Trump Signs Sweeping Tax Cuts Bill Including SALT Deduction Expansion

President Donald Trump recently signed the 'One Big Beautiful Bill,' a sweeping domestic policy package extending major tax cuts from his first term and introducing new deductions, including for tipped income and newborn investment savings accounts. The bill has sparked fierce political debate, as it not only extends the 2017 tax cuts but also makes significant cuts to Medicaid and green energy credits, while substantially increasing funding for ICE, potentially resulting in millions losing health coverage. A key feature is the temporary increase of the state and local tax (SALT) deduction cap from $10,000 to $40,000 for five years, benefiting upper-income earners, especially in high-tax states like Illinois, and putting some Democrats in a politically awkward position. Retirees will continue to benefit from lower tax brackets through 2025, but face a potential 'tax cliff' in 2026 unless further legislation is passed, prompting financial advisors to suggest considering Roth IRA conversions now. The bill is being heavily promoted by Republican-aligned groups in competitive districts, highlighting the tax relief for working Americans, while Democrats criticize cuts to social safety nets. The overall impact of these changes, particularly on middle- and upper-middle-income homeowners, will depend on future legislative action and the evolving political landscape.