The Latest Personal Finance News for August 2025

Congress Has Passed New Tax Cuts for 2025 and Beyond

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, and it includes several updated tax benefits for the current tax year through 2028 or beyond. Some of the more prominent adjustments include:

• Higher standard deduction: The larger standard deduction introduced by the Tax Cuts and Jobs Act (TCJA) of 2017 was made permanent, and it was also slightly enhanced for 2025. Seniors over the age of 65 can take an additional deduction.
• Higher cap for sales and local tax (SALT) deduction: Eligible taxpayers can deduct up to $40,000 in state and local taxes from their federal tax return. This is up from the previous limit of $10,000.
• Deduction for tip earners: Eligible workers and self-employed individuals who receive qualified tips can deduct up to $25,000 in tip earnings.
• Deduction for overtime pay: Eligible workers can deduct up to $12,500 of their overtime pay (or up to $25,000 for married couples filing jointly).
• Auto loan interest deduction: If you take out a car loan to buy a new vehicle with a "final assembly" in the U.S., you may be able to deduct up to $10,000 in qualified interest.
• Enhanced child tax credit: The higher child tax credit created by the TCJA was made permanent and increased to $2,200 for 2025—it was previously set at $2,000 for the current tax year.

Why It Matters

The OBBBA introduces several tax changes that could significantly impact your bottom line. Knowing about these updates can help you make smarter financial decisions now, like adjusting your withholdings, planning large purchases or maximizing new deductions.

Staying informed ensures you don't miss out on money-saving opportunities and helps you file more confidently come tax time.

What You Can Do

• Learn more about tax changes in the OBBBA.
• Get tips for making tax filing go more smoothly.
• Find ways to get a bigger tax refund.
• Be wise about how you use your tax refund.

Big Changes for Student Loan Repayment Options

The OBBBA also made significant changes to the federal student loan program, including introducing a new income-driven repayment plan and eliminating three existing ones.

The new income-based Repayment Assistance Plan (RAP) will set monthly payments as a percentage of a borrower's income and subtract $50 for each dependent. The percentage ranges from 1% to 10% and is based on your income.

There is a $10 minimum payment for even the lowest-income borrowers, but if your payment isn't enough to cover accrued interest, the interest will be waived. The new plan will become available on July 1, 2026.

The OBBBA also set a plan in place to eliminate the Pay As You Earn (PAYE) plan, the income-contingent repayment (ICR) plan and the Saving on a Valuable Education (SAVE) plan by July 1, 2028. The income-based repayment (IBR) plan wasn't affected by the changes.

Why It Matters

With student loan payments resuming, the new RAP could make monthly bills more manageable for millions of borrowers.

By eliminating interest accumulation and offering a sliding payment scale, RAP aims to reduce long-term debt burdens. However, its minimum payment could make it more expensive compared to the SAVE plan, particularly for lower-income borrowers.

The upcoming removal of popular plans like SAVE and PAYE means borrowers should reassess their strategy before those options disappear. Understanding these changes now gives you time to plan ahead and choose the best repayment path for your financial future.

What You Can Do

• Learn more about the changes to income-driven repayment plans.
• Evaluate your student loan repayment plan.
• Consider options if you can't repay your student loans.
• Get details on how to pay off student loans fast.

New Federal Loan Limits for Graduate and Professional Students

In addition to changes to income-driven repayment plans, the OBBBA also instituted new limits for graduate and professional students. For starters, the law eliminates the Grad PLUS loan program, which had no hard borrowing limit, on July 1, 2026.

It also sets the following limits for other loan programs, which go into effect at the same time:

• Parent PLUS loans: Parents can borrow up to $20,000 annually per dependent student and up to $65,000 in total per dependent student.
• Graduate loans: Graduate students can borrow up to $20,500 per year and up to $100,000 in total.
• Professional loans: Professional students can borrow up to $50,000 per year and up to $200,000 in total.

Why It Matters

The elimination of Grad PLUS loans and the introduction of strict borrowing caps could significantly impact how graduate and professional students finance their education. While the new limits may help reduce long-term debt, they also mean students may need to seek additional funding sources, such as scholarships, employer assistance or private loans.

Planning ahead will be crucial, especially for students in high-cost programs like law, medicine and business, so they're not caught off guard when the changes take effect next year.

What You Can Do

• Learn more about the changes to federal student loan limits.
• Figure out how much you should borrow in federal student loans.
• Get details on how to pay for college when financial aid isn't enough.
• Learn about some of the best ways to save for college.

Back-to-School Shoppers Expected to Spend Less This Year

American families are expected to spend an average of $570 per child on back-to-school needs, according to a survey by Deloitte. While that's just slightly lower than last year's average spending of $587, it's a sharp decline from a five-year high of $661 in 2022.

The survey also found that 4 in 10 consumers are making more cost-conscious choices and sacrificing convenience to maximize savings—a trend that's increased since last year.

Why It Matters

Back-to-school shopping is the second-largest spending event of the year, so it's important to approach it with careful consideration for your budget.

Even small changes in consumer behavior can signal broader economic shifts. The fact that more families are prioritizing savings over convenience suggests growing financial pressure and a need for smarter, more strategic spending. Whether you're a parent or a teacher, staying mindful of these trends can help you plan more effectively.

What You Can Do

• Read the full Deloitte Back-to-School survey.
• Learn how to save money on back-to-school shopping.
• Start budgeting for next year's back-to-school season.
• Figure out whether you can afford to go back to school as an adult.

Good Credit Can Contribute to a Healthy Financial Plan

While there are aspects of your financial situation that are outside of your control, building and maintaining a good credit score can help you weather challenges and save money in the long run.

With Experian's free credit monitoring service, you'll get access to your FICO^® Score^Θ and your Experian credit report. With this information in hand, you can gauge your credit health and target areas of your credit profile that you can improve over time. And with real-time alerts whenever your report is updated, you can spot potential issues and fraud and address them quickly.