Trump Tax Bill Just PASSED - Tax Cuts Explained

So, the big beautiful bill has passed the House 218 to 214 votes. The vote was delayed after Hakee Jeff spoke on the House floor for 8 hours 44 minutes to delay the vote. I don't know what the point of that was because it passed anyway. But yeah, it's quite funny to watch. He kept leaving long pauses in between his sentences to string the whole thing out. It's something I really can't understand about this country why you have this rule that people can do that. But anyway, uh we don't take really political sides on this channel, but we are in the business of helping you succeed financially. So, in this video, we are going to go through all of the things in the bill that will benefit you. And there's one thing that is a little bit of a negative change that I want to talk about as well. And this is by no means a complete video, okay? There is so much in this bill. It's like 800 pages or something. So, I'm just going to give you sort of a first look at some of the things I think are important. Hey, financial warriors, welcome to the show. My name is Ben Hedges aka the credit shifu. And on this channel, I cover credit cards, personal finance, and luxury travel. If you like the sound of that, do subscribe. And if you want to pick up up to 60 free stocks from Mumu just for opening an account and making a deposit, click the link below at the end of this video. So firstly, this bill extends the 2017 Tax Cuts and Jobs Act tax rate, making them permanent. So your tax rates will still look like this in 2026. The lowest rate will be 10% and the highest rate will be 37%. And most people will find themselves in the sort of 22 25% range. Otherwise, everyone's taxes would have gone up to pre207 levels for the year 2026 onwards. The standard deduction has also been increased. Okay? And these changes will actually apply to 2025 too. So, the amount of money that you can earn and pay no tax on is now $15,750 for single filers, $23,625 for heads of a household, and $31,500 for married filing jointly. And these amounts will go up in years to come adjusted for inflation. Now, before we look at some other things, if you're interested in picking up a load of free stocks, like I talked about at the beginning, do check out Mumu in the links below and in the pin comment. You can get five free stocks for a deposit of $100 in a new brokerage account, 25 free stocks for depositing $2,000, and 60 free stocks for a $5,000 deposit. Obviously, that money you deposited remains yours for you to buy stocks or do whatever you want with. And Mumo, of course, is the fantastic commission-free stock brokerage app where you can buy US and international stocks and ETFs. Link is below. Next, the child tax credit increases from $2,000 per year per kid to $2,200 for 2025 onwards. $1,600 of that credit will be refundable. That means even if you've already paid $0 in taxes, the government will still give you $1,600 per kid. These amounts will also go up indexed for inflation in future years. If this bill hadn't passed, the child tax credit would have gone back down to pre207 levels of $1,000 per kid. I personally am really pleased about this since I have two kids. So that saves me $4,400 on my taxes each year going forward. Then we have an increase in the salt deduction. Now, the salt deduction, or the amount of state and local taxes that you can deduct against your federal taxes, has increased. In the 2017 tax cuts and jobs act, this deduction had been set at $10,000, which was a massive reduction from what it was before. And that's pretty low for people living in high tax states like my home state of New York, right? The Big Beautiful bill has now raised that amount to $40,000, which should cover most middle-class people. I'm guessing this year I paid $8,000 in property taxes on my primary residence and then state taxes, too. So, that takes me over the $10,000 limit, but I would still be within the $40,000 limit. However, just remember that you can only claim the salt deduction if you itemize. And the vast majority of people today don't itemize. They just take the standard deductions because they've been increased so much. So, it's not really going to affect the vast majority of people. But for the people in the audience who this does apply for, you now have an increased amount of $40,000 per year, but it is only for 5 years and then it goes back down to $10,000 unless they vote to extend it. Then we get no tax on tips. Okay, this was a campaign promise from Trump. Kla Harris also had promised this. So, it's kind of a bipartisan thing. And this covers individuals earning up to $160,000 a year in income. And remember, you will still have to pay state income taxes and social security taxes on your tips. And uh previously, one of my videos and I think some other videos incorrectly mentioned that this was only going to be on cash tips, but actually that was just a misunderstanding. Cash tips means uh tips that are either paid in cash or paid on credit card like in restaurants where you pay the check and a little thing pops up. How much do you want to tip? Uh basically it just you know the language they use cash tips just distinguishes it from tips like a gift or some some other kind of tip. All right. So c anything that is a dollar amount no matter how it's paid that will be uh not taxable. The no tax on overtime provision that was promised uh is also in the bill too. But remember this is only on the overtime amount. So, if you normally get $15 an hour and your overtime rate is 50% more at 2250 an hour, then you're only not taxed on that extra 750. Then there is a new tax deduction of up to $10,000 for interest paid on indebtedness incurred in 2025 through 2028 to buy a passenger vehicle for personal use. Okay. The tax deduction phases out for taxpayers with modified adjusted gross income that exceeds 100,000 for single filers and 200,000 for joint filers. So just make sure you understand this right. It seems you have to buy the car this year through 2028. You can't claim interest on cars you bought in previous years. That's a little bit of a shame for me because I bought a car I think last year. Yeah, I bought a car last year. So that's a shame. If I bought it this year, I'd be able to deduct the interest. Then we have the QBI, the qualified business income deduction. This goes up to 23% from 20%. And what this is is an extra deduction you get on your business income. Okay? So not money paid to you in salaries, but you if you have a business income from an escorp or an LLC, an extra 20% of that is deductible. So that's great news for anyone who runs what they call a pass for a pass through business, okay? which is basically LLC's, escorps, and that includes myself. Then we have Trump accounts. So, this is kind of comical. So, the bill sets up Trump accounts for newborn babies born between 2025 and 2029, and it deposits $1,000 into those accounts, and parents will be able to contribute up to $5,000 a year. Basically, they're like an IRA. It's a tax deferred account for the benefit of the child. And I think that's pretty cool. And I'm sure these accounts will be, you know, able to be set up with brokerages and you'll be able to invest in stocks and stuff through those accounts. Basically, think of it as like an IRA. It's for your kid and kids born between now and 2029. Get $1,000 put into that account to get them started, you know, from the government. All right, let's now look at a negative change, and that is Medicaid cuts. So, this is going to affect people in 40 states that have expanded Medicaid. Um, so this is Medicaid is a program used by lowincome households. I used it in the past too before my businesses and my YouTube channel got big, okay, when I was earning a much lower income. And it gets you cheap health insurance, even free in some cases if you're below a certain income. Actually, my two kids were born uh using Medicaid insurance. And uh, you know, it's a decent program. Um, it depends which state you're in. It does kind of change from state to state, but they use private insurance companies to run it. and I found it to be great, you know, um it was very convenient. Anyway, the bill brings in a restriction that you must be working or at school for at least 80 hours per month. So, that's 20 hours per week to get Medicaid coverage. And this only affects people, I think, between 19 and 65 years old. So, it's not going to affect people like seniors or whoever. I guess they're on Medicare actually rather than Medicaid. But able-bodied p people who can work, um, you're going to now have to be working at least part-time, at least 20 hours per week. Probably if you're a pregnant woman, you don't have to be working. I'm guessing, uh, we'd have to read through the small print, but I'm I'm guessing able-bodied means you're not pregnant, right? So, I think there are some things in there to cover people, but basically, if you're unemployed, um, you're not going to be able to get Medicaid. So, that's kind of a restriction. uh one of the sort of negative aspects of the bill. Now that is a very quick rundown of some of the key points. Okay, I think that you know the thing people are going to be most pleased about will be that they keep their current tax rate and the standard deduction increases and for the people who claimed the salt deduction before they're going to be very pleased to see that increase as well. I'll put a link to it uh and some of the summaries and stuff different articles about it in the links below. And don't forget, if you want to get up to 60 free stocks for opening account and making a deposit with Mumu, there'll be a link for that below as well. Please subscribe to the channel if you're new. I'll see you next time.