Trump’s ‘Big, Beautiful Bill’ Hits the Senate — Here’s What They Kept and Cut

President Donald Trump made sweeping changes to the tax code during his first term. Now he’s trying to do it again.

Republicans in Congress are working on a "big, beautiful" bill that would deliver on many of Trump’s economic promises — and impact various aspects of Americans’ personal finances. It's the first major legislative package for the GOP-controlled 119th Congress.

The Senate version of the tax bill, which looks similar to the House bill in many areas while also making some notable changes — highlighted below — gives a look at where lawmakers are at just over two weeks out from party leadership's July 4 goal date for passage.

The bill includes "no tax on tips" and "no tax on overtime" provisions; it would extend significant income tax cuts, increase the child tax credit and temporarily expand the standard deduction.

These changes would come at a cost: A Congressional Budget Office score estimates the bill (as passed by the House) would add $3.3 trillion to the nation's debt over 10 years.

Other policies the president has called for, such as ending taxes on Social Security benefits and increasing the top tax rate for millionaires, did not make it into the bill.

The Senate still needs to reach a consensus on its modifications to the bill, and the moderate and conservative wings of the Republican party both have their demands. But they have their work cut out for them, and the actual timing is uncertain with key challenges still ahead.

Here are the key tax changes in the "The One, Big, Beautiful Bill":

Extends the Tax Cuts and Jobs Act

Several provisions in the 2017 Tax Cuts and Jobs Act, which lowered federal income tax rates by several percentage points, are due to sunset at the end of the year unless Congress extends them.

The tax bill would remove the sunset date. These are the tax rates the bill would cement:

• 10% rate — no change from the 2017 rate (applies to your first $11,925 of taxable income after deductions in 2025)
• 12% rate — down from 15% ($11,925 to $48,475 in 2025)
• 22% rate — down from 25% ($48,475 to $103,350)
• 24% rate — down from 28% ($103,350 to $197,300)
• 32% rate — down from 33% ($197,300 to $250,525)
• 35% rate — no change ($250,525 to $626,350)
• 37% rate — down from 39.6% ($626,350 and up)

As noted in the Journal of Accountability, the bill "would add an additional year of inflation adjustment to the 10%, 12% and 22% individual tax brackets."

"No tax on tips" and "no tax on overtime"

Income from cash tips would be exempt from federal income taxes through a deduction that could benefit millions of workers in the food and beverage industry, as well as barbering and hair care, nail care, esthetics and body and spa treatment. Both versions of the bill include a Dec. 31, 2028, sunset clause for the no-tax-on-tips deduction, meaning the relief would be available for most of Trump's presidency, if passed. The Senate bill caps the deduction at $25,000 — a difference from the House bill, which had no cap.

Another section of the bill exempts overtime pay from federal tax through a similar deduction that would also sunset around the end of Trump's second term. The no-tax-on-overtime plan, as written in the House bill, would apply to overtime over 40 weekly hours but would exclude highly compensated employees, which are those who perform "executive, administrative, professional and outside sales" duties. The current version of the Senate bill is similar, but it adds a $12,500 cap for individuals.

Payroll taxes would still apply to overtime and cash tips.

Kills the EV tax credit

Assuming Republicans pass tax reform this summer, you can probably say goodbye to the $7,500 EV tax credit, which was always expected to be a casualty of the last election. EV shoppers still have a window to shop for an electric vehicle and get the tax credit, but time seems to be running out.

The EV tax credit offered an incentive, now available as a point-of-sale rebate, to EV shoppers who meet certain income requirements. Even stronger incentives have been available on EV leases, while some used electric-car buyers have been eligible for a tax credit up to $4,000.

These credits would be undone by the House bill effective Dec. 31. Some EV tax credits would still be available for one more year in 2026 under that version, but they would apply only to models from automakers with fewer than than 200,000 EV sales. The Senate bill would remove that carveout and completely eliminate the tax credit 180 days after the bill is signed into law.

Creates Trump Accounts for kids

One of the more surprising inclusions in the version of the bill laid out by the House was a plan to create "MAGA Accounts" (or "money account[s] for growth and advancement") for children under 8. These accounts would be tax-preferred, but the funds would be tied up until the child in question turns 18.

Before passing its version of the bill, the House amended the language to change the name of these savings vehicles to "Trump Accounts," and the Senate has stuck with that name. (The relevant section of the Senate bill is basically unchanged from the House bill, but the Senate Finance Committee noted that "further refinements" are still being worked on in coordination with the Trump administration.)

The annual contribution limit would be $5,000, allowing parents to set aside money for college or other endeavors. The eye-popping part of the proposal: The government would make a one-time contribution of $1,000 to the accounts of children born from 2025 through 2028.

"[Trump] accounts would empower American children to reap the American Dream with a strong financial foundation," a Trump spokesperson said in a statement to media.

Increases the standard deduction

The standard deduction, available to taxpayers who do not opt to itemize their taxes, is a set amount of income that you don’t need to pay federal taxes on. Currently, that's $15,000 for tax year 2025.

Trump's tax bill would extend standard deduction increases from the Tax Cuts and Jobs Act, or TCJA, overhaul, which nearly doubled it from previous levels. It would also make two key changes to the standard deduction: First, the bill would bump up the deduction by $1,000 for single filers and $2,000 for couples. The new standard deduction would be $32,000 for couples and $16,000 for single filers starting in 2026. Second, there would be an "enhanced deduction" for older Americans of $6,000 through 2028, although income caps would determine eligibility. (That's an increase from $4,000 in the House bill.)

Allows a charitable-contribution deduction for non-itemizers

While the tax code currently incentivizes charitable contributions among people who itemize their taxes, there's no such tax benefit for the majority of folks who are better off taking the standard deduction. Trump's tax bill would change that. The House version allows non-itemizers to claim an above-the-line deduction of $150 for single filers and $300 for married couples filing jointly. The Senate bill increases those amounts to $1,000 for individuals or $2,000 for joint filers.

Ups the child tax credit

Republicans in Congress want to not only extend the expanded child tax credit, but also increase it even more. The Senate bill would up the credit by $200 to $2,200 per child — a smaller bump than the $500 increase in the House bill. The child tax credit increase in the House bill was temporary; the Senate version would make it a permanent increase.

The current child tax credit is a $2,000 per child benefit for folks with kids under age 17, and families are eligible for the full amount if they earn up to $200,000, ($400,000 if filing jointly).

The proposed changes won't benefit all households: Democrats are criticizing stricter citizenship requirements that they say would reduce eligibility for 2 million kids. The bill stipulates that parents and children would need Social Security numbers to qualify for the credit.

There is precedent (and, typically, bipartisan support) for raising the tax credit. During the pandemic, the child tax credit was notably expanded in 2021 by the American Rescue Plan, reaching up to $3,600 for some families with young kids. But that was a temporary measure, and in 2022 the credit went back to the $2,000 level.

Weakens the estate tax

The tax bill would make increases to 2017 estate tax exemptions permanent. Current estate taxes apply when transfer amounts exceed $13.99 million for single filers and $27.98 million for joint filers. Without Congressional action, a provision of the 2017 tax package that doubled these levels would sunset at the end of the year.

The Senate bill would increase the levels to $15 million for individuals and $30 million for couples in 2026 and index them to inflation, meaning that even fewer wealthy families would be subject to this taxation.

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