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The massive tax and spending legislation President Donald Trump dubbed the “Big Beautiful Bill” is set to reshape your family’s finances in ways you might not expect.
White House Press Secretary Karoline Leavitt hailed the bill’s passage, saying in a statement that it “delivers on the common sense agenda that nearly 80 million Americans voted for—the largest middle-class tax cut in history, permanent border security, massive military funding, and restoring fiscal sanity.” But critics paint a different picture, with Economic Policy Institute President Heidi Shierholz calling it “one of the most destructive economic bills in generations” while saying it “will gut Medicaid, slash food aid for families, and shutter rural hospitals” to pay for tax cuts to the wealthiest Americans.
From new savings accounts for your kids to changes in college funding and massive cuts to the healthcare millions of American families rely on, we take you beyond the rhetoric to highlight the five most important parts of the law for your family.
Key Takeaways
- Under the One Big Beautiful Bill Act (OBBBA, 2025), child tax credits increase to $2,200, and there are new $1,000 “Trump accounts” for babies, but families relying on safety net programs face significant cuts.
- Wealthy families gain about $12,000 annually while the poorest lose $1,600 per year, according to a Congressional Budget Office analysis.
1. The Child Tax Credit Increases
The federal government’s child tax credit applies to families with qualifying children under the age of 17 who have a valid Social Security number. The OBBBA increases the credit from $2,000 to $2,200 per child starting with your 2025 tax return. The refundable portion—the part you can get back even if you don’t owe taxes—jumps to $1,700 starting in the 2025 tax year.
2. Medicaid Cuts To Cuts to Families
Critics of the law have focused many of their concerns on the changes to the American healthcare system. “The biggest and most damaging cuts are those to Medicaid,” wrote Steven Rattner, who served as counselor to the Treasury secretary in the Obama administration, in the New York Times.
Starting in late 2026, adults on Medicaid will face new work requirements of 80 hours per month. Parents with children aged 14 and older will also have to meet these requirements. Miss the paperwork or can’t prove you’re working enough hours? You could join the 16 million estimated by the nonpartisan Congressional Budget Office to lose access to Medicaid, the Children’s Health Insurance Program, and Obamacare exchanges over the next decade.
Tip
The ripple effects of the law on healthcare could extend beyond individual coverage. Rural hospitals, which rely heavily on Medicaid revenue, face a particular crisis. While the bill includes $50 billion in emergency funding for rural hospitals over five years, critics argue this falls far short of offsetting the $1 trillion in Medicaid cuts.
3. Newborns Get $1,000 Investment Accounts
Starting in 2025 through 2028, every child of a parent with a Social Security number will receive a new “Trump account”—essentially a government-funded investment account with $1,000 deposited at birth. Modeled after individual retirement accounts and governed by relevant sections of federal law pertaining to them, there are major distinctions from typical IRAs:
- Income that goes in doesn’t have to be earned income, given the age group involved.
- Distributions can be taken at 18, not at 59.5 or 65.
- These accounts have lower annual caps of $5,000, and employers can contribute another $2,500 tax-free.
You can open these accounts for your child even if they were born before 2025, but without the $1,000 starter money.
4. Your Kid’s College Costs Are Likely To Go Up
While your younger kids are getting investment accounts, older children planning for college face a harsh new reality. The bill dramatically cuts how much students can borrow from the federal government, potentially pricing many families out of higher education.
Graduate students now face borrowing caps of $20,500 per year (down significantly from current unlimited borrowing). Parents using PLUS loans can borrow up to $20,000 annually per child, with a lifetime limit of $65,000. These and other changes are summarized below.
5. A New National School Choice Program
Starting in 2027, the federal government will provide tax credits to people who donate to private school scholarship funds—essentially creating a national school voucher program.
Donors get 100% tax credits up to $1,700 for contributions to these funds, which then provide scholarships for families to send kids to private schools.
The Bottom Line
There’s a split-screen reality regarding how the OBBBA affects American families. Higher-income families will see meaningful benefits—bigger child tax credits, investment accounts for newborns, and senior tax relief. But families relying on Medicaid, SNAP, or other safety net programs face potential coverage losses and reduced benefits.
For parents, the key is understanding which category your family falls into and planning accordingly. If you have a decent income and employer health insurance, focus on maximizing the new tax benefits and savings opportunities. If your family depends on Medicaid or SNAP, start preparing for new requirements and potential benefit reductions.
