Economics · Oct 7, 2026The Aftermath of the Big Beautiful Bill, Part 5 of 5: Taxes, Energy, Housing and a Citizen’s Checklist

The Aftermath of the Big Beautiful Bill · Part 5 of 5 · October 7, 2026, 7:00 AM CDT

Key Facts

• The child tax credit is now permanent at $2,200 per child. The standard deduction is permanently higher, at $31,500 for joint filers in 2025.^[1]
• New deductions cover up to $25,000 of tips, $12,500 of overtime premium pay ($25,000 joint) and $6,000 for each person 65 or older, from 2025 through 2028.^[1]
• CBO estimates the law lowers yearly resources for the lowest-income tenth of households by about $1,200 and raises them for the top tenth by about $13,600.^[2]
• A peer-reviewed review of the 2017 tax law this one extends found long-run GDP gains of under 1% and wage gains below what supporters advertised.^[3]

The first four parts covered what the Big Beautiful Bill took away. This last part covers what it gave: the tax cuts. It also sets the two side by side, because they came in the same law.

Read the earlier parts first: Part 1 (Medicaid), Part 2 (SNAP), Part 3 (marketplace, Medicare, rural health) and Part 4 (student aid).

1. The tax changes for families

The Congressional Research Service says many of the law’s tax provisions modify or extend the 2017 Tax Cuts and Jobs Act, which had provisions set to expire at the end of 2025.^[1]

• Child tax credit. The maximum rises to $2,200 per child, adjusted for inflation, and the higher income limits become permanent: phase-out begins at $200,000 for single filers and $400,000 for joint filers. Taxpayers need a work-eligible Social Security number.^[1]
• Standard deduction. It becomes permanently higher, at $15,750 for single filers, $23,625 for heads of household and $31,500 for joint filers in 2025.^[1]
• Tips. A deduction of up to $25,000 for qualified tip income, reduced by $100 for each $1,000 of income above $150,000 ($300,000 joint). It is available from 2025 through 2028.^[1]
• Overtime. A deduction of up to $12,500 ($25,000 joint) for the extra half of regular pay that federal law requires for overtime. It does not cover the regular rate.^[1]
• Car loans. A deduction of up to $10,000 of interest on loans for vehicles assembled in the United States, phased out above $100,000 of income ($200,000 joint).^[1]
• Seniors. A new $6,000 deduction for each person 65 or older, from 2025 through 2028, reduced by 6% of income above $75,000 ($150,000 joint).^[1]
• State and local taxes. The SALT deduction cap is $40,000 for most taxpayers in 2025, rises each year through 2029, and resets to $10,000 in 2030.^[1]
• Trump accounts. A new tax-deferred account for children, with contributions of up to $5,000 a year starting in 2026. Children born from 2025 through 2028 who are U.S. citizens qualify for a one-time $1,000 credit paid into the account.^[1]
• Estate tax. The lifetime estate and gift exemption rises to $15 million per person for deaths after 2025.^[1]

2. Energy: credits end early

• Clean vehicles. The credit of up to $7,500 ends for vehicles acquired after September 30, 2025.^[1]
• Home solar and efficiency. The residential clean energy credit, worth 30% of costs, ends for spending after December 31, 2025. The home-improvement credit is meant to end for property placed in service after that date. CRS notes the bill’s wording is ambiguous and may be open to interpretation.^[1]
• Utility-scale wind and solar. To keep clean-electricity credits, projects must begin construction by July 4, 2026 or be in service by December 31, 2027.^[1]

3. Housing and communities

The law permanently increases state low-income housing tax credit allocation authority by 12.0%. It lowers the tax-exempt bond financing requirement for the 4% credit from 50% to 25% for bonds issued starting in 2026. It also makes the Opportunity Zone program permanent and expands New Markets Tax Credits.^[1]

A 2024 study in the journal Buildings looked at neighborhoods that received new low-income housing tax credit developments between 2010 and 2015. It found they gained more jobs in grocery stores, health care, libraries and similar services than comparable neighborhoods that did not.^[5] It is one study, and it measures neighborhood services, not how many families the credit housed.

4. Who gains and who loses

CBO’s August 2025 letter to congressional Democrats spells it out. Resources fall for households toward the bottom of the income distribution and rise toward the top. The lowest-income tenth loses an average of $1,200 a year, or 3.1% of income. Households in the fifth and sixth tenths gain between $800 and $1,200 a year. The top tenth gains $13,600.^[2]

CBO attributes the bottom-tenth loss mainly to cuts to in-kind transfers such as Medicaid and SNAP, which is what Parts 1 through 3 covered. It says changes states make in response will also reduce household resources.^[2]

That is the heart of the law: tax cuts and benefit cuts, enacted together. Which side of that ledger you land on depends on your income and on which programs you use.

5. What the peer-reviewed research shows

A 2024 review in the Journal of Economic Perspectives assessed the 2017 law’s business provisions, which the new law extends. It found corporate tax revenue fell by 40%, and that “a loose consensus” holds corporate tangible investment rose by 11%. It also found the provisions “increased economic growth and wages by less than advertised by the Act’s proponents,” with long-run GDP higher by less than 1%.^[3]

A National Bureau of Economic Research working paper studied the temporary 2021 expansion of the child tax credit, a different and larger policy than the $2,200 credit. It found the monthly payments reduced hardship, “in particular their food insecurity,” and had “no effects on any labor supply measures.”^[4] That supports the view that cash to families can reduce hardship without cutting work, but it does not measure this law’s credit.

We found no peer-reviewed study yet that measures the enacted law’s tips, overtime or energy provisions.

6. What each side says

The president’s side. PBS NewsHour’s October 1, 2026 fact-check of Trump’s midterm talking points examined his claim that the law is the “largest tax cut in American history.” It rated that claim “mostly false,” finding that when the 2017 extensions are counted, “the tax savings from Trump’s 2025 law rank third among tax cut laws since 1980.” The same fact-check rated the “no tax” claims on tips and overtime “mostly true” with caveats: the tip deduction phases out above $150,000 for single filers, overtime covers only federally mandated premium pay, and the senior provision is a $6,000 deduction, not a repeal of tax on Social Security.^[6]

The opposition. In May 2025, Senate Democratic Leader Chuck Schumer said Republicans would “cut taxes for the ultra-rich by trillions of dollars.” He called the House bill “the biggest cut to Medicaid in American history” and said “nearly fourteen million Americans will lose their health insurance.”^[7]

Those remarks were about the House bill. CBO’s estimate for the enacted law is 10.0 million more uninsured by 2034, as Part 1 explained. We did not find a source that ranks the Medicaid cut against every earlier one.

Each side has a point and each overreaches. The tax cuts are real, and so is the $1,200 average loss for the lowest-income tenth. The law is not the largest tax cut ever, and it is not exactly the figure the opposition cited either.

Watch: the new deductions and credits

Video: WFXR News — “Tax season updates: Deductions for tips, overtime, seniors.”

Video: ABC10 — “The new Child Tax Credit could mean ‘cash in your pocket’.”

What is not yet known

• How many workers will actually qualify for the tips and overtime deductions, since both depend on how income is reported.
• Whether energy credits that ended early will be restored, and how that affects household solar and electric-vehicle costs.
• How states will respond to the cuts in Parts 1 through 4 and what that does to household budgets beyond CBO’s estimate.

What You Can Do Right Now

For your taxes

1. Claim what you are owed. The child tax credit, tips, overtime, car-loan interest and senior deductions each have income limits. Check them before you file.
2. Get your Social Security numbers in order. Several credits and deductions require a work-eligible Social Security number.
3. Ask your employer to report tips and overtime separately. The tip deduction requires it, and overtime premium pay must be identifiable.
4. Use free tax help. Community volunteer tax sites exist for lower-income households; ask your local library or the IRS.

For the whole series

5. Medicaid: confirm your state’s work-requirement start date, check exemptions, update your contact information and keep records. (Part 1)
6. SNAP: log your 80 hours a month, answer every notice and ask about local waivers. (Part 2)
7. Marketplace: update your income on the exchange when it changes, because excess credits are now fully repaid. (Part 3)
8. Student loans: check your plan before June 30, 2028 and do not accept a default plan without checking. (Part 4)
9. Be an informed voter and caller. CBO says benefits and taxes moved in opposite directions for different households. Tell your representatives which side you are on, with your own numbers.

How to Verify This Yourself

• Open CRS report R48611 and search each section number for the amounts quoted here.
• Compare PBS NewsHour’s fact-check with the CRS description of each deduction.
• Read the abstracts of the journal articles at the links below.

References

1. Congressional Research Service, “Tax Provisions in P.L. 119-21, the FY2025 Reconciliation Law,” R48611, July 29, 2025. Primary (nonpartisan congressional analysis). congress.gov
2. Thomson Reuters Tax & Accounting, “CBO Analyzes Distributional Effects of Budget Act,” reporting CBO Director Swagel’s August 11, 2025 letter. Secondary (news report of a primary CBO document; we could not open CBO’s own page). thomsonreuters.com
3. Chodorow-Reich G, Zidar OM, Zwick E. “Lessons from the Biggest Business Tax Cut in US History.” Journal of Economic Perspectives, 2024. Primary (peer-reviewed). doi.org
4. Pilkauskas N, Michelmore K, Kovski N, Shaefer HL. “The Effects of Income on the Economic Wellbeing of Families with Low Incomes: Evidence from the 2021 Expanded Child Tax Credit.” NBER Working Paper 30533, 2022. Primary (working paper, not a peer-reviewed article in the version we read; studies the 2021 expansion, not this law). nber.org
5. Ahn Y, Won J. “Do Low-Income Housing Tax Credit Developments Expand Neighborhood Opportunities?” Buildings, 2024. Primary (peer-reviewed). mdpi.com
6. PBS NewsHour, “A fact-checked guide to Trump’s talking points and falsehoods at midterm rallies,” October 1, 2026. Secondary (fact-check). pbs.org
7. Senate Democratic Leader’s Office, “Leader Schumer Floor Remarks on Republicans’ Big Beautiful Bill to Gut Medicaid and Slash SNAP in Order to Give Tax Breaks to Billionaires,” May 12, 2025. Primary (statements by the official quoted; partisan source). democrats.senate.gov

Investigative methodology: provisions were read from the CRS report. CBO’s distribution was read from a news report of its letter. Study findings were read from published abstracts. Quotation marks mark exact wording from the pages we read, and claims by officials are attributed to them.

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