Trump’s “One Big Beautiful Bill Act” Extends Tax Cuts and Adds New Deductions

On July 4, 2025, President Donald Trump signed the “One Big Beautiful Bill Act” at the White House. The legislation bundles a sweeping spending package with a suite of tax provisions that build on the Tax Cuts and Jobs Act of 2017.

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The bill makes permanent several elements of the 2017 tax law, including lower brackets, larger standard deductions, an expanded child-tax credit, and a higher estate-gift exemption. It also introduces new deductions that were promoted during the 2024 campaign: allowances for tips, overtime pay, auto-loan interest, and an enhanced senior-age deduction. For 2025 the state-and-local-tax (SALT) deduction cap rose to $40,000, up from $10,000 in 2024, with the benefit tapering off for filers whose income exceeds $500,000.

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More than 64 million tax returns claimed at least one of the new deductions, according to Bessent. Treasury data show an average tips deduction of over $7,000 and an average senior deduction of more than $7,500. The larger SALT deduction primarily aids upper-middle-income to high-income households, while the lowest earners are less likely to see a refund boost because many owe little or no tax. As of May 8, the average individual refund for the 2026 filing season was $3,276, an 11.5 % increase from the comparable period a year earlier, per IRS data.

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Joseph Rosenberg, senior fellow at the Urban-Brookings Tax Policy Center, noted that the provisions “hit households differently,” reflecting varied impacts based on family circumstances.

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Garrett Watson, vice president of federal tax policy with the Tax Foundation, emphasized that the primary benefit came from making existing cuts permanent, while the new deductions “go toward specific taxpayers.”

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• “Those all go toward specific taxpayers,” — Garrett Watson, vice president of federal tax policy with the Tax Foundation

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