How the Big Beautiful Bill Will Impact My Taxes and Financial Planning

Trump’s Big Beautiful Bill has generated plenty of headlines, but it’s important to assess how major policies like this one will impact your finances. This bill made its way into the FIRE subreddit, where people discussed how the Big Beautiful Bill would affect people’s taxes and finances.

Reddit’s reaction to the bill was mixed. Some people emphasized how the bill can help a lot of people, while others were skeptical about other programs getting cut back. 

Lower Taxes Will Help Many People

Not having to pay taxes on tips or overtime can help people keep up with their expenses and build up to their long-term financial goals. The SALT deduction going from $10,000 to $40,000 would be a big help for people who live in areas with higher costs of living. Trump previously reduced the SALT limit from $25,000 to $10,000, so this is a major upgrade.

Finally, people can write off interest in their new vehicles. It’s similar to how people write off mortgage interest payments on their properties. Any policy that reduces taxes makes it easier for people to keep up with expenses. Some people benefit from lower income taxes than others, but it offers a net benefit.

The Removal Of EV and Solar Panel Credits Didn’t Sit Well

Redditors weren’t pleased with EV credits and solar panel credits getting the axe. These tax credits incentivized clean energy, and the original poster theorized that an outsized number of FIRE Reddit members would have taken advantage of these tax credits compared to the rest of the population.

If the Big Beautiful Bill goes through, green energy investments can lose value, and products in the industry will see reduced demand. People who don’t intend on buying electric vehicles or solar panels anytime soon won’t feel any impact from this change.

Creating More Problems For Future Generations

One of the counterarguments for lower taxes is that the reduced government revenue will hurt future generations. For instance, the government regularly spends more than it earns, and that has resulted in soaring living costs. As interest payments eat up a higher percentage of the government’s budget, the government will have to reduce or cut various programs. 

Reducing tax revenue allows the fiscal debt to grow larger, but that’s only true if the government maintains its current spending. If the government manages to reduce its spending at a higher rate than it reduces its revenue, then this problem may be avoided. The Department of Government Efficiency is one of the few programs that can achieve this objective.

MAGA Accounts

The Big Beautiful Bill includes “Money Account for Growth and Advancement” accounts or MAGA accounts. It’s a tax-advantaged account with $1,000 that grows tax-free until a child turns 18. The bill proposes that all newborns and children who are currently under eight can receive one of these “Trump accounts.”

Parents, relatives, and other individuals can each contribute up to $5,000 per year to a child’s Trump account. That doesn’t include the $1,000 that the government provides upon opening the account. 

This account can help fund college expenses, set your child up for a down payment, or enable other financial advantages. There are rules based on when the child can access the funds. Up to 50% of the funds are accessible when the child turns 18. The full amount is available for 25-year-olds if the money is used for qualifying expenses, but all of the guardrails are off when the account owner turns 30.

Parents should monitor developments around MAGA accounts to see if the distributions will be taxed as long-term capital gains or ordinary income. It can serve as a good financial foundation for young professionals, but the final version of MAGA accounts can look very different by the time the Big Beautiful Bill is finalized. 

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