Potential Impacts of Trump's 2025 Tax Proposal on Your Tax Rebate: Increase or Decrease
The One Big Beautiful Bill (OBBB) has introduced several changes to the tax system, affecting both citizens and non-citizens in the United States. Here's a breakdown of some key provisions and their impact on taxpayers.
Child Tax Credit (CTC) Enhancements
The OBBB has raised the Child Tax Credit (CTC) to $2,500 per child for tax years 2025 through 2028. This increase benefits eligible families, but it comes with strict Social Security Number (SSN) requirements that significantly affect non-citizen taxpayers.
- The child must have an SSN.
- The taxpayer(s) must have an SSN(s).
- If filing jointly, both spouses must have SSNs.
These requirements mean that a non-citizen spouse who only has an ITIN (Individual Taxpayer Identification Number) cannot be included for the CTC claim, effectively disqualifying many mixed-status or non-citizen families from claiming the credit.
Changes to CTC and its Impact on Non-Citizen Taxpayers
The strict SSN mandate is aimed at preventing fraud and limiting benefits to those with authorized work status, but it restricts access for many non-citizen families otherwise eligible for the credit by familial or citizenship ties. As a result, many non-citizen or mixed-status households, including those abroad or with non-U.S. spouses, face difficulties or disqualification for the CTC unless both parents have valid SSNs.
Other Notable Changes in the OBBB
- The SALT cap is increased to $40,000 for 2025, with limits of $150,000 for married, filing jointly couples and $75,000 for single filers.
- The OBBB permanently extended the "Qualified Business Income" (QBI) tax rate. Single filers receive $15,750, while married couples filing jointly receive $31,500.
- The maximum amount for qualifying children 17 and under is increased from $2,000 to $2,200. This extra $200 could raise your next tax refund or lower your tax bill.
- Families with four children could see an increase in child tax credit breaks from $8,000 to $8,800.
- The child tax credit is reduced by $50 for every $1,000 (or fraction thereof) that your Modified Adjusted Gross Income (MAGI) is above specific income thresholds. If you make above the income limits of $200,000 (single filers) or $400,000 (married filing jointly couples), you'll likely see less benefit from the new child tax credit.
- Heads of household receive $23,625.
- The OBBB also includes a new temporary car loan interest deduction allowing you to deduct up to $10,000 in interest paid on new vehicles, subject to income phase-outs.
The OBBB also introduces a new bonus standard deduction of $6,000 for those who are 65 or older, and a "no tax on overtime" deduction worth up to $12,500 for tax years 2025 through 2028, which could increase your tax refund or lower your federal tax liability.
In summary, the OBBB brings numerous changes to the tax system, with the Child Tax Credit being one of the most significant. While the credit increases for eligible families, strict SSN requirements may disqualify many non-citizen families from claiming it. It's essential to understand these changes and their impact on your specific situation to make informed decisions about your tax filings.
Defi and personal finance: In light of the OBBB's changes, investors might consider exploring defi platforms for alternative ways to manage their personal finances, especially if they or their families face difficulties in claiming the Child Tax Credit due to SSN requirements.
Business and finance: Small businesses may benefit from the OBBB's permanent extension of the "Qualified Business Income" (QBI) tax rate, as it offers single filers $15,750 and married couples filing jointly $31,500. This could be an opportunity for businesses to reduce their tax liability.
