Car loans, tips, and overtime pay can be tax-deductible, really helping low-income earners? Unpacking the truth behind Trump's "Inflation Reduction Act" tax cuts.

The U.S. Senate passed the Trump "One Big Beautiful Bill Act" on Tuesday by a narrow margin, aiming to get it through the House of Representatives this week. However, CNBC analyzes that the benefits for low-income groups are limited. (Background: The U.S. "ADP" report is out! In June, jobs decreased by 33,000, and Bitcoin is standing at $108,000.) (Background: Musk announces: The Neuralink brain-computer interface "human brain chip implantation" surgery was successful! The first patient has recovered well.) The service worker Lily from New York initially thought that "tips are tax-free" would quickly fill her wallet, but after calculations, she found that the tax savings weren't even enough for a cup of hand-brewed coffee. She helplessly sighed, "The little happiness we talked about is actually just something we can see but not eat." This self-narrative, although fictional, indeed hints at the gap between Trump's tax reduction slogan and actual benefits. Previously, we mostly discussed the high-level impact of the "One Big Beautiful Bill Act," but this article will roughly discuss its impact on the general public's livelihood. Scale of the Bill and Legislative Progress Currently, the "One Big Beautiful Bill Act" has been submitted to the House for a vote. If it is successfully enacted, it will release over $4 trillion in net tax cuts from 2025 to 2028. The bill extends the tax reduction provisions from 2017 while adding four major deductions for car loan interest, tips, overtime, and senior deductions: Car loan interest: Families can deduct up to $10,000 of new car loan interest from taxable income each year. Tips: Employees in traditionally tipped industries, including service and dining, can deduct up to $25,000 in tips from taxable income each year. Overtime pay: Employees can deduct up to $12,500 in overtime pay from taxable income each year. (Married couples filing jointly can deduct up to $25,000.) Senior "bonus" deduction: Americans aged 65 and older can deduct up to $6,000 from taxable income. The Triple Threshold Design for Deductions At first glance, the deductions of up to $10,000 for car loan interest, $25,000 for tips, and $12,500 to $25,000 for overtime seem attractive, but CNBC's analysis reveals three "invisible ceilings" in actual operation. First, most low-wage earners' taxable income has already been offset by the standard deduction, leaving limited room for the new deductions. Second, the tax-saving extent is tied to the applicable tax rate. Workers in the 10% bracket save only $0.1 in tax for every $1 deducted, while high-income earners can amplify benefits with a higher tax rate. Third, the limits and threshold designs exclude a large number of grassroots consumers; for example, to enjoy the full deduction for car loan interest, one must bear a new car loan of over $112,000, a demographic that only accounts for 1% of the market. Tax Credits are Key for Low-Income Households Compared to deductions that require a tax base, "credits" directly reduce tax payments, providing more substantial help for low-income families. The OBBBA raises the child tax credit to $2,200, with $1,700 refundable, but the U.S. Tax Policy Center and the Congressional Budget Office point out that low-income individuals still mainly rely on existing tools such as the Earned Income Tax Credit (EITC) and premium tax credits. Research from Yale University's Budget Laboratory shows that the overall distribution is "hump-shaped," with the middle and upper-income groups being the biggest winners. Market Impact and Future Variables If the bill successfully passes, the tax cuts for car loans and the service industry are expected to stimulate the performance of automobile, retail, and leisure stocks in the short term while increasing disposable income for some consumers. However, the $4 trillion tax cuts will increase the fiscal deficit, potentially driving long-term interest rates up and squeezing budgets for social welfare programs such as Medicaid and food stamps. From "Labor Gospel" to "Wealth Rebalancing," the OBBBA is hoped to be a policy highlight in the election race, but for low-income earners, the tangible benefits from deductions remain limited. As the House of Representatives moves closer to deliberation this week, how this tax cut drama concludes will affect the political temperature in Washington and shape the financial and market trends in the U.S. for years to come. Related Reports Musk's Neuralink "brain-computer interface" raises $43 million led by Silicon Valley venture capital guru Peter Thiel Musk's "brain chip" experiment requires skull cutting! Thousands are still signing up for Neuralink brain implants Musk's Neuralink "brain chip implantation" has been approved for human trials. Is the brain-computer interface becoming a reality? <Car loans, tips, overtime can be deducted, really helping low-wage earners? Analyzing the tax reduction truth of Trump's "One Big Beautiful Bill Act"> This article was first published on BlockTempo, the most influential blockchain news media.