Trump Tax Plan 2025: What to Know About the Latest Bill

The Trump tax bill just cleared the House, and whether you’re living off tips, working overtime, or still paying off loans, this bill could change what hits your bank account, and what gets taken out. If the Trump income tax plan becomes law, everything from your tax refund to your monthly budget might start looking very different. 

Get ahead of the game by knowing the following 7 key points of the big, beautiful bill. 

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1. No taxes on tips or overtime?! 

The Trump tax bill 2025 includes a proposal to eliminate federal income tax on tips and overtime wages. For gig workers, service employees, and hourly staff, this means a direct increase in take-home pay. Instead of losing part of your earnings to taxes, you’d keep every dollar you earn from tips or extra shifts.

👉 No Tax on Tips? Understanding the Current Rules and Exceptions

2. Say adios to green incentives

But while some may benefit in the short term, other changes in the Trump tax plan roll back key incentives. 

What’s on the chopping block:

• Tax credits for electric vehicles? Gone.

• Incentives for installing solar panels or energy-efficient upgrades? Gone.

• And if you’re an EV driver, say hello to a $250 annual registration fee.

So while the “no tax on tips” proposal offers immediate relief, other provisions could cost more over time.

3. Say au revoir to student loan forgiveness 

One of the more controversial changes in the Trump tax plan is the repeal of the SAVE plan, an income-driven repayment option that lowers monthly payments and speeds up loan forgiveness. 

In its place? Two options:

• A Repayment Assistance Plan that forgives loans after 30 years of payments (360 total)

• A standard repayment plan with fixed terms set by your loan servicer, not you

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4. “Trump Accounts” are real and only for newborns

No, this isn’t a headline from The Onion. The Big Beautiful Tax Bill includes a proposal to create “MAGA savings accounts” (also called Trump Accounts), offering $1,000 to babies born between 2025 and 2028. 

How it works:

• Each eligible baby would receive $1,000 in a government-seeded account** **

• The money grows tax-deferred.** **

• Withdrawals are taxed at the long-term capital gains rate (typically lower than income tax)

It’s a generational wealth play, but only for a narrow slice of families.

 👉 How to Get The Maximum Tax Refund in 2024-2025

5. Work requirements are coming for Medicaid and SNAP

If you rely on Medicaid or SNAP, there are proposed changes that could impact your access. The Trump tax bill introduces stricter work requirements, including:

• 80 hours/month of work required for childless Medicaid recipients (by 2026)

• SNAP work rules expanded to cover adults up to age 64

The Congressional Budget Office estimates that millions could lose coverage, not because they don’t qualify, but because they can’t keep up with the paperwork or changing rules.

6. The SALT cap lift 

This change lifts the state and local tax (SALT) deduction cap from $10,000 to $40,000. That’s a big bump, but mostly for wealthy taxpayers in high-tax states like California, New Jersey, or New York.

This primarily benefits high-income earners in high-tax states and won’t affect most middle-income Americans. But it could redirect federal benefits toward higher earners while reducing available funds for broader services.

7. The national debt could climb 

According to Moody’s Analytics, extending Trump’s 2017 tax cuts, as the bill proposes, could add $4 trillion to the national deficit over the next decade.

Why should you care? Because rising deficits can lead to:

• Higher interest rates on mortgages, credit cards, and auto loans** **

• Downgrades to the U.S. credit rating (already happening)

When borrowing gets more expensive, everyone usually pays the price. So even if you benefit from things like tax-free tips now, the long-term borrowing cost could rise across the board.

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Bottom Line: Will This Bill Help or Hurt You?

That depends on your income, your debt, and your benefits. 

If you earn tips or regularly work overtime, parts of the Trump tax bill 2025 might put a little more cash in your pocket today. But if you’re juggling student loans, using Medicaid or SNAP, or hoping to qualify for clean energy incentives, those wins could be offset by what you lose in the long run.

And with interest rates rising and the national debt ballooning, even folks who don’t feel the hit right away could end up paying more down the line: on mortgages, credit cards, or just borrowing to get by.

The bottom line? It’s a mixed bag. Knowing which parts of the Trump income tax bill could affect you now, and which could sneak up later, might be one of the smartest financial moves you make this year.