Top Performers and Underperformers in Trump's Recent Tax Reform Strategy
The One Big Beautiful Bill (OBBB), signed into law in July 2025, brings significant changes to the American tax code and federal assistance programs. One of the key aspects of the OBBB is the extension and enhancement of the Tax Cuts and Jobs Act (TCJA) of 2017[2][5].
Key Tax Changes:
- The OBBB extends most TCJA provisions, including larger standard deductions, lower tax brackets, and limits on itemized deductions[4].
- A new bonus deduction of $6,000 is available to individuals age 65 and older, with eligibility set at $75,000 in income for single filers and $150,000 for couples[4].
- The No Tax on Tips Act allows workers who receive tips to deduct up to $25,000 in reported cash tips from their taxed wages at the federal level, with the deduction phasing out for those earning over $150,000 ($300,000 for joint filers)[4].
- The state and local tax (SALT) deduction cap is temporarily raised from $10,000 to $40,000 annually for taxpayers with incomes up to $500,000[4].
Expansions to Family Tax Breaks:
- The federal adoption tax credit is permanently enhanced for the 2025 tax year by allowing parents to claim up to $5,000 in credits and making the tax break partially refundable[4].
- The OBBB includes major expansions to existing family tax breaks, including the child tax credit, the Child and Dependent Care Tax Credit, and the adoption tax credit[4].
Impacts on Medicaid, Food Stamps, and Low-Income Households:
- The OBBB makes substantial cuts to Medicaid funding, estimated at $1.02 trillion over 10 years, the largest federal rollback to Medicaid to date[5].
- Over 300 rural hospitals face immediate closure due to Medicaid cuts in the OBBB[5].
- The OBBB suspends the SAVE (Saving on a Valuable Education) plan, impacting 8 million borrowers enrolled in the program[5].
- The OBBB also cuts SNAP funding by about 20%, putting millions of families at risk of losing food stamps[5].
- Households earning up to $18,000 a year could lose an estimated $165 in after-tax dollars by 2027, while households earning up to $53,000 a year could lose $65 on average by 2033 under the OBBB[5].
In summary, the 2025 One Big Beautiful Bill tightly links substantial tax cuts—primarily benefiting higher- and middle-income taxpayers through the permanent TCJA extension—with deep Medicaid funding cuts and eligibility restrictions that will cause millions of low-income Americans to potentially lose health coverage and face increased financial strain. The combined effect threatens to increase the uninsured population and financial strain on low-income households, while explicit food stamp or SNAP program changes were not detailed in the provided sources[1][2][3][4][5].
In light of these changes, some individuals might consider allocating their savings from lower taxes into health-and-wellness programs to preserve their wellbeing, while the reduction in Medicaid funding and food stamps could potentially strain personal wallets for low-income families. On the flip side, the business sector may benefit from lower tax rates and extended deductions, contributing to the overall finance and economic growth of the country.
