3. “No Tax on Car Loan Interest” Deduction

Allows taxpayers to deduct interest paid on a personal-use auto loan for newly purchased vehicles.

Eligibility Criteria:

• Vehicle must be:
• New (no used vehicles qualify).
• Personal use only (not business/commercial).
• Final assembly in the U.S.
• Have a GVWR < 14,000 lbs.
• Loan must be:
• Originated after December 31, 2024.
• Secured by a lien on the vehicle.
• Refinanced loans may qualify for deduction.

Deduction Limits:

• $10,000 per year
• Phase-out at:
• $100,000 (individual)
• $200,000 (joint filers)

Requirements:

• Must include Vehicle Identification Number (VIN) on return.
• Deduction allowed for both itemizing and non-itemizing taxpayers.

Reporting:

• Lenders/payees must report interest received to IRS and furnish statements to borrowers.
• Transition relief applies for 2025.

4. New Senior Deduction

Adds an additional $6,000 deduction for seniors aged 65 and older.

Eligibility Criteria:

• Taxpayer must be age 65 or older by December 31 of the tax year.
• Applies to each qualifying individual (i.e., $12,000 total for a senior couple).

Deduction Limits:

• No cap, but phases out at:
• $75,000 (individual)
• $150,000 (joint filers)

Requirements:

• Must include Social Security Number of qualifying individual(s).
• Must file jointly if married to claim the deduction.

Additional Notes:

• This deduction is in addition to the current senior standard deduction under existing law.
• Available for both itemizing and non-itemizing taxpayers.

Implementation and Guidance

The IRS will:

• Provide occupation and vehicle eligibility lists, and
• Issue transition relief and guidance for 2025 regarding the reporting and claiming of these new deductions.

Employers, lenders, and other reporting entities should prepare for new information return requirements.

Tax Provisions

The bill includes significant tax changes aimed at individuals and businesses:

• Permanently extends the 2017 individual tax cuts that were set to expire at the end of 2025.
• Temporarily increases the SALT (state and local tax) deduction cap to $40,000 for households earning less than $500,000. This provision will revert to the $10,000 cap after five years.
• Introduces temporary deductions through 2028 for:
• Tips and overtime income.
• Interest on loans for U.S.-assembled automobiles, up to $10,000 annually.
• An additional tax deduction of up to $6,000 for seniors.
• Establishes "Trump Accounts" — tax-advantaged savings accounts for children, available to be opened at birth and receive contributions until 2028.
• Raises the Child Tax Credit by $200 to a total of $2,200 and ties it to inflation moving forward.
• Implements a 1 percent remittance tax on money sent abroad.
• Increases taxes on large university endowments.

Energy and Climate Policy

The bill rolls back many clean energy initiatives introduced under the Biden administration. Specific provisions include:

• Phasing out tax credits for renewable energy projects.
• Eliminating electric vehicle purchase subsidies.
• Repealing the methane emissions fee on energy producers.
• Offering new subsidies for domestic oil and gas development.
• Expanding tax credits for U.S.-based semiconductor manufacturing.
• Repealing federal taxes on firearm silencers.

Budgetary Impact and Spending

The bill raises the U.S. debt ceiling by $5 trillion. According to projections by the Congressional Budget Office (CBO), it will add approximately $2.8 trillion to the national deficit over the next decade. Other independent estimates place the deficit increase closer to $3 to $4 trillion.

To offset some of the tax cuts and spending, the bill includes significant reductions in social spending:

• A 12 percent cut to Medicaid.
• Tighter work requirements for SNAP (food assistance) and other welfare programs.
• These changes could result in millions of Americans losing access to health insurance or other benefits.

Defense and Border Security

A major feature of the OBBB is its focus on national security:

• Allocates $150 billion in new defense spending, with a focus on shipbuilding, drone warfare, missile systems, and Indo-Pacific military operations.
• Adds $150 billion for immigration enforcement, dramatically expanding the budget for Immigration and Customs Enforcement (ICE). ICE is projected to become the most heavily funded federal law enforcement agency by 2029.

Public Response and Criticism

The bill has been met with strong opposition from Democrats, social justice organizations, environmental groups, and many economists. Key criticisms include:

• The bill disproportionately benefits wealthier Americans while cutting essential support for low-income households.
• Medicaid cuts could result in 10 to 11 million people losing healthcare coverage.
• Clean energy rollbacks are expected to cause up to 830,000 job losses and increase average household energy costs by as much as $640 per year by 2035.
• Critics argue the bill represents a regressive shift in federal priorities, prioritizing tax breaks and military expansion over social welfare and environmental protection.

Support and Endorsements

Supporters of the bill, primarily conservative lawmakers, business groups, and pro-defense advocates, argue that the OBBB will:

• Boost job creation by reducing taxes on labor (tips and overtime).
• Strengthen national security and border enforcement.
• Encourage savings through Trump Accounts and higher child tax credits.
• Promote energy independence by prioritizing domestic fossil fuel production.

Summary

The One Big Beautiful Bill represents a comprehensive reshaping of American fiscal policy. It solidifies Trump-era tax cuts, overhauls welfare programs, repeals key climate initiatives, and increases spending on defense and immigration enforcement. While hailed by conservatives as a major pro-growth achievement, the bill has also sparked intense national debate over its long-term economic, environmental, and social consequences.