Anaya Nolan
President Donald Trump's 'One Big Beautiful Bill' (OBBB) has been hailed as a victory for the American people, with tax cuts and breaks for small businesses, homeowners, seniors, and families. The bill, signed into law on July 4, includes extensions and enhancements of the Tax Cuts and Jobs Act (TCJA) of 2017, which lowered corporate tax rates and provided individual tax cuts. While some praise the bill for its economic growth potential, others argue that it disproportionately benefits high-income households, adding to the national debt and eroding the US revenue base. The bill also targets student loan forgiveness and makes changes to the estate and gift tax exemption. Overall, the bill is expected to provide tax relief and strengthen public programs, but its full impact remains to be seen.
| Characteristics | Values |
|---|---|
| Name of the bill | One Big Beautiful Bill (OBBB) |
| Objective | To overhaul taxes in the United States |
| Beneficiaries | Working and middle-class families, small businesses, farmers, senior citizens, homeowners, entrepreneurs, workers, and America's future |
| Key provisions | Largest tax cut in American history, permanent tax relief for small businesses, increased standard deduction for senior citizens, no tax on tips, suspension of Biden-era SAVE plan for student loan borrowers, tax breaks for industries like coal, oil and natural gas, higher taxes on US imports |
| Impact | Added $3.4 trillion to the national debt over 10 years, Decreased federal revenues by $4.5 billion through 2034, cut deficits, create jobs, ramp up mass deportations |
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What You'll Learn
The wealthy win
Donald Trump's tax law, the One Big Beautiful Bill (OBBB), has been criticized for benefiting wealthy individuals like himself. According to an analysis by The New York Times, if Trump's tax plan had been in place in 2005, he would have saved $11 million in taxes and $4.4 million on his eventual estate tax bill. This financial gain for the President and his family has been described as "virtually unprecedented in American political history".
The bill includes several provisions that favor the wealthy. For example, it provides tax breaks for homeowners, with the mortgage interest deduction cap increased to $750,000 for joint filers. It also establishes Trump Savings Accounts for newborns, allowing for compounded growth over time, which primarily benefits wealthier families who can afford to save. Additionally, the bill incentivizes companies that manufacture products in America with lower taxes and allows buyers of American-made vehicles to fully deduct their auto loan interest. These measures may contribute to wealth accumulation for certain individuals and businesses.
Furthermore, the bill makes permanent the Small Business Deduction, allowing small businesses to deduct up to 20% of their business income. While this may benefit small businesses, it could also provide tax advantages to wealthy business owners, particularly those with pass-through businesses. The bill also increases the Small Business Expensing Cap, allowing small businesses to fully expense business equipment purchases in the first year, which could result in significant tax savings for business owners.
Trump's tax law has been criticized for potentially widening economic inequality. While it provides tax cuts for most U.S. taxpayers, with 65% of households experiencing lower income taxes, it has been projected to add $3.4 trillion to the national debt over ten years. Some states, particularly those with higher taxes and property values, may face higher taxes due to the legislation. Overall, while Trump's tax law may provide some benefits for certain individuals and businesses, it has been criticized for disproportionately favoring the wealthy and contributing to increasing economic inequality.
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Small businesses win
Small businesses are among the biggest winners from President Donald Trump's One Big Beautiful Bill. The bill provides permanent tax relief for small businesses, allowing them to keep more of their money and invest in their business and employees.
One of the key benefits for small businesses is the increase in the Small Business Estate Tax Exemption. The new exemption thresholds will be set at $15 million for individual filers and $30 million for joint filers, allowing small businesses to pass on more of their wealth to the next generation. The bill also increases the Section 199A deduction to 23%, promoting the growth and success of small businesses on Main Street.
Small businesses in certain industries, such as manufacturing and agriculture, will particularly benefit from the bill. For example, companies can now fully and immediately deduct the cost of new manufacturing plants, providing certainty and encouraging investment. In addition, the bill expands and makes permanent a smaller federal estate tax, which will benefit small businesses with estates valued up to $15 million.
The bill also includes a “no tax on tips” provision, which will help small businesses, particularly in the service industry, to recruit employees by offering higher take-home pay. Overall, President Trump's One Big Beautiful Bill is expected to spur economic growth and job creation, with small businesses playing a crucial role in this process.
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Seniors win
The One Big Beautiful Bill (OBBB) or the Tax Cuts and Jobs Act (TCJA) has been touted by President Trump as a win for seniors. The bill includes a $6,000 tax deduction for individuals aged 65 and older, which is expected to raise the number of seniors who won't pay taxes on Social Security benefits to 88%. This means that couples filing jointly can reduce their taxable income by up to $12,000. This change is expected to provide seniors with more income to cover basic living expenses such as housing, transportation, and healthcare.
The bill also eliminates taxes on Social Security for the majority of seniors. This is a significant change, as currently, about one in three adults aged 65 and older are living below the poverty level. By removing taxes on Social Security, seniors will have additional income to cover their basic needs.
In addition to the tax deductions and eliminations, the bill also improves customer service for Social Security recipients. Wait times for social security service delivery have been reduced, with the average telephone response time dropping from 30 minutes to six minutes.
While there is some criticism that the bill does not help low- and middle-income seniors and may deplete Social Security funds, it is undeniable that the OBBB provides financial relief to seniors, especially those relying on Social Security. With the bill in place, seniors can expect to have more disposable income to cover their living expenses.
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$32.45
Tax cuts for working and middle-class families
Donald Trump's One Big Beautiful Bill has been praised as a win for working and middle-class families, with some claiming it delivers the largest tax cut for these groups in American history. The bill is said to unleash economic prosperity, empower Americans, and strengthen the nation's defences.
Proponents of the bill argue that it will dramatically grow the economy, cut deficits, and create jobs. They claim that it ensures that working and middle-class families keep more of their hard-earned money, rather than giving it to the federal government.
In defence of the bill, Rep. Randy Feenstra stated:
> "This pro-family, pro-worker, pro-growth economic package is the culmination of President Trump's campaign promises and conservative economic principles, which will dramatically grow our economy, cut deficits, and create jobs."
Furthermore, the bill has been praised for its positive impact on farmers, who have celebrated how it overhauls the 'death tax'—the taxes imposed on someone's estate upon their death. This is particularly beneficial for family-run farms, where the value of the farm may be high on paper, but the family running it is not living a life of luxury.
However, critics argue that the bill falls short of its promise to lower costs for American families and instead raises costs for middle-class families. They claim that the bill worsens inequality, giving the ultra-rich historic tax breaks while making working people worse off.
According to an analysis by the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), working families will experience a net loss in household resources, while the ultra-rich will get richer. The bill is also criticised for making cuts to nutrition assistance and making higher education less affordable.
While there are differing opinions on the impact of the bill, it is clear that the tax cuts have sparked debate and will continue to be a topic of discussion and analysis.
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Student loan forgiveness losers
The Trump administration's new tax and spending package, also known as the "One Big Beautiful Bill" (OBBB), has made significant changes to student loan forgiveness. The Biden-era SAVE (Saving on a Valuable Education) plan has been suspended under the new law, impacting approximately 8 million borrowers who relied on income-driven repayment programs for loan forgiveness. This means that borrowers with loans in SAVE forbearance will start accruing interest as of August 1, 2025.
The new law also eliminates the requirement for borrowers to have a partial financial hardship to qualify for Income-Driven Repayment (IBR) plans. Additionally, it places loan limits on part-time students, undergraduates, and parent borrowers, reducing the number of repayment plans to just two programs. These changes represent a restructuring of student loan borrowing and could have significant implications for those seeking loan forgiveness.
While the OBBB delivers significant tax relief and is touted as a win for working families, it is important to recognize that the suspension of the SAVE plan and the reduction in repayment plans may negatively affect borrowers who were relying on these programs for student loan forgiveness. This could particularly impact those with financial hardships or those who are part-time students, undergraduates, or parent borrowers.
The OBBB's impact on student loan forgiveness highlights the complexities of tax legislation and how it can affect different groups of people in varying ways. While some may benefit from the tax cuts and enhanced tax breaks, others may struggle with the changes to student loan repayment and forgiveness programs. It is crucial for individuals to understand how these legislative changes may influence their financial situations and plan accordingly.
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Frequently asked questions
The 2017 tax law was skewed to benefit high-income households, large businesses, and corporations. It also provided tax relief for small businesses and farmers.
The tax cuts have been criticised for costing substantial revenue, limiting investment in national priorities, and adding trillions to the national debt.
The "One Big Beautiful Bill" (OBBB) is a tax and spending bill signed into law by President Donald Trump on July 4. It includes tax breaks for homeowners, small businesses, and seniors, and is considered a win for working families, farmers, and entrepreneurs.
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