Here's what federal tax bill means for NJ wallets

By: Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey

..... The landmark "Big Beautiful Bill" that President Donald Trump signed on July 4 [2025] will affect the finances of hundreds of thousands of New Jerseyans, for better or for worse, depending on whom you ask.
..... Estimates call for the measure to increase the national deficit by $3.4 trillion over the next 10 years.
..... It will make 2017 income tax breaks for tips and overtime. It will implement new benefits for businesses, and roll back clean energy tax credits crated under former President Joe Biden.
..... Democrats in the state were quick to condemn the measure for its provisions that would cut access to food stamps and Medicaid.
..... New Jersey Republicans meanwhile cheered the legislation as bolstering national defense and immigration enforcement and gutting wasteful spending.
..... The more than 1,000-page piece of legislation fundamentally alter Americana's finances in the years to come.
..... So what does the bill do for New Jerseyans, and what does it mean for your wallet?
..... We broke out those numbers on the impact you could see.

Cuts to health care and food programs

..... The Penn Wharton Budget Model forecasts that the lowest-income households will be left worse off because of cuts to Medicare and SNAP, formerly known as food stamps. those Americans could lose $27,500 over a lifetime, while the highest-income households would gain more than $65,000.
..... Americans earnings below $58,000 would likely lose benefits from Medicaid, health insurance marketplaces, food assistance and student loans.
..... New Jersey's department of Health and Human Services said more than 350,000 eligible residents will likely lose health care coverage in New Jersey.

No tax on tips or overtime wages

..... Starting this year, [2025] the first $25,000 on tips would be tax deductible through 2028 for individuals earning up to $150,000 a year (or $300,000 for those filing jointly).
..... The legislation spells out which jobs are affected, such as food servers and beauticians.
..... In addition, the bill makes up to $12,500 of extra overtime pay tax deductible, also with $150,000 income limit for single filers or $300,000 limit for joint filers.

Higher standard deduction

..... The bill permanently raises the standard deduction to $15,750 for individuals, $31,500 for married couples and $23,625 for heads of households.

Increased SALT deductions

..... The law raises the limit from $10,000 to $40,000 on what tax filers can claim in state and local property tax deductions for those earning up to $500,000a year. After 2028, the cap goes back down to $10,000, which was the limit set in Trump's 2017 tax bill.
..... Critics say the cap has targeted - and hurt residents in - often Democratic-leaning states with high property taxes, such as New Jersey, California and New York.
..... Average property taxes in some New Jersey towns in 2024 were more than double the $10,000 cap, so homeowners could not claim the full property tax payment as a deduction on their federal income tax.
..... In Bergen County, for example, the average property tax bill for 2024 was more than $13,000, state records show.

Car loan deductions

..... If your car was assembled in the U.S. you could deduct up to $10,000 in car loan interest payments.
..... The deduction phases out between $100,000 and $250,000 if you file jointly.

Higher senior tax deductions

..... Through 2028, anyone over 65 could deduct an additional $6,000 on their taxes. That deduction begins phasing out at $75,000, or $150,000 if you file jointly.

Bigger estate tax exemption

..... The tax bill allows estates valued at up to $15 million to be passed tax-free to their heirs. Without the change, the exemption would have reverted to just over $7 million.

Increased child tax credits, other exemptions

..... The child tax credit is raised from $2,000 to $2,200, and then is adjusted for inflation after this year. [2025]
..... The law also provides $1,000 to children under 8 to open a special savings account, and allows for tax-free contributions of up to $,000 annually until the child erases 18 years of age.

Green energy rollbacks

..... The new law repeals the $7,500 tax credit for electric cars effective September 30, [2025] a move that critics say could hamper the EV market. Also taken out are a 30% tax credit for rooftop residential solar enacted as part of Biden's inflation Reduction Act.

..... This article contains material from USA Today.

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