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Republicans’ “big beautiful” bill could result in higher monthly payments for many federal student loan borrowers, a new analysis finds.
If the GOP legislation is enacted, student loan borrowers could pay hundreds of dollars a month more under the proposed “Repayment Assistance Plan,” or RAP, compared with the now-blocked SAVE plan.
“This kind of financial drag could further delay major life milestones like homeownership, starting a family, or saving for retirement,” said Doug Boneparth, a certified financial planner.

US Speaker of the House Mike Johnson, Republican from Louisiana, speaks during a news conference after a House Republican conference meeting on Capitol Hill in Washington, DC on June 4, 2025.
Saul Loeb | Afp | Getty Images

Republicans’ One Big Beautiful Bill Act could result in higher monthly payments for many federal student loan borrowers, a new analysis finds.
If the legislation is enacted as drafted, a student loan borrower earning roughly $80,000 a year (the median for a bachelors’ degree holder in 2024) would have a monthly payment of $467 under the GOP-proposed “Repayment Assistance Plan,” or RAP, according to recent findings by the Student Borrower Protection Center. That compares with a $187 monthly bill on the Biden administration’s now-blocked SAVE, or Saving On A Valuable Education plan.

No matter their income, borrowers face higher monthly payments under RAP compared with SAVE, the analysis found. For lower incomes, the difference may be just $10 per month; for higher earners, the new repayment plan can be as much as $605 per month pricier.

Depending on their income, some federal student loan borrowers also face higher payments on RAP than they would have on the U.S. Department of Education’s other income-driven repayment plans, including PAYE, or Pay As You Earn and IBR, or Income-Based Repayment.
However, some borrowers on PAYE or IBR plans would have a smaller bill under RAP. For example, a borrower with a roughly $60,000 annual income would pay $250 a month on RAP, and $304 on PAYE, the SBPC found.
The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package.

Larger bills could push more borrowers into default

Under the Republican proposals, there would be just two repayment plan choices for borrowers who take out loans after July 1, 2026, compared with roughly a dozen options now.

After graduation, those student loan borrowers could either enroll in a standard repayment plan with fixed payments, or a single income-based repayment plan: RAP.

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Under RAP, monthly payments would typically range from 1% to 10% of a borrower’s income; the more they earn, the bigger their required payment. There would be a minimum monthly payment of $10 for all borrowers.
The new plan would fail to provide many borrowers with an affordable monthly bill — the goal of Congress when it established income-driven repayment plans in the 1990s, Michele Zampini, senior director of college affordability at The Institute for College Access & Success, recently told CNBC.
“If Republicans’ proposed ‘Repayment Assistance Plan’ is the only thing standing between borrowers and default, we can expect many to suffer the nightmarish experience of default,” Zampini said.

Repayment timeline to stretch over three decades

Meanwhile, current income-driven repayment plans now conclude in loan forgiveness after 20 years or 25 years. But RAP wouldn’t lead to debt erasure until 30 years.
“This kind of financial drag could further delay major life milestones like homeownership, starting a family, or saving for retirement,” said Doug Boneparth, a certified financial planner and the founder and president of Bone Fide Wealth in New York. He is a member of CNBC’s Financial Advisor Council.

There’s also “an emotional toll” to carrying student debt for so long, said Cathy Curtis, the founder of Curtis Financial Planning in Oakland, California. She is also a member of CNBC’s Financial Advisor Council.
“It reinforces the feeling of being stuck — especially for those who’ve already struggled to access opportunity,” Curtis said.

GOP: Bill helps those who ‘chose not to go to college’

Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, has said his party’s plans would lift the burden on taxpayers of subsidizing college graduates’ loan payments.
″[Former President Joe] Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college,” Cassidy said in a statement on June 10.
He said his committee’s bill would save an estimated $300 billion out of the federal budget.

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Many clean energy tax credits for consumers would be terminated in 2026 under House and Senate Republicans’ “big beautiful” bill.
A $7,500 tax credit for new electric vehicles, $4,000 credit for used EVs and tax breaks tied to boosting a home’s energy efficiency are among those that would be on the chopping block.
Republicans would use these federal funds and others from reductions to Medicaid and food assistance programs to pay for domestic policy priorities like tax cuts.

Halfpoint Images | Moment | Getty Images

Legislation that Republicans are trying to pass by the Fourth of July would end a slew of popular consumer tax breaks tied to clean energy, leading some experts to call on households to act now to collect the savings.
Many tax breaks on the chopping block were created, extended or enhanced by the Inflation Reduction Act, a 2022 law signed by former President Joe Biden that provided a historic U.S. investment to fight climate change.

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The Senate may vote on its measure, part of a broader package of domestic policy initiatives, as soon as next week. The House passed its version of the One Big Beautiful Bill Act in May.
Both bills would eliminate tax credits for households that buy or lease electric vehicles, or that make their homes more energy efficient.
“The intention of Republicans writing the bill is to root out all of the incentives from moving away from fossil fuels that the Biden administration puts in place, and it’s just a question of timeline,” said Matt Gardner, senior fellow at the Institute on Taxation and Economic Policy.

GOP set to end many clean energy tax breaks in 2026

Republicans would use money from the clean energy tax breaks — as well as cuts to food assistance and healthcare programs like Medicaid — to help pay for a broader multitrillion-dollar package of tax cuts for households and businesses, among other policy priorities.

The “One Big Beautiful Bill Act,” which House Republicans passed in May, would end a tax credit of up to $7,500 for qualifying households that buy a new electric vehicle and a $4,000 credit for those who buy a used EV.
It would also end a separate tax incentive that allowed car dealers to pass along a $7,500 credit to consumers who lease an electric vehicle.

Additionally, the House bill would end the energy efficient home improvement credit (also known as the 25C credit) and residential clean energy credit (the 25D credit), which help consumers defray the cost of projects like installing insulation, solar panels, heat pumps, and installing energy-efficient windows and doors.
With few exceptions, these tax breaks would disappear in 2026, about seven years earlier than under current law, which makes them available through 2032.
Senate Republicans, who haven’t yet passed their version of the legislation, would end these tax breaks under a similar timeline.
For example, the tax credit for used EVs would end 90 days after the law’s enactment. The credits for new and leased EVs, as well as the ones tied to energy efficiency, would disappear after 180 days.

Advocates for preserving the tax credits argue that getting rid of the tax breaks would raise monthly bills for U.S. households and businesses.
A group of 21 House GOP lawmakers in March expressed support for preserving clean energy tax credits, in a letter to Rep. Jason Smith, R-MO, chairman of the House Ways and Means tax-writing committee.
“As our conference works to make energy prices more affordable, tax reforms that would raise energy costs for hard working Americans would be contrary to this goal,” they wrote.
Consumers who want to ensure they get a federal tax break for buying an EV or undergoing an energy-efficiency home project should act soon, according to experts.
“Based on the existing proposed language, if you’ve been considering an EV or planning to get one, now is the time to do it,” Alexia Melendez Martineau, senior policy manager at Plug In America, told CNBC recently.
The legislation may change in the Senate, which may vote on the massive domestic policy measure as soon as next week. If there are changes, the House would have to pass the legislation before sending it to President Trump’s desk. More

The trust fund Social Security relies on to help pay retirement benefits may be depleted in 2033, at which point 77% of those benefits would be payable.
The program’s combined trust funds, which also includes disability insurance, may run out in 2034, one year sooner than projected last year.
Advocates for Social Security’s beneficiaries said Congress should act as soon as possible to avoid a benefit shortfall.

A Social Security Administration office in Washington, D.C., March 26, 2025.
Saul Loeb | Afp | Getty Images

The trust fund Social Security relies on to pay retirement benefits may be depleted in 2033, according to an annual report released by the Social Security Board of Trustees on Wednesday. That is unchanged from last year’s projections.
At that time, 77% of those benefits will be payable, according to the report.

Social Security’s combined trust funds — the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund — will have enough revenue to pay scheduled benefits and administrative costs until 2034, according to the report. That is one year earlier than projected last year.
At that time, 81% of the combined benefits will be payable, according to the new projection.
While the combined depletion date is used to gauge Social Security’s solvency, current law prohibits joining those funds. However, Congress has authorized shifting of the funds in the past when there have been trust fund shortfalls.
The Disability Insurance fund will be able to pay full benefits through at least 2099, according to the report.
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Medicare’s Hospital Insurance trust fund, which is associated with Medicare Part A and pays for certain health-care services, will be able to pay full benefits until 2033, according to the Medicare trustees’ report, which was also released Wednesday. That is three years earlier than projected last year.
At that time, 89% of benefits will be payable.
The new Social Security trustees report takes into account the effects of the Social Security Fairness Act, according to Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities. That legislation, which enhanced benefits for certain public pensioners, went into effect in 2025. Experts anticipated the law would move the program’s depletion date closer.
However, new tax proposals, tariffs and deportations were not included in the new trustees’ report, which is based on assumptions dating back to December, Romig said. Those three developments may “pose serious threats to Social Security’s financing,” she said.

Congress ‘must act’ to protect program

Social Security’s trust funds help pay for benefits when more money is needed in addition to ongoing revenue from payroll taxes.
Workers currently contribute 6.2% of their pay toward Social Security and 1.45% toward Medicare. Employers typically match those taxes. However, self-employed workers pay a 15.3% tax rate.
To shore up Social Security’s and Medicare’s trust funds, Congress may raise taxes, cut benefits or a combination of both.
Approximately 70 million people will receive Social Security benefits this year, while 185 million individuals work and contribute to the program through payroll taxes, Social Security Administration Commissioner Frank Bisignano said in a statement.
The financial status of the trust funds is a “top priority” for the Trump administration, Bisignano said. He also called on Congress to “protect and strengthen” the trust funds for the millions of Americans who will rely on the program “now and in the future.”

Advocates for Social Security beneficiaries likewise called for lawmakers to address Social Security’s looming funding shortfall.
“Congress must act to protect and strengthen the Social Security that Americans have earned and paid into throughout their working lives,” AARP CEO Myechia Minter-Jordan said in a statement following the release of the report.
Minter-Jordan said that “as America’s population ages, the stability of this vital program only becomes more important.”
Because the Social Security and Medicare depletion dates are approaching, lawmakers are “running out of time to phase in changes gradually and avoid harsh cuts, sharp tax increases, or unacceptable borrowing,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement.
Based on the current outlook, Social Security and Medicare won’t be able to pay full benefits for today’s retirees, MacGuineas said. For example, the trust funds will run out when today’s 59-year-olds reach full retirement age and when today’s youngest retirees turn 70, she said.

Raise taxes, or cut benefits?

Democrats and Republican lawmakers are divided over whether to raise taxes or cut benefits to shore up Social Security.
However, a recent survey found 85% of Americans would rather raise taxes than cut benefits, according to the National Academy of Social Insurance, AARP, the National Institute on Retirement Security and U.S. Chamber of Commerce. The groups polled more than 2,200 Americans.
“Across party lines, generations, income, education, the American people are strongly opposed to cutting Social Security,” said Rebecca Vallas, chief executive of the National Academy of Social Insurance.
The most popular policy option Americans want to see would be eliminating the payroll tax cap for earnings over $400,000, according to the survey. Currently, workers contribute payroll taxes to Social Security for wages up to $176,100. That cap would stay in place, while the payroll levies would be reapplied starting at $400,000 for higher earners.
Survey respondents were also largely in favor of gradually raising the payroll tax rate from 6.2% to 7.2% for both workers and employers.
“They want to see lawmakers secure the program by raising the revenues that are needed to keep the system strong for generations to come and to improve benefits,” Vallas said. More

GOP lawmakers, in their “big beautiful” bill, plan to eliminate several student loan repayment plans and keep borrowers in debt longer.
Consumer advocates warn that the legislation will deepen a lending crisis in which millions of borrowers are already struggling to pay off the debt from their education.

Staff members remove a sign following a press conference after the House passage of the tax and spending bill, at the U.S. Capitol on May 22, 2025 in Washington, DC.
Kevin Dietsch | Getty Images

Republicans’ “big beautiful” bill, if enacted as drafted, would make some of the biggest changes to the federal student loan system in decades.
GOP House and Senate lawmakers’ proposals would eliminate several repayment plans, keep borrowers in debt longer and roll back relief options for those who become unemployed or run into another financial challenge.

The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package.
Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, said his party’s plans would lift the burden on taxpayers of subsidizing college graduates’ loan payments.
“[Former President Joe] Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college,” Cassidy said in a statement on June 10. He said his committee’s bill would save an estimated $300 billion out of the federal budget.
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However, consumer advocates say that the legislation will deepen a lending crisis in which millions of borrowers are already struggling to pay off the debt from their education.

“It’s not about fiscal responsibility, it’s about doing some funny math that justifies tax cuts,” said Astra Taylor, co-founder of the Debt Collective, a union for debtors.
“It’s going to be extremely hard for people to get out of debt with these changes,” Taylor said.
Here are three big proposals in the GOP bills to overhaul federal student lending.

1. Fewer repayment plans, larger bills

Under the Republican proposals, there would be just two repayment plan choices for new borrowers, compared with roughly a dozen options now.
Student loan borrowers could either enroll in a standard repayment plan with fixed payments, or an income-based repayment plan known as the “Repayment Assistance Plan,” or RAP.
Under RAP, monthly payments would typically range from 1% to 10% of a borrower’s income; the more they earn, the bigger their required payment. There would be a minimum monthly payment of $10 for all borrowers.

It’s going to be extremely hard for people to get out of debt with these changes.

Astra Taylor
Co-founder of the Debt Collective

A typical student loan borrower with a college degree could pay an extra $2,929 per year if the Senate GOP proposal of RAP is enacted, compared with the Biden administration’s now-blocked SAVE plan, according to a recent analysis by the Student Borrower Protection Center.
The new plan would fail to provide many borrowers with an affordable monthly bill — the goal of Congress when it established income-driven repayment plans in the 1990s, said Michele Zampini, senior director of college affordability at The Institute for College Access & Success.
“If Republicans’ proposed ‘Repayment Assistance Plan’ is the only thing standing between borrowers and default, we can expect many to suffer the nightmarish experience of default,” Zampini said.

2. Longer timelines to loan forgiveness

As of now, borrowers who enroll in the standard repayment plan typically get their debt divided into 120 fixed payments, over 10 years. But the Republicans’ new standard plan would provide borrowers fixed payments over a period of between 10 years and 25 years, depending on how much they owe.
For example, those with a balance exceeding $50,000 would be in repayment for 15 years; if you owe over $100,000, your fixed payments will last for 25 years.

Meanwhile, current income-driven repayment plans now conclude in loan forgiveness after 20 years or 25 years. But RAP wouldn’t lead to debt erasure until 30 years.
“Thirty years is your adult life,” Taylor said.
If RAP becomes law, she said, “We anticipate an explosion of senior debtors.”

3. Fewer ways to pause bills

House and Senate Republicans are also calling for the elimination of the economic hardship and unemployment deferments.
Those deferments allow federal student loan borrowers to pause their monthly bills during periods of joblessness or other financial setbacks, often without interest accruing on their debt. Under both options, which have existed for decades, borrowers can avoid payments for up to three years.
Under the Senate Republicans’ proposal, student loans received on or after July 1, 2026, would no longer qualify for the unemployment deferment or economic hardship deferment. The House plan does away with both deferments a year earlier, on July 1, 2025.

“These protections enable borrowers to stay in good standing on their loans while they get back on their feet,” Zampini said.
“Without them, borrowers who suddenly can’t afford their payments will have little recourse, and many will likely enter delinquency and eventually default,” she said. More

The Federal Reserve kept rates unchanged at the end of its June meeting.
The central bank’s interest rate decision has far-reaching implications for almost all types of borrowing and for savings rates.
From credit cards and mortgage rates to auto loans and savings accounts, here’s how the Fed’s moves influence your wallet.

The Federal Reserve announced Wednesday it will leave interest rates unchanged.
The Fed decision came amid demands from President Donald Trump to lower the key borrowing rate benchmark, and escalating attacks on Fed Chair Jerome Powell even hours before the announcement.

Trump has been pressuring Powell for a rate cut, arguing that maintaining a fed funds rate that is too high makes it harder for businesses and consumers to access cash, adding more strain to the U.S. economy. But Powell has said that the federal funds rate is likely to stay higher as the economy changes and policy is in flux. 
That’s enough to keep the central bank on the sidelines, for now, according to Greg McBride, Bankrate’s chief financial analyst. “With the uncertainty around tariffs and how that could impact inflation readings in the month ahead, there’s an ongoing sense of another shoe about to drop,” McBride said.
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The federal funds rate sets what banks charge each other for overnight lending, but it also has a domino effect on almost all of the borrowing and savings rates Americans see every day.  
When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans — including credit cards, auto loans and home equity lines of credit — quickly followed suit. Even though the central bank lowered its benchmark rate three times in 2024, those consumer rates are still elevated, and are mostly staying high, for now.

“Borrowing rates are high, with mortgage rates near 7%, many home equity lines of credit in double-digit interest rate territory, and the average credit card rate still above 20%,” McBride said. “But savers continue to be rewarded with inflation-beating returns on the top-yielding savings accounts, money market accounts, and certificates of deposit. Retirees, in particular, are earning good income on their hard-earned savings.”

Five ways the Fed affects your wallet

1. Credit cards
Many credit cards have a variable rate, so there’s a direct connection to the Fed’s benchmark.
With a rate cut likely postponed until at least September, the average credit card annual percentage rate is currently just over 20%, according to Bankrate — not far from last year’s all-time high. In 2024, banks raised credit card interest rates to record levels and some issuers said they are keeping those higher rates in place.
“Interest rates on credit cards are painful because they are so high,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion.
“The reality is you could drop the fed funds rate by two full basis points and all you are doing is lowering your interest rate from say 22% to 20%,” he said.
Borrowers are better off switching to a zero-interest balance transfer credit card, or consolidating and paying off high-interest credit cards with a lower-rate personal loan, experts say.
2. Auto loans
Auto loan rates are tied to several factors, but the Fed is one of the most significant.
With the Fed’s benchmark holding steady, the average rate on a five-year new car loan was 7.3% in May, near a record high, while the average auto loan rate for used cars was 11%, according to Edmunds.

But car prices are also rising — in part due to pressure from Trump’s tariffs on imported vehicles — leaving car buyers with bigger monthly payments and a growing affordability problem. Of those households with a monthly car payment, 20% pay more than $1,000 a month, according to separate data from Bank of America.
“Every way you slice it, car buyers are struggling to find a deal in today’s car market, and financing a new vehicle is becoming cost-prohibitive for more shoppers,” said Ivan Drury, Edmunds’ director of insights.
3. Mortgages
Mortgage rates don’t directly track the Fed, but are largely tied to Treasury yields and the economy. As a result, concerns over tariffs and ongoing uncertainty about future costs have kept those rates within the same narrow range for months.
The average rate for a 30-year, fixed-rate mortgage was 6.91% as of June 17, while the 15-year, fixed-rate was 6.17%, according to Mortgage News Daily. 
“I don’t see any major changes coming in the immediate future, meaning that those shopping for a home this summer should expect rates to remain relatively high,” said Matt Schulz, chief credit analyst at LendingTree. 
Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate, and those rates are also higher.
4. Student loans

D3sign | Moment | Getty Images

Federal student loan rates are set once a year, based in part on the last 10-year Treasury note auction in May and fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.
Current interest rates on undergraduate federal student loans made through June 30 are 6.53%. Starting July 1, the interest rates will be 6.39%.
Although borrowers with existing federal student debt balances won’t see their rates change, many are now facing other headwinds and fewer federal loan forgiveness options.
5. Savings
While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
“Yields for CDs and high-yield savings accounts aren’t at the sky-high levels they were a year ago, but they’re still really strong,” said LendingTree’s Schulz. Top-yielding online savings accounts currently pay more than 4%, on average, according to Bankrate — well above the annual rate of inflation.
“Shopping around for high-yield savings accounts, if you haven’t done it already, is one of the best financial moves you can make to take advantage of rates being high,” Schulz said.
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The Senate Finance Committee unveiled text for a multitrillion-dollar tax bill, part of a broader Republican domestic policy package.
The legislation would let taxpayers deduct up to $10,000 of car loan interest per year from their taxable income.
The Senate GOP bill, unlike its counterpart in the House “One Big Beautiful Bill Act,” seems to include new cars but exclude used cars from the tax deduction, tax experts said.
The average driver paid $1,332 of annual loan interest charges on new cars bought in 2024, according to AAA.

Senate Majority Leader John Thune (R-SD) speaks during a news conference following the weekly Senate Republican policy luncheon at the U.S. Capitol on June 17, 2025.
Anna Moneymaker | Getty Images News | Getty Images

A multitrillion-dollar tax package issued Monday by the Senate Finance Committee would offer a tax break for drivers on auto loan interest, but it doesn’t seem to be available for used cars, tax experts said.
The Senate GOP tax plan is part of a broader domestic policy bill that Republicans are trying to get to President Trump’s desk by the Fourth of July, and aims to partially fund tax cuts by slashing spending on health programs like Medicaid and the Affordable Care Act. The House passed its version — the “One Big Beautiful Bill Act” — in May.

One of the legislation’s many provisions would let taxpayers deduct up to $10,000 of auto loan interest from their taxable income in any given year. The average driver paid $1,332 of annual loan interest charges on new cars bought in 2024, according to AAA.
The tax break — which President Trump proposed when campaigning for president last year — would be available from 2025 through 2028.

Which vehicles may qualify for the tax break

Qualifying vehicles must be U.S.-assembled cars, minivans, vans, sport utility vehicles, pickup trucks, or motorcycles for personal use.
The Senate legislation excludes all-terrain vehicles, trailers and campers, which the House bill had included.
The deduction would only be available for loans secured after after December 31, 2024, according to the Senate legislation. It must also be the first loan on the vehicle.

Unlike a tax plan passed by the House in May, Senate Republicans appear to limit the tax deduction to new — and not used — passenger cars, tax experts said.
The Senate limits the tax break to vehicles for which “the original use … commences with the taxpayer,” according to the legislative text.
That phrasing is “pretty clear” in its meaning that only loans on new cars are eligible for the tax deduction, said Matt Gardner, senior fellow at the Institute on Taxation and Economic Policy.
“They don’t say the word ‘new cars’ but I don’t see another way of interpreting that language,” Gardner said.

Which car owners may benefit

That would limit the usefulness of the tax break for low- and middle-income taxpayers, who more often buy used cars, Gardner said.
A survey of low- and middle-earning households published in 2023 by researchers at the University of California, Los Angeles, showed 61% had bought a used vehicle, while 39% bought a new one.
Average household income was $115,000 for new-vehicle buyers in 2023, compared to $96,000 for a used-car buyer, according to Cox Automotive.
Cox estimates more than 20 million households will buy a used car in 2025. In March, it forecast about 16 million new-vehicle sales this year, though said tariffs levied by the Trump administration cloud the sales outlook.

Higher earners tend to get more value from tax deductions than low and middle earners, Gardner said. Deductions reduce the amount of taxable income that households pay, and high earners generally pay a higher federal tax rate than lower-earning households.
“The more you earn, the higher the tax rate you pay, meaning the more benefit you get from this thing,” Gardner said.
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However, the auto loan interest deduction starts to lose value when a taxpayer’s annual income exceeds $100,000. The threshold is $200,000 in the case of a joint tax return filed by married couples.
The deduction’s value falls by $200 for each $1,000 of income over those thresholds.
Meanwhile, the Trump administration put 25% tariffs on imported cars and car parts. Those tariffs are expected to push up car prices, and in turn erode the deduction’s value for households, Gardner said.
“Tariffs will completely eat up the value of this deduction for a lot of people,” he said.
William McBride, chief economist at the Tax Foundation, said he thinks the “biggest change” from the House version of the legislation is “to prevent loans against used cars.” More

The Senate has unveiled its version of the One Big Beautiful Bill Act that includes a temporary enhanced deduction for seniors ages 65 and up.
The chamber’s version of the proposal brings the deduction to $6,000 per qualifying individual, up from $4,000 per person proposed by the House.
Here’s who experts say would benefit most.

The Senate has begun deliberations over President Donald Trump’s massive “Big Beautiful Bill” that narrowly passed the House on May 22.
Bloomberg | Bloomberg | Getty Images

The Senate version of the One Big Beautiful Bill Act includes a temporary enhanced deduction for seniors ages 65 and up. The House of Representatives also proposed such a tax break in its text, calling it a “bonus.”
Notably, the Senate is calling for a deduction of up to $6,000 per qualifying individual. The House included a $4,000 deduction.

The senior “bonus” is in lieu of the elimination of taxes on Social Security benefits that President Donald Trump pitched on the campaign trail. The Republicans’ tax bill is being done through reconciliation, a process that generally prohibits changes to Social Security.
The White House has said the proposed deduction is a “historic tax break” for seniors.

How the senior ‘bonus’ deduction would work

The full deduction amount would be available to individuals with up to $75,000 in modified adjusted gross income, and $150,000 if married and filing jointly.
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Notably, the Senate version calls for a faster 6% phase-out rate for incomes above those thresholds, compared to the House version’s 4% phase-out rate, according to Alex Durante, senior economist at the Tax Foundation.

The faster phase-out means the full $6,000 benefit is lost more quickly, said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. For people who would be eligible for the full proposed senior deduction, the Senate’s $6,000 version is more generous, he said.
“It really depends on where you are on the income distribution,” Gleckman said, with middle-income taxpayers poised to benefit most.
In the House version, the proposed senior deduction would be available to taxpayers whether they take the standard deduction or itemize their tax returns. There are not many taxpayers in the income ranges for the deduction who itemize their returns, Gleckman said.

To qualify for the break, all individual taxpayers and spouses, if filing jointly, would need to have Social Security numbers.
The temporary senior deduction would be in place for tax years 2025 through 2028.

No tax on Social Security vs. senior ‘bonus”

The House of Representatives passed its version of the One Big Beautiful Bill Act on May 22. Both chambers will have to agree on the changes before it is sent to Trump’s to sign.
“I think it’s pretty clear, since this was in both bills, that there’s going to be a version of a senior deduction,” Durante said.
Eliminating taxes on Social Security benefits would have been a more expensive provision, he said.

Tax-free Social Security benefits would have benefited higher-income people most, according to Gleckman.
Currently, Social Security benefits are taxed based on a formula known as combined income — the sum of adjusted gross income, nontaxable interest and half of Social Security benefits.
Up to 85% of Social Security benefits are taxed for single taxpayers with combined income above $34,000 and joint filers with more than $44,000. Meanwhile, up to 50% of benefits are taxed for individuals with $25,000 to $34,000 in combined income and for couples with between $32,000 and $44,000.
In contrast, the proposed senior “bonus” would not benefit high-income taxpayers and instead focuses on middle-income taxpayers with incomes less than $75,000 if single or $150,000 if married.
“It’s better because it helps the people who need the help more,” Gleckman said. More

Under current law, the maximum child tax credit is $2,000, which will revert to $1,000 after 2025 without action from Congress.
Both House and Senate proposals would increase the top credit, but phase-ins would mirror the current tax break.
Without design changes, the higher child tax credit wouldn’t benefit the lowest-earning households, policy experts say.

Oscar Wong | Moment | Getty Images

As Senate Republicans race to pass President Donald Trump’s “big beautiful” spending bill, key provisions, including the child tax credit, could change amid Senate-House negotiations.
The Tax Cuts and Jobs Act, or TCJA, of 2017, temporarily boosted the maximum child tax credit to $2,000 from $1,000, which will expire after 2025 without action from Congress.  

If enacted, the Senate bill would permanently increase the biggest credit to $2,200 starting in 2025, according to a draft of the text released on Monday. The measure would also index this figure for inflation after 2025.
By comparison, the House-approved bill would boost the top child tax credit to $2,500 from 2025 through 2028. After that, the credit’s highest value would drop to $2,000 and be indexed for inflation.
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It’s unclear how the final provision may change before Trump signs the package into law. However, in either version, the changes wouldn’t benefit the lowest-earning families, some policy experts say.
“It’s extremely disappointing,” said Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities’ federal fiscal policy division. “The [child tax credit] increase will go to families with middle and upper incomes.”

Here’s how the tax break works and who could benefit if Congress enacts the updates.

How the child tax credit works

For 2025, the tax break is worth up to $2,000 per qualifying child under age 17 with a valid Social Security number. Up to $1,700 is “refundable” for 2025, which provides a maximum of $1,700 once the credit exceeds taxes owed.  
“If you have very low income, you can’t access the full $2,000 credit,” and the tax break phases out for “very high-income families,” said Elaine Maag, senior fellow in the Urban-Brookings Tax Policy Center.
After your first $2,500 of earnings, the child tax credit value is 15% of adjusted gross income, or AGI, until the tax break reaches that peak of $2,000 per child. The tax break starts to phase out once AGI exceeds $400,000 for married couples filing together or $200,000 for all other taxpayers.   

The ‘central problem’ with the child tax credit

Under current law, 17 million children don’t receive the full child tax credit, according to Cox from the Center on Budget and Policy Priorities. The reason is many families earn too little and they don’t owe taxes.  
The Senate and House proposals don’t change that “central problem,” she said. 
In 2024, the House passed a bipartisan bill to address this issue by boosting the refundable portion of the credit, but the legislation later failed in the Senate.
The proposed higher child tax credit comes as the U.S. fertility rate hovers near historic lows, which has troubled lawmakers, including the Trump administration.
Some research suggests financial incentives, like a bigger child tax credit, could boost U.S. fertility. But other experts say it won’t solve the issue long-term. More