GOP Tax Bill Would Extend Trump's Tax Cuts, Create 'MAGA' Accounts for Kids and More

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

House Republicans 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. This is the first major legislative package for the GOP-controlled 119th Congress, and the latest 389-page version of the tax bill offers a look at where things are headed.

Republican officials previously floated a goal of passing the bill by Memorial Day; now, House officials are aiming to score both chambers' approval by July 4. But Congress has a lot of work to do, and the actual timing is uncertain with key challenges still ahead. The bill is far from final — it's all but certain to evolve as members work toward consensus and navigate the party's thin margin in the House.

Some of Trump’s priorities, like eliminating taxes on tips and overtime hours, were popular among the electorate but could be difficult to pass if revenue isn't made up elsewhere. The current version of the bill would also extend significant income tax cuts, increase the child tax credit and temporarily expand the standard deduction.

That's costly: An estimate from the Joint Committee on Taxation found it would add $3.8 trillion to the deficit from 2025 to 2034.

Other policies the president has called for, like ending taxes on Social Security benefits and increasing the top tax rate for millionaires, have yet to make it into the legislation but could theoretically be added in the coming weeks.

Keeping in mind that the bill will see several adjustments, here are the key tax changes in the latest version of "The One, Big, Beautiful Bill," which the House Ways and Means Committee advanced Tuesday. The 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 current version of the House tax bill would remove the sunset date, "permanently preventing tax hikes," according to the bill text. These are the tax rates that this part of 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)

Ends income tax on tips and overtime

Income from cash tips would be exempt from federal income taxes through a deduction under the House bill 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. The bill includes 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.

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.

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 the latest version, but they would only apply on models from automakers with less than 200,000 EV sales.

Creates 'MAGA' accounts for kids

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

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.

"MAGA 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.

The House bill would extend standard deduction increases from the 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 $1,500 for couples through 2028. Second, there would be an "enhanced deduction" for older Americans of $4,000 for those same years (though income caps would determine eligibility).

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. The House bill would change that, allowing non-itemizers to claim an above-the-line deduction of $150 for single filers and $300 for married couples filing jointly.

Ups the child tax credit

The House wants to not only extend the expanded child tax credit, but also temporarily increase it by $500 to $2,500 per child from 2025 through 2027.

The 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 child tax credit would revert to $2,000 after 2028.

The 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 be 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.

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