a cost of $212 billion over 10 years. They were also increased from $13.99 million single; $27.98 million married filing jointly in 2025 to $15 million for single filers; $30 million for married filing jointly for 2026
• SALT Deduction Cap: the State & Local Tax deduction receives a huge increase from $10,000 to $40,000 limit for 2025 and increases by 1% through 2029. It then reverts to $10,000 in 2030. This is estimated to cost $140 billion through 2029.
• Full Expensing of Capital Investment Property: a $363 billion tax cut for businesses is permanently extended.
• Miscellaneous Other Tax Cuts Extended: a few hundred billion in costs over 10 years.

Temporary New OBBBA Tax Cuts (Last Through 2028)

There were also a few new tax cuts created in the OBBBA that expire right at the end of Trump’s 2nd term at the end of 2028. This includes:

• Tax on Tip Deduction: certain specified professions can now deduct up to $25,000 per year on tips from 2025 though 2028, at a projected cost of $32 billion. There are MAGI phaseouts starting at $150,000 (single), $300,000 (married filing jointly).
• Tax on Overtime Pay Deduction: specified overtime pay can now be deducted up to $12,500 per taxpayer from 2025 through 2028, at a projected cost of $90 billion. There are MAGI phaseouts starting at $150,000 (single), $300,000 (married filing jointly).
• Bonus Standard Deduction for those Age 65+: a new additional standard deduction of $6,000 per eligible individual (i.e., $12,000 total for a married couple where both spouses qualify) for those age 65+ was created. This new deduction lasts from 2025 through 2028, and is projected to cost $93 billion.
• Auto Loan Interest Deduction: eligible purchasers of American made vehicles can deduct up to $10,000 of annual interest on new loans from 2025 through 2028, with individual income limitations. This is projected to cost $31 billion.
• New “Trump Accounts”: adds a new type of savings account for newborn children, with a one-time deposit of $1,000 from the federal government for U.S. citizens born between 2025 and 2028. Parents can make an annual contribution of up to $5,000 to these funds for investment. This is projected to cost $16 billion.

Additional New Funding Created in the OBBBA:

Additional new funding in the OBBBA includes:

• Defense: an additional $150 billion added over 10 years.
• ICE/Homeland Security: an additional $170 billion added through 9/30/29.
• Non-Itemized Charitable Deduction: a new iteration of the short-lived “universal” charitable deduction tax credit was created, called the “non-itemized charitable deduction“. Starting in 2026, non-itemized (standard deduction) filers can claim a $1,000 (single) or $2,000 (married filing jointly) deduction for cash (or cash-like) donations to 501(c)(3) charities. Previously, only itemized filers could claim charitable deduction donations.
• Other New Tax Cuts: a few hundred billion for additional new tax cuts not mentioned above.

Previous Funding that was Cut in the OBBBA

The following is a shortlist of impactful federal funding cuts in the OBBBA:

• Medicaid: the OBBBA cuts $911 billion from Medicaid over the next 10 years, resulting in an estimated ~10 million losing Medicaid health care.
• ACA Funding: the OBBBA allowed enhanced ACA premium subsidy funding to expire. This is estimated to lead to 4.2 million more uninsured individuals and a 75% increase in out-of-pocket premium payments for ACA enrollees, on average. The CBO also estimates that other ACA Marketplace de-funding will lead to 3.1 million additional uninsured individuals.
• Supplemental Nutrition Assistance Program (SNAP): aka “food stamps”, SNAP funding was significantly cut by $69 billion through new work requirements along with another $127 billion in direct cuts. The cuts are estimated to impact over 40 million people, according to the Center on Budget and Policy Priorities, including approximately 16 million children, 8 million seniors, and 4 million non-elderly adults with disabilities.
• EV Tax Credits: the EV tax credits (aka “Clean Vehicle Tax Credits”) were previously funded to go through 2032 but now expire early on 9/30/25.
• Clean Energy Home Efficiency and Residential Energy Tax Credits: the clean energy tax credits for things like new energy-efficient windows, doors, insulation, furnaces, water heaters, solar, wind, geothermal and much more were previously funded to go through 2032, but now expire early on 12/31/25.
• Student Loan Repayment Program: $271 billion in cuts to loan repayment program lenience for low-income public workers.

The OBBBA’s Impact on Individuals & the National Debt

To best summarize the OBBBA: most of us will pay a little less in taxes, a few of us at higher income levels will pay a lot less in taxes, and a good number of us (particularly at lower income levels) will be negatively impacted overall by program cuts. In net, the CBO estimates that the OBBBA will affect households at different income levels by the following average annual amounts, making this a “regressive” tax bill:

Adding it all up, according to estimates from the CBO, the OBBBA is projected to add an incremental new $3.4 trillion to the national debt through 2034. Including additional interest payments on that debt, the total increase in debt is estimated to exceed $4.1 trillion through 2034.