Dear Friend in Finance,
I've been hearing a lot in the news about the new tax bill that Trump recently passed. How does this affect me?
Sincerely,
Confused By One Big Bill
Dear Confused By One Big Bill,
To be honest, this blog is too small a space to dive into all of the specifics and intricacies of everything in the bill. It's over 1000 pages, after all, and the lawmakers did their best to make things as confusing as possible!
But I can cover on a very superficial level some of the things the bill has put into effect, and how it affects you. In this case, I'll assume that your income is low to moderate, and that you might have a small business thanks to gig work, but without any employees.
Tax Brackets:
Many people didn't realize that the tax brackets that were put in effect by the original Trump Tax Act were set to expire. This new bill makes those tax brackets permanent. While the tax brackets were not great for everyone, they are much simpler than the myriad of brackets that existed before. Most low- and middle-income families will continue to benefit from the lower rates that were introduced in 2017.
Standard Deduction:
The standard deduction—how much income you can earn before you owe any federal income tax—has been adjusted upward slightly. For 2025, the deduction is indexed for inflation and remains higher than it was pre-2017, which benefits most households that don’t itemize their deductions. For many families, this means less taxable income and potentially a lower overall tax bill.
Child Tax Credit (CTC):
This one is big. The Child Tax Credit has been slightly expanded in this new bill, though not to the levels seen during the pandemic. It’s now partially refundable again for more families, which means you could get money back even if you don’t owe taxes. If you’re a parent with children under 17, this is worth paying attention to—especially if your income is moderate or you work gig jobs and don't always owe much in taxes.
Earned Income Tax Credit (EITC):
This credit continues to provide a boost to low- and moderate-income workers, especially single parents. While the new bill doesn’t dramatically expand it, it preserves the enhancements made in previous years for childless workers and adjusts eligibility thresholds to account for inflation. If you’ve qualified before, chances are you’ll still benefit.
Gig Work and Small Business (Pass-Through Deduction):
If you’ve got a small business or earn income from freelance work (think: Uber, Etsy, or contract work), the Qualified Business Income (QBI) deduction is still here. That means you can deduct up to 20% of your income from self-employment before calculating taxes. The bill extends this provision, which was also set to expire. There are income limits, but most moderate-income gig workers will still qualify.
Health Care Penalty Still Gone:
Just a reminder—the bill does not bring back the penalty for not having health insurance, which was eliminated in an earlier bill. If you rely on marketplace plans or Medicaid, nothing in this new bill adds penalties or restrictions.
What’s Missing:
While this bill helps some folks by locking in lower tax rates and preserving deductions, it doesn’t bring back some of the pandemic-era benefits that were especially helpful for low-income families, like the fully refundable CTC or expanded unemployment support. And it doesn’t do much to address housing costs, student loans, or health insurance premiums—areas where many families are still feeling squeezed.
So: if you're working a moderate-income job or side hustle, claiming the standard deduction, and possibly raising a kid or two, this bill may not feel like a windfall, but it’s also not a disaster. It mostly preserves the status quo—albeit one that remains much friendlier to corporations and high earners than to families like yours.
Sincerely,
Your Friend in Finance