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Nearly two weeks after President Donald Trump signed what he dubbed a “big, beautiful bill,” tax professionals and financial planners are still working to understand how the sweeping new tax law will affect millions of Americans starting next year.
The legislation—passed by Congress with narrow Republican majorities—extends and enhances provisions of Trump’s 2017 tax cuts, while introducing new deductions that will take effect for the 2025 tax year. That means the changes will be felt by taxpayers filing in 2026.
While the Trump administration has touted the new law as a win for “working families,” financial experts say the actual impact depends heavily on each filer’s income, household size, and strategy.
“There are just so many moving pieces,” said Jim Guarino, a certified financial planner and CPA at Baker Newman Noyes in Woburn, Massachusetts. “You never want to do anything in a silo when it comes to tax planning.”
Background: 2017 Tax Cuts Made Permanent
A centerpiece of the new law is the permanent extension of the 2017 Tax Cuts and Jobs Act (TCJA), which lowered federal tax brackets and increased the standard deduction.
Without this extension, most Americans would have seen higher taxes starting in 2026, according to the nonpartisan Tax Foundation.
Starting in 2025:
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The standard deduction rises to $15,750 for single filers (up from $15,000), and $31,500 for married couples filing jointly (up from $30,000).
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The child tax credit increases to $2,200 per child (up from $2,000).
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The SALT deduction cap increases from $10,000 to $40,000, although this benefit begins to phase out for households earning between $500,000 and $600,000.
This phaseout has led some tax analysts to warn of an effective marginal rate spike—what some are calling a “SALT torpedo”—for high-income earners in that bracket.
“There’s a narrow ‘sweet spot’ for maximizing SALT deductions,” CPA John McCarthy noted in a recent advisory blog, “typically between $200,000 and $500,000 in income.”
New Tax Breaks for 2025
The law also includes several new, temporary deductions that Trump floated during his 2024 campaign:
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A $6,000 “bonus” deduction for seniors aged 65 and older, which phases out for incomes above $75,000 (single) or $150,000 (joint filers).
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New deductions for tip income, overtime wages, and car loan interest, each with separate eligibility thresholds and caps.
“These are niche provisions that will require detailed planning,” said Orlando-based tax advisor Tommy Lucas. “People need to know what’s available to them based on how they earn and spend their money.”
Health Insurance Costs Could Rise
One area where Trump’s legislation does not extend existing policy is the enhanced premium tax credit for Affordable Care Act (ACA) plans. The expanded subsidies—first introduced during the COVID-19 pandemic—are set to expire in 2025.
Without renewal, health insurance premiums could rise significantly for more than 22 million Americans who rely on ACA coverage, according to a report by the Kaiser Family Foundation (KFF).
“We’re expecting the return of the ‘subsidy cliff’,” Lucas said, referring to the ACA rule that eliminates the premium tax credit entirely if income exceeds 400% of the federal poverty level. For a family of three, that threshold is $103,280 in 2025.
Even exceeding the limit by $1 could result in the loss of thousands of dollars in subsidies.
What’s Next
With the law now in place, federal agencies have until early 2026 to implement final regulations for each of the tax provisions. Meanwhile, advisors are already running multi-year simulations to help clients optimize strategies ahead of next April’s tax season.
Taxpayers are encouraged to revisit withholding choices, assess income thresholds, and consider new deductions in light of the updated law.
“There’s opportunity here, but also risk,” Guarino said. “Without planning, you could easily lose out on benefits you would otherwise be eligible for.”
The Trump administration has signaled more tax reforms could come if Republicans retain control of Congress in the 2026 midterms. Until then, the current changes are expected to shape American tax policy through at least the end of the decade.
