by President Donald Trump is set to sign a major new spending bill into law after Republicans narrowly secured passage in Congress ahead of the July 4 deadline.
The landmark legislation permanently locks in the 2017 tax cuts and introduces several new consumer-focused benefits—including tax breaks on tips, overtime pay, auto loans, and a new savings vehicle called “Trump accounts.”
While some changes are permanent, others are scheduled to sunset in 2028—unless extended by future lawmakers.
1. No Federal Income Tax on Tips (Through 2028)
- Tipped workers (e.g., servers, bartenders) can deduct up to $25,000 in tips from federal income taxes
- Phases out for individuals earning over $150,000, couples over $300,000
- Still subject to state, local, and payroll taxes
2. No Federal Tax on Overtime Pay (2025–2028)
- Workers can deduct up to $12,500 (single) or $25,000 (joint) in overtime income
- Phases out starting at $150,000 (individuals) or $300,000 (couples)
- Not available for incomes above $275,000/$550,000
3. Deduction on Auto Loan Interest (For U.S.-Assembled Vehicles)
- Deduct up to $10,000 in interest on loans for personal-use U.S.-assembled cars, SUVs, pickups, motorcycles, etc.
- Loans must be taken after Dec. 31, 2024
- Phases out above $100,000/$200,000 income
- Targets new car buyers, but only a small percentage of loans may qualify for the full amount
4. Creation of “Trump Accounts” for Kids Born 2025–2028
- Government deposits $1,000 at birth for U.S. citizen children
- Parents can contribute up to $5,000/year (post-tax) into a diversified investment fund
- Funds can be accessed starting at age 18 (with restrictions)
- Early withdrawals for education or first home taxed at capital gains rate
- Non-qualified withdrawals face income tax + 10% penalty under age 30
