Charlie MarlowPresident Trump recently signed the highly publicized One Big Beautiful Bill Act into law. While the bill affects all American taxpayers, many provisions have particular relevance for military members and their families.
Key Provisions Affecting Military Families:
- Tax Cuts Made Permanent: The lower individual tax rates and larger standard deductions introduced in the Tax Cuts and Jobs Act of 2017 were made permanent.
- Higher Standard Deduction: The 2025 standard deduction increased to $15,750 for singles and $31,500 for joint filers, and it will be indexed for inflation in future years.
- SALT Deduction Cap Raised: For those who itemize, the cap for state and local taxes was raised from $10,000 to $40,000 through 2029.
- Child Credit Increased: The Child Tax Credit increased from $2,000 to $2,200 per qualifying child, indexed annually for inflation.
- Auto Loan Interest Deduction: Up to $10,000 in auto loan interest may be deducted for loans on U.S.-assembled new vehicles through 2028.
- Charitable Deduction for Non-Itemizers: Individuals may deduct up to $1,000 ($2,000 for joint filers) in charitable contributions without itemizing.
- Newborn Savings Accounts: Tax-advantaged savings accounts for newborns were introduced to encourage early savings.
Provisions Popular with Families
Two of the bill’s most talked-about features are the “No Tax on Tips” and “No Tax on Overtime” provisions. While the military doesn’t pay overtime (that would be a national budget buster!) or tips for serving, this can be great news for spouses and for military members who have off-duty employment.
- No Tax on Tips: Up to $25,000 of tip income may be deducted annually (subject to income limits).
- No Tax on Overtime: A portion of the “time-and-a-half” portion of overtime wages can be deducted—up to $12,500 for single filers and $25,000 for joint filers.
Both deductions apply for tax years 2025–2028.
Business Owner Relief
The bill expands and makes the Qualified Business Income (QBI) Deduction permanent, allowing qualified business owners to deduct 20% of ordinary business income. Starting in 2026, the minimum deduction will be $400, even if your business is small!
Provisions Directly Affecting Personnel and Families:
- $2.9 billion to supplement Basic Allowance for Housing (BAH) to ease cost burdens in high-rent areas.
- $100 million in DoD Impact Aid to support public schools serving large numbers of military children.
- Upgrades to barracks and privatized housing to address longstanding maintenance issues.
- Expanded child care fee assistance to help dual-working military families.
- Military spouse professional fee assistance to help offset licensing and certification costs when relocating.
- Authorization to extend the Temporary Lodging Expense from 14 to 21 days.
Infrastructure and Modernization Provisions:
- $29.2 billion in additional funding for shipbuilding.
- $24.4 billion in additional space-related systems and infrastructure.
- $25.4 billion in additional funding for weapon systems.
- $16.3 billion in additional funding to enhance and modernize military depots and shipyards.
- $8.6 billion in addition to aircraft modernization funding.
- $380 million to replace business systems.
Along with tax savings, benefits, and quality-of-life initiatives, other parts of the Bill may also negatively affect some military members.
- Medicaid cuts may impact the ability of military families to obtain services that TRICARE does not cover.
- Cuts to the Supplemental Nutrition Assistance Program (SNAP) may make it harder for military members to qualify.
- Significant cuts to the Consumer Financial Protection Bureau (CFPB), including the Office of Servicemember Affairs, may make it harder for them to protect military members and their families when lenders and landlords violate provisions of the Servicemembers Civil Relief Act (SCRA).
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