Partisans will disagree over how “beautiful” President Donald Trump’s “Big Beautiful Bill” is. But there’s little question that Trump’s signature tax and spending legislation is “big.”
The bill runs 330 pages. It extends income tax cuts for a wide swath of individual taxpayers and businesses. It includes about $75 billion in new funds for Immigration and Customs Enforcement over four years. It makes historic cuts to safety net programs including Medicaid and food stamps. And it’s bigger in dollars than two of President Joe Biden’s laws combined — the American Rescue Plan Act and the Bipartisan Infrastructure Law.
Since Trump signed the legislation July 4, some PolitiFact readers have written to us with questions about what the new law will or won’t do. Here’s a sampling.
Readers can submit questions and suggestions for fact-checks to [email protected]
Reader: “I’ve heard that although overtime received will not be taxed on people’s wage checks, it will appear on their annual W-2s and incur taxes at that point. Is that true?”
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As a candidate, Trump promised to lift taxes on overtime. The new law allows workers to deduct up to $12,500 in overtime compensation (for single filers) or $25,000 (for joint filers). This deduction phases out for income levels between $150,000 and $275,000 (for single filers) and $300,000 and $550,000 (for joint filers).
On our MAGA-meter — our effort to gauge progress on Trump’s second-term promises — we rated this a Compromise, because it doesn’t make all overtime compensation free, but rather the portion above the worker’s regular pay.
As to the reader’s question, tax experts say not to worry: The deduction of overtime pay from a taxpayer’s income tax is real.
“The deduction is certainty included during tax time,” said Garrett Watson, director of policy analysis for the Tax Foundation, a center-right think tank. “It’s a real deduction.”
The confusion may stem from the fact that all kinds of untaxed income are listed on a taxpayer’s W-2 — the year-end form that employers give their employees to summarize the year’s compensation. For instance, there’s a box on the W-2 that lists 401(k) contributions made by the employee, but being listed on the form doesn’t mean those contributions are subject to income tax, Watson said.
Although the incremental overtime pay is tax-free up to the limits specified in the law, it’s still subject to the calculations for payroll tax, Watson said.
Reader: “There has been talk of extending the solvency of Social Security by removing the cap on income subject to the tax. Is this a legitimate solution to the funding of the program, or is it merely a method of making the burden of funding the program more equitable? How long would it extend the program before the need to reduce benefits?”
The question refers to the way Social Security taxes are calculated. Under current law (a policy unchanged by the new Trump law) every worker’s payroll earnings are taxed to support Social Security — up to a point.
For 2025wages up to $176,100 are taxed to benefit Social Security, split between 6.2% for the employer and 6.2% for the employee. For wages earned above that level, there is no Social Security taxation. Critics have said this amounts to a bonus for the wealthy.
The reader asked whether removing the cap on income subject to the tax might not only offer more progressive taxation but also help ease the rapidly closing window before the Social Security Trust Fund runs out of money.
In their 2025 annual report, which was published before Trump signed the new law, Social Security trustees estimated that the trust fund would become insolvent in 2033. The Committee for a Responsible Federal Budget projected that the changes from Trump’s law will reduce Social Security tax revenues by $30 billion per year — meaning the trust fund would be exhausted several months earlier, in 2032 rather than in 2033.
Federal budget experts told PolitiFact that raising or eliminating the cap on Social Security wage taxation wouldn’t be a panacea, but it could help the program’s fiscal position.
“This can definitely be part of the solution,” said Marc Goldwein, Committee for a Responsible Federal Budget senior vice president. Fully eliminating the cap “could extend insolvency by 20 to 30 years and close between 30% and 75% of the funding gap, depending on how the policy is designed and what specifically you are measuring.”
The challenge is more political than mathematical, experts say. This idea has been proposed for years by activists and some lawmakers, but it has never advanced very far in the legislative process.
Reader: “I am 65 but I do not collect Social Security yet. My husband is 71 and does collect Social Security. Will we get the $6,000 deduction or the $12,000 because we file a joint return? And how long will this provision be in place?”
This refers to another provision of the bill Trump signed, relating to taxation for older Americans.
As a candidate, Trump had promised to end taxation of Social Security. In the new law, he didn’t do that exactly, but he did provide a tax break for older Americans.
The law gives an additional $6,000 tax deduction to people aged 65 and older. These deductions come on top of existing tax deductions for Americans over 65 years old — $1,600 if married or $2,000 if unmarried and not a surviving spouse. The new deductions are temporary, lasting through 2028.
Watson said this reader and her spouse should get the higher rate, because they are both 65 or over, regardless of who receives Social Security benefits. So this couple should get the $12,000 deduction, although the tax break would diminish once their income exceeds the $150,000 set in the law for joint filers; the deduction fully disappears at $250,000 for joint filers.
Reader: “Some people say that if you count the projected tariff income, the Big Beautiful Bill will be closer to revenue neutral. Is this true? Could tariffs become a meaningful revenue source?”
The new law is projected to add $4.1 trillion to the federal debt through 2034, according to the Congressional Budget Office, Congress’ nonpartisan number-crunching arm. Over a longer time horizon — 30 years — it could add $19 trillion to the debt as written and $32 trillion if the law’s temporary provisions are made permanent, the Committee for a Responsible Federal Budget projected.
Could tariff revenue — on the scale Trump wants from his widespread tariff actions — solve the debt problem? No, experts say.
“The tariff income, which is effectively a tax on American consumers, would not generate the revenue needed to offset the new law, especially considering the on-again, off-again nature of them” so far under Trump, said Steve Ellis, president of Taxpayers for Common Sense, which tracks federal budget policy.
And if the idea is to lower tariff rates based on negotiations with trading partners — as Trump has indicated — there will be less revenue, Ellis said.
The tariffs currently in effect “are only large enough to offset about half the bill’s cost when it’s in full effect,” Goldwein said. “And many of these tariffs have been ruled illegal, pending appeal.”
Do you have questions about the Big Beautiful Bill or other pieces of legislation that you think PolitiFact should look into? Send them to us at [email protected].
CORRECTION, July 17, 2025: This article has been updated to correct the amounts of the existing 65-and-over deduction prior to enactment of the new law, and to clarify the initial phase-out level for the deduction.
