How Trump’s new Federal budget could impact your taxes

Let’s be honest—reading federal budget summaries is no one’s idea of a good time. But President Trump’s 2025 budget law? It’s not just bureaucratic fluff. It’s a full-on remix of how taxes will hit your paycheck, shrink your refund, and maybe even poke around in your Venmo history.

If you thought tax law only changes stuff for billionaires and corporations, think again. This one’s got ripple effects for freelancers, side hustlers, digital nomads, gig workers, crypto traders—and yeah, even that barista with a Canva side hustle and $700 in Ethereum. Let’s decode what’s actually changing, what’s staying the same, and how to play smart with your 2025 money moves.

President Trump’s budget for fiscal year 2025 landed with a price tag of $4.3 trillion and a long list of “reforms.” The loudest talking points? Simplified tax brackets, big cuts to IRS enforcement funding, and sunset clauses for popular pandemic-era credits.

Here’s the punchline:

• The income tax code goes from 7 brackets to 3: 10%, 15%, and 25%.
• Standard deductions are being tightened, not expanded.
• Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) bonuses? Gone.
• IRS loses billions in audit funding—especially for high earners.
• Crypto and gig work? Still under surveillance.
• The pass-through deduction for small biz survives, but benefits the 1%.

All this under the slogan: “No new taxes.” But that only works if you ignore the receipts.

On paper, 3 tax brackets sounds like a W for simplicity. 10% for low-income, 15% for middle-income, 25% for everyone else. But here’s the fine print: the breakpoints shifted, and not in your favor. Under the old system, if you made $45K, your marginal rate was 12%. Now? You’re in the 15% bucket. Meanwhile, someone making $500K drops from 37% to 25%. That’s not simplification—it’s a reward system for the already rich.

For Gen Z earners in the $30K–$70K range, this means:

• You could owe slightly more in federal income tax
• You’re losing access to some deductions
• Your refund will likely be smaller

It’s like getting upgraded to “main cabin” after paying for extra legroom. Sure, the ticket looks nicer. But are you actually more comfortable? Not really.

Standard deduction = the amount you subtract from your income before calculating tax. It used to go up each year with inflation. Now? Trump’s budget law caps that growth. The deduction still exists, but it’s losing power in real terms—especially as prices rise faster than the IRS’s math.

In plain English: You’re getting a discount on your taxes, but that discount buys you less every year. If you’re single and making $40K, this change matters. That $13,850 standard deduction won’t stretch as far next year. And if you don’t have kids or a home loan, you’re basically paying more without calling it “more.”

Those boosted pandemic-era tax credits are over. The Child Tax Credit is back down to $1,000 per kid. The Earned Income Tax Credit shrinks for single filers and part-time workers. No extra top-ups for caretakers, gig earners, or college students with tuition bills.

If you’re someone who used to get $1,800 or $2,400 in federal refund cash? Expect less next spring. And unless your income dropped drastically, there’s not much you can do to get it back. This doesn’t just hit parents. It affects students, dependents, and any low-to-mid earners using tax credits to fill a February–April money gap.

Trump’s law slashes IRS audit funding hard—especially the chunk used to chase high-net-worth tax cheats. That might sound like a win. No more big government breathing down your neck, right? Wrong.

The IRS still needs to collect revenue. And it turns out chasing rich people with 12 lawyers is expensive. But scanning digital 1099-Ks from freelancers? Easy. Cheap. Automated. So the new IRS enforcement strategy is: go after the easy wins. If you freelance, sell stuff on eBay, trade crypto, or rent out a spare room on Airbnb—you’re on the radar. Not because you’re doing anything wrong. Just because you’re easier to scan than someone hiding money in the Caymans.

The $600 reporting threshold for third-party platforms is here to stay. That means:

• If you get more than $600 through PayPal, Cash App, or Venmo?
  You’ll get a 1099-K form.
• If you drive for Uber or deliver with DoorDash?
  That income is getting flagged.
• If you resell sneakers or flip vintage on Etsy?
  That money’s being logged.

Under Trump’s budget, the IRS won’t chase billionaires—but they will absolutely auto-flag your $8,000 in side hustle income if it doesn’t match up. And with fewer agents? The agency relies even more on automation. That means fewer audits, but more frozen refunds, algorithmic flags, and letters you can’t easily explain away.

No, crypto taxes didn’t get friendlier. Capital gains rules still apply. Wash sale rules are being debated. And major exchanges are being pressured to file new reporting forms (Form 1099-DA) that break down your trades by wallet, platform, and value. What’s new? Not much.

What’s sharper? The tools the IRS has to cross-check your crypto holdings with your banking activity. And if you’re staking, flipping NFTs, or playing the long game with Solana? It’s all in the system now. The budget didn’t repeal any of the crypto monitoring initiatives. It just stopped funding white-collar audits. So again, if you’re trading from a mobile wallet with no recordkeeping, you’re the low-hanging fruit.

Trump’s budget keeps the 20% Qualified Business Income (QBI) deduction for pass-through entities like LLCs, S corps, and partnerships. That’s good news… if you’re already registered as a business. But most Gen Z creators, freelancers, and part-time consultants? You’re still using Schedule C. That deduction doesn’t apply unless you restructure your gig into a full business—meaning admin work, separate banking, and tax advisors.

And yes, you can switch to an LLC or S corp. But you’ll need to file differently, budget for quarterly taxes, and maybe pay yourself a salary. That’s not a casual move for someone making $22K from TikTok edits and ghostwriting side gigs. Bottom line: The perks are there—but only if you’re already playing the business owner game at scale.

One of Trump’s economic advisors floated the idea of indexing capital gains to inflation. That would’ve reduced taxes on long-term gains for assets that appreciate slowly.

But Congress didn’t go for it. For now, capital gains are still taxed on the difference between buy and sell price—without any inflation buffer. That means your gains on ETFs, stocks, real estate, or Bitcoin still get taxed the old-school way. No relief for time, inflation, or holding strategy. If you’re a long-term investor, this was a maybe-win that didn’t land. But watch for 2026. This one could come back.

Let’s be real. You can’t dodge the tax code. But you can prep smarter. Start now—before the 2025 tax year is halfway done. That means:

• Track all income from gigs, resales, crypto, and freelance
  Use a spreadsheet. Or Notion. Or even a Google Doc. Just track.
• Separate business expenses
  Make a new debit card for side hustle costs. Keep receipts. Don’t co-mingle.
• Use a tax-friendly platform
  Try tools like Keeper, FlyFin, or TurboTax Self-Employed. They know how to fish for deductions.
• Claim dependents carefully
  The credits are smaller now. One wrong claim and your refund could get flagged.
• Don’t ignore letters from the IRS
  Respond fast. Even if it’s a bot-generated notice.

The tax game is winnable. But in 2025? It’s not about maxing out returns. It’s about not getting caught slipping.

Trump’s budget law isn’t “evil.” It’s not even that loud. But it’s sneakily effective at rerouting who gets relief—and who gets left behind. If you make over $400K? You just got a raise. If you freelance on weekends and claim the standard deduction? You just got a stealth pay cut. The IRS is shrinking, but the system isn’t. So play smart. Track early. File on time. And treat tax season like a strategy game, not a compliance chore. This isn’t about fear. It’s about clarity. Because the real flex isn’t avoiding taxes—it’s knowing the rules better than the system wants you to.