As we continue to explore the changes within the newly signed federal tax law, named the “One Big Beautiful Bill Act” by the Trump administration, we want to contextualize how these changes will impact California families.
The bill brings sweeping changes, which we discussed in our initial article on the bill, which will reshape how families and businesses save, spend, and plan for the future. For many California households, these updates affect everything from child-related credits and deductions to healthcare savings, education costs, and even car loan interest. Understanding what’s changed helps families make informed decisions that protect both immediate budgets and long-term financial goals.
Changes to the Child Tax Credit and Child Savings Accounts
In our recent breakdown of the broader tax bill, we touched on some of the family-focused provisions. The child tax credit now increases to $2,500 per child through 2028, then adjusts to $2,200 in 2029 with inflation indexing. A new feature, the Trump child savings accounts, provides a one-time $1,000 contribution for children born between 2025 and 2028. Parents can continue contributing annually, and the accounts grow tax-deferred, creating a potential tool for future education or housing costs.
Car and Student Loan Changes
The law also introduces a temporary deduction for interest on qualifying car loans. Families can deduct up to $10,000 of interest payments from 2025 to 2028, provided the vehicle’s final assembly occurred in the United States. This can ease transportation costs for households balancing car payments with other financial responsibilities.
Student loan rules also undergo significant adjustments. Subsidized Federal Direct Stafford Loans are eliminated, meaning students now begin accruing interest immediately whereas prior to this change, the government would cover the interest while the student was still in college or in the six-month grace period immediately after. This change increases the total cost of borrowing and makes repayment planning more critical. At the same time, employers can now permanently contribute up to $5,250 annually toward an employee’s student loan repayment tax-free, offering some relief to working graduates. Additionally, 529 education savings plans now cover certain homeschooling expenses, which allows California families who make that decision to offset some of the costs.
Paying for Healthcare with a Health Savings Account (HSA)
Families with high-deductible health plans will be able to take advantage of expanded HSA rules. Contribution limits double for individuals earning under $75,000 and joint filers earning under $150,000, phasing out at higher income levels. Beyond increased limits, the list of eligible expenses now includes gym memberships, physical activity programs, and monthly fees for direct primary-care arrangements. These expansions aim to make preventive care and wellness more affordable while helping families manage rising medical costs.
California Families Deserve a Tax Strategy That Keeps Money in the Family
These tax changes will impact budgets, savings, and long-term planning all at once. Families who respond quickly to new rules often gain the greatest financial advantage. Dahl Law Group helps California households and businesses understand how these changes interact with their estate plans, business interests, and future goals. Contact us at our offices in San Diego or Sacramento to protect your family’s resources and create tax strategies that make the most of the opportunities in this new tax landscape.
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