Personal Finance

How Trump ‘big beautiful’ tax bill could change in the Senate

Published

3 days ago

June 1, 2025

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

House Republicans passed a multi-trillion-dollar tax and spending package after months of debate, which included many of President Donald Trump‘s priorities.

Now, policy experts are bracing for Senate changes as GOP lawmakers aim to finalize the “big bill” by the Fourth of July.

If enacted as currently drafted, the House’s “One Big Beautiful Bill Act” would make permanent Trump’s 2017 tax cuts, while adding new tax breaks for tip income, overtime pay and older Americans, among other provisions.

The House bill also approved historic spending cuts to programs for low-income families, including Medicaid health coverage and SNAP, formerly known as food stamps.

“Overall, the [Senate] bill is not going to be that much different,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

But there will be “a lot of debate” about the Medicaid provision, as well as other changes, he said.

Here are some other issues to watch during negotiations, policy experts say.

Fiscal hawks could ‘stop the process’

With control of Congress, Republicans are using a process called “budget reconciliation,” which bypasses the Senate filibuster and only needs a simple majority vote to clear the upper chamber.

But some GOP senators have cost concerns about the House-approved bill.

“We have enough to stop the process until the president gets serious about spending reduction and reducing the deficit,” Sen. Ron Johnson, R-Wis., said last week on CNN’s ‘State of the Union.’

An earlier version of the House package could raise the deficit by an estimated $3.8 trillion over the next decade, according to the Congressional Budget Office. However, the agency hasn’t released an updated score to reflect the bill’s last-minute changes.

Other cost estimates for the House-passed reconciliation bill have ranged between $2 to $3 trillion over 10 years.

Under reconciliation, the Senate bill also must follow the “Byrd Rule,” which bans anything unrelated to federal revenue or spending.

After the Senate vote, House lawmakers must approve changes to the bill, which could be tricky with a slim Republican majority.

“That’s where the fight is really going to happen,” Gleckman said.

A lower ‘SALT’ deduction limit

One sticking point during the House debate was the current $10,000 limit on the federal deduction for state and local taxes, known as “SALT,” which is scheduled to sunset after 2025.

Enacted by Trump via the Tax Cuts and Jobs Act, or TCJA, of 2017, the $10,000 cap has been a key issue for certain lawmakers in high-tax states like New York, New Jersey and California.

Before TCJA, filers who itemized tax breaks could claim an unlimited deduction on state and local income taxes, along with property taxes. But the so-called alternative minimum tax reduced the benefit for some higher earners.

After lengthy debate, House Republicans approved a $40,000 SALT limit. If enacted, the higher cap would apply to 2025 and phase out for incomes over $500,000.

Putting tax & spending bill together before July 4th will be 'extremely difficult', says Bill Daley

But the SALT limit is likely to be lower than $40,000 after Senate negotiations, experts say.

Staying closer to the current $10,000 cap “seems like a very natural place to start,” but the final number could be higher, said Alex Muresianu, senior policy analyst at the Tax Foundation.

Child tax credit could be more generous

The Senate could also expand the child tax credit further, policy experts say.

If enacted in its current form, the House bill would make permanent the maximum $2,000 credit passed via the TCJA, which will otherwise revert to $1,000 after 2025.

The House measure would also make the highest child tax credit $2,500 from 2025 through 2028. After that, the credit’s top value would revert to $2,000 and be indexed for inflation.

But some senators, including Josh Hawley, R-Mo., have called for a bigger tax break. Vice President JD Vance also floated a higher child tax credit during the campaign in August.

With the House-approved tax breaks favoring higher earners, “there’s some recognition that they need to do a little more” for families, Gleckman said.

“That’s going to be a fun one to watch,” he said of the upcoming Senate debate.

Personal Finance

Why on-time debt payments may not boost your credit score

Published

1 hour ago

June 4, 2025

Business Finance News

Asiavision | E+ | Getty Images

Americans have a near-record level of credit card debt — $1.18 trillion as of the first quarter of 2025, according to the Federal Reserve Bank of New York. The average credit card debt per borrower was $6,371 during that time, based on data from TransUnion, one of the three major credit reporting companies.

Many people don’t understand why a common strategy that can help them pay down that debt — paying bills on time — isn’t all it takes to improve their credit. Separating fact from fiction is essential to help you pay down debt and raise your credit score.

Here’s the truth behind a common credit myth:

Myth: Paying bills on time ensures a high credit score.

Fact: Your payment history is critical to your credit score. However, not all bill payments are treated equally, and making them on time isn’t all that counts.

Your credit score is a three-digit numerical snapshot, typically ranging from 300 to 850, that lets lenders know how likely you are to repay a loan. The average American’s score is 715, according to February data from scoring brand FICO.

Here’s what you need to know about on-time payments and your credit:

Not all debt payments factor into credit scores

“You may be paying rent-to-own, private school tuition, utilities, or internet payments on time every month, and you think it helps your credit score,” said Yanely Espinal, director of educational outreach for financial literacy nonprofit Next Gen Personal Finance. “But a lot of these are not traditional payment types and are not reported to the credit bureaus — so there’s no impact.”

For example, making on-time payments on buy now, pay later, or BNPL, loans may not help your credit score, even though 62% of BNPL users incorrectly believe they will, according to a new LendingTree survey.

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Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

While some BNPL providers do report certain loans to the credit bureaus, this is not a universal practice. And BNPL users may see a negative credit impact if they fall behind.

“Some BNPL lenders will report missed payments, which can hurt your score,” said Matt Schulz, chief consumer finance analyst at LendingTree and author of “Ask Questions, Save Money, Make More.”

An easy way to check what payments are and aren’t influencing your credit: take a look at your credit report. You can pull it for free, weekly, for each of the major credit reporting agencies at Annualcreditreport.com.

‘Go for the A+’ on credit usage

Julpo | E+ | Getty Images

While payment history can account for 35% of your score, according to FICO, it’s not the only factor that matters. How much you owe relative to how much credit you have available to you — known as your “credit utilization” — is almost as important, at about 30% of your score.

Higher utilization can hurt your score. Aim to use less than 30% of your available credit across all accounts, credit experts say, and keep it below 10% if you really want to improve your credit score.

A 2024 LendingTree study found that consumers with credit scores of 720 and up had a utilization rate of 10.2%, compared with 36.2% for those with credit scores of 660 to 719.

“Don’t settle for B+ when you can go for the A+,” said Espinal, who is also the author of “Mind Your Money” and a member of the CNBC Global Financial Wellness Advisory Board. “You want to use less than 10% to really boost your score significantly.”

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Personal Finance

Social Security Fairness Act benefit increases arrive for pensioners

Published

3 hours ago

June 4, 2025

Business Finance News

A Social Security Administration (SSA) office in Washington, DC, March 26, 2025.

Saul Loeb | Afp | Getty Images

The Social Security Administration has now processed about 91% of cases related to a new law that is prompting higher benefits and lump-sum retroactive payments for nearly 3 million people, according to a new update from the agency.

The Social Security Fairness Act, which was signed into law in January, eliminated two provisions — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO — that previously reduced benefits for individuals who also receive income from public pensions that did not require the payment of Social Security payroll taxes.

At the start of the year, the Social Security Administration said affected beneficiaries may have to wait more than one year to see their payments adjusted.

The agency credits automation for helping it to expedite those payments.

The Social Security Administration currently plans to update all beneficiary records affected by the law by early November.

However, the agency is “working to exceed its estimate” under new commissioner Frank Bisignano, a Social Security Administration official said via email.

“Commissioner Bisignano committed to senators during his confirmation process that this would be finished ‘while the weather is warm’ and he will keep his promise,” the Social Security Administration official said.

Here’s the latest on the Fairness Act payments.

Who does the Social Security Fairness Act affect?

The Social Security Fairness Act, which was signed into law on Jan. 5, affects certain individuals who are eligible for Social Security benefits, but who also receive pensions from work that did not require the payment of Social Security payroll taxes.

Examples of those affected include teachers, firefighters and police officers; federal employees covered by the Civil Service Retirement System; and people who are covered by a foreign social security system, according to the Social Security Administration.

Notably, not everyone in those groups will receive a benefit increase, according to the agency. About 72% of state and local public employees pay Social Security taxes, and therefore were not affected by the new law, according to the agency.

What you need to know about Social Security

The provisions that had previously been in place reduced Social Security benefits for more than 2.8 million people, according to SSA. To date, the agency has processed about 2.5 million cases, the agency said in its latest update.

Railroad Retirement Board beneficiaries also stand to receive adjusted annuity payments because of the law. New monthly annuity amounts for most individuals will begin in July, and one-time retroactive payments are due to arrive by the end of July, according to a Railroad Retirement Board spokeswoman.

How much are the benefit increases?

Individuals affected may see monthly Social Security check increases ranging from “very little” to more than $1,000 per month, according to SSA.

The changes will result in higher monthly payments ranging from $360 to $1,190, depending on individual circumstances, the Congressional Budget Office previously estimated.

Affected beneficiaries will also see lump-sum payments dating back as far back as January 2024. Notably, Social Security benefit payments for January 2024 were received by beneficiaries in February 2024, according to the Social Security Administration.

For each beneficiary, the monthly benefit increases and any back payments are processed together, the Social Security official said.

Who is still waiting for benefit adjustments?

The Social Security Administration is now prioritizing the remaining complex cases that could not be automated, according to the Social Security official.

Those cases require additional time to manually update records to process both the retroactive and new benefits.

The roughly 300,000 individuals who are still waiting may have unique circumstances, notes David A. Weaver, a former Social Security Administration executive who currently teaches statistics at the University of South Carolina.

For example, some eligible beneficiaries who have recently died may qualify for the lump-sum retroactive payments, Weaver said. In those circumstances, the Social Security Administration would likely try to issue that money to survivors.

Others may be affected by overpayments, whereby the Social Security Administration issued benefit payments that were too high. In those cases, the agency will generally seek reimbursement for the excess sums that were issued.

In addition to the cases that require manual processing, there are people who are now newly eligible to apply for Social Security benefits as a result of the law, Weaver said.

Those individuals may need to file an application, according to the Social Security Administration. The date of the application may determine benefit start date and benefit amount.

What could happen next?

As the implementation of the Social Security Fairness Act moves to completion, it may be wise for Congress to ask the Government Accountability Office to audit that process, Weaver said.

That may allow for an evaluation of the final administrative costs for processing the benefit changes due to the law, including both the manual cases and additional new claims, as well as phone calls from the public about the changes, he said.

That investigation could also evaluate whether other agency work was sidelined as the benefit changes were processed, he said.

Have your Social Security benefits been affected by the Social Security Fairness Act? If you would be willing to share your story, email [email protected].

Personal Finance

Trump’s tax bill could end ‘SALT’ workaround for some businesses

Published

4 hours ago

June 4, 2025

Business Finance News

Speaker of the House Mike Johnson, R-La., speaks to the media after the House narrowly passed a bill forwarding President Donald Trump’s agenda at the Capitol on May 22, 2025.

Kevin Dietsch | Getty Images

As Senate Republicans debate trillions of tax breaks advanced by the House, some business owners could be blocked from part of the proposed windfall, policy experts say.

If enacted as written, the House GOP’s “One Big Beautiful Bill Act” would raise the federal deduction limit for state and local taxes, known as SALT, to $40,000. That would phase out once income exceeds $500,000.

The bill would also boost a tax break for pass-through businesses, known as the qualified business income, or QBI, deduction, to 23%. But the measure would end a popular state-level SALT cap workaround for certain pass-through business owners.

Here’s what to know about the proposed change and who could be impacted.

SALT deduction cap ‘workaround’

Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, there’s currently a $10,000 limit on the SALT deduction for filers who itemize tax breaks. This cap will expire after 2025 without changes from Congress. The SALT deduction was unlimited before TCJA, but the so-called alternative minimum tax reduced the benefit for some higher earners.

The cap has been a pain point in high-tax states like New York, New Jersey and California because residents can’t deduct more than $10,000 for SALT, which includes income, property and sales taxes.

However, most states now have a “workaround” to bypass the federal SALT deduction limit for pass-through business owners, explained Garrett Watson, director of policy analysis at the Tax Foundation.

As of May 9, some 36 states and one locality, New York City, have enacted a workaround — the pass-through entity, or PTE, level tax — since the 2017 TCJA limitation, according to the American Institute of Certified Public Accountants, or AICPA.

While each state has different rules, the strategy generally involves paying individual state and local taxes through a pass-through business to sidestep the $10,000 cap, Watson said. Owners can then deduct their share of SALT paid.

How the SALT workaround could change

Certain white-collar professionals — doctors, lawyers, accountants, financial advisors and others — known as a “specified service trade or business,” or SSTB, can’t claim the qualified business income deduction once income exceeds certain limits.

As advanced, the House bill would block SSTBs from using the SALT deduction workaround, which would be “substantial” for those impacted, Watson said.

Meanwhile, some non-SSTB pass-through businesses would have two benefits under the House-approved bill. Depending on income, they could qualify for the bigger 23% QBI deduction. They could also still claim an unlimited SALT deduction via the PTE workaround, experts say.

Hidden cost of Republican tax bill: Here's what to know

The revised provision has faced some pushback among certain organizations.

“This loophole is likely expensive, and lawmakers and the public should demand a clear accounting of the fiscal cost to bless workarounds for this favored group,” New York University Tax Law Center deputy director Mike Kaercher said in a statement after the revised House bill text was released in late May.

Some industry groups, such as AICPA, have urged the Senate to maintain the SALT deduction workaround for SSTBs.

If the House bill is enacted as written, SSTBs would be “unfairly economically disadvantaged” by existing as a certain type of business, AICPA wrote in a May 29 letter to the Senate.

Since many SSTBs can’t organize as a C corporation, there’s “no option to escape the harsh results of the SSTB distinction,” which could limit these professionals’ SALT deduction, AICPA wrote.