President Donald Trump signed the Big Beautiful Bill into law, promising to boost the economy and put more money back into the pockets of American families. While some attention has focused on corporate tax cuts and benefits for high earners, the plan also includes several provisions that directly affect the middle class.
“While most middle-class families will benefit from immediate relief, the picture is more complex for those in high-tax states and municipalities,” explained Lisa A. Cummings, attorney and executive vice president at Cummings & Cummings Law. “Families should evaluate how the new rules affect their specific situation, compare standard deduction benefits against prior itemized deductions and consider working with a tax professional to integrate these changes into long-term financial planning.”
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Here are six ways Trump’s tax plan affects middle-class families, according to tax experts.
Higher Standard Deduction
“The standard deduction for non-itemizers is slightly higher for 2025 than expected. For example, $15,750 for single person rather than $15,000,” Annette Nellen, CPA, attorney and tax professor at San José State University, wrote in an email. “For itemizers, the state and local tax deduction is up to $40,000 starting for 2025.”
According to Cummings, while the higher standard deduction is something that the middle class will notice right away, it may not be enough to fully offset costs, particularly for families in high-tax states and municipalities, thanks to caps on state and local tax deductions.
Find Out: What Trump’s New Tax Law Means for Upper-Middle-Class Families in 2025
Higher Child Tax Credit
“Families can now get up to $2,200 per child adjusted for inflation, slightly more than before, helping with child-related expenses,” explained Elina Linderman, tax professional and owner of accounting firm La Rusa Financial.
However, there are some new restrictions. Linderman noted that families with children who don’t have Social Security numbers or with mixed immigration status may not qualify for the full credit.
Deductions for Overtime and Tips
“These new provisions also reduce the tax burden on overtime pay and tips, a meaningful benefit for hourly and service workers who depend on extra shifts to make ends meet,” Cummings explained.
According to the IRS, the maximum annual deduction is up to $25,000 in qualified tip income and up to $12,500 in qualified overtime compensation, or $25,000 for joint filers.
Auto Loan Insurance Deduction
Another provision tied to the tax plan highlights Trump’s emphasis on domestic manufacturing and consumer spending. “If you buy a car assembled in the U.S., you can deduct up to $10,000 in loan interest per year,” Linderman stated.
The vehicle must be for personal use only, and lease payments do not qualify. If the qualifying vehicle is later refinanced, the IRS noted that the interest paid on the refinanced amount is generally eligible for the deduction.
Senior Tax Relief
Americans age 65 and older may also see additional tax relief. “A new enhanced tax deduction for those 65+, offering an additional $6,000 deduction from 2025 to 2028 for individuals earning up to $75,000 (or $150,000 for couples filing jointly),” Stuart Rohatiner, CPA, JD, at the Gerson Preston Klein Lips Eisenberg Gelber Accounting Firm, wrote in an email.
Another senior benefit is that roughly 90% of Social Security recipients will no longer owe federal income tax on their benefits, Rohatiner added.
Trump Accounts
“Trump Accounts start in 2026 for certain savings for children, where family, friends, employers can contribute in aggregate up to $5,000 for the year,” Nellen wrote. “For 2025 to 2028, a child born can get $1,000 deposited into an account at election of the parent under rules to be provided by the IRS.”
The Tax Foundation noted that these accounts could be better. According to the organization, Trump Accounts add another layer to an overcomplicated savings account system. Plus, they don’t have the same tax advantages as 529 or Roth-style accounts.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Tax Experts: 6 Ways Trump’s Tax Plan Impacts Middle-Class Families
