The GOP’s newly introduced tax overhaul—backed by former President Donald Trump and dubbed the “One Big, Beautiful Bill”—has sent shockwaves across the American tax landscape. Announced on May 12, 2025, this bill proposes significant changes to US tax law, introducing tax relief for workers, imposing new levies on remittances and elite universities, and rolling back green energy incentives.

Key Highlights of the 2025 Republican Tax Proposal

Tax Exemption on Tips and Overtime (2025–2028)

A major win for workers: tips and overtime pay will be completely tax-exempt through 2028. This fulfills one of Trump’s core campaign promises and directly benefits employees in the hospitality, retail, and service industries.

Auto Loan Interest Becomes Tax Deductible

Interest paid on personal car loans will now be tax-deductible, retroactively effective from January 1, 2025. This provision is expected to benefit millions of Americans who purchase vehicles on EMI.

No Tax Hike for Millionaires

Despite prior proposals to increase taxes on high earners, the top federal income tax rate of 37% will remain unchanged, avoiding its scheduled hike to 39.6% in 2026.

Expanded SALT Deduction (But With Limits)

The State and Local Tax (SALT) deduction cap will rise to $30,000 per couple ($15,000 for single filers). However, the deduction will phase out for households earning over $400,000, drawing criticism from high-tax states like California and New York.

Ivy League Universities Face Higher Tax Burden

In a direct blow to elite academia, the bill increases the endowment tax rate from 1.4% to as high as 21% for institutions like Harvard, Stanford, MIT, Yale, and Princeton.
Private foundations, such as the Gates Foundation, will face tiered tax rates up to 10%, depending on their asset base.

This provision is aimed at reducing the influence of large educational and philanthropic institutions.

Major Rollback of Green Energy Incentives

The bill proposes to eliminate the electric vehicle (EV) tax credit by 2026. Other changes include:

• Phasing out clean energy production and investment tax credits by 2031
• Ending the nuclear energy production credit in 2031
• Scaling back tax credits for used and commercial EVs

This marks a sharp reversal of the Biden administration’s climate-focused tax policy.

$4,000 Bonus for Senior Citizens

Senior citizens aged 65+ who do not itemize deductions will receive a $4,000 bonus on their standard deduction from 2025 to 2028. The bonus phases out at:

• $75,000 for individuals
• $150,000 for married couples

5% Tax on Immigrant Remittances

In one of the most controversial measures, the GOP bill introduces a 5% tax on foreign remittances sent from the US. While US citizens may claim credits, this tax will significantly impact immigrant families sending money to countries like Mexico, India, and the Philippines.

Big Benefits for Businesses and Manufacturers

The bill includes major corporate tax breaks, such as:

• 100% depreciation for qualified manufacturing property and factory development
• Extended low tax rates on foreign income for multinational corporations
• Reinstatement of R&D tax deductions through 2029 — a key priority for the technology and manufacturing sectors

Enhanced Child Tax Credit and New MAGA Accounts

• Child Tax Credit increases to $2,500 per child through 2028 (before reverting to $2,000)
• Introduction of MAGA Accounts: Tax-exempt savings accounts allowing $5,000/year per child for:
  • Education expenses
  • First-time home purchases
  • Launching a small business

Summary: Who Gains & Who Pays?

Winners:

• Workers earning tips & overtime
• Senior citizens on fixed incomes
• Car buyers and auto loan holders
• Large manufacturers and corporate entities
• High-net-worth individuals (no tax hike)

Losers:

• Ivy League institutions and private foundations
• EV buyers and clean energy investors
• Immigrant households sending remittances abroad
• Environmental advocates and climate programs

Conclusion

The 2025 GOP tax bill is a bold, populist economic plan aligned with Donald Trump’s America First vision. From tax relief for working-class Americans to new levies on educational elites and remittances, this bill could shape the next decade of US tax policy. It may also impact cross-border financial planning, especially for NRIs and expatriates navigating treaties like DTAA India USA for tax relief and compliance.

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