Donald Trump's ‘Big Beautiful Bill' delivers tax cuts but at a cost to low-income families

Mint

15 hours ago

US President Donald Trump signed into law the sweeping tax and spending bill that Republicans pushed through Congress earlier in the week, meeting his deadline of legislating it by the Fourth of July.
Spanning nearly 900 pages, the new law includes a broad mix of tax cuts, spending reductions, and other key Republican priorities, such as increased funding for the military and immigration enforcement.
The new tax bill makes the Trump-era tax rates and brackets permanent, solidifying earlier cuts. It introduces temporary deductions for tips, overtime pay, and auto loans, and adds a $6,000 deduction for seniors earning up to $75,000, aligning with Trump's pledge to eliminate taxes on Social Security benefits.
The child tax credit rises slightly from $2,000 to $2,200, though many low-income families won't receive the full amount. The cap on state and local tax (SALT) deductions increases to $40,000 for five years, a major benefit for residents of high-tax states.
While the bill includes major business tax breaks to encourage investment, a Congressional Budget Office analysis finds that wealthy households would gain around $12,000 annually, while the poorest could lose $1,600 due to cuts in Medicaid and food aid, AP reported.
Despite the significant cuts to safety net programs, the savings fall short of covering the cost of the tax package, which is expected to add over $3 trillion to the federal debt by 2034.
The package includes new 80-hour-a-month work requirements for many adults receiving Medicaid and food stamps, including older people up to age 65. Parents of children 14 and older would have to meet the programme's work requirements, according to the Associated Press.
There's also a proposed new $35 co-payment that can be charged to patients using Medicaid services.
More than 71 million people rely on Medicaid, which expanded under Obama's Affordable Care Act, and 40 million use the Supplemental Nutrition Assistance Programme. Most already work, according to analysts, AP reported.
Some measures in the bill could result in millions losing access to Medicaid and food assistance, creating financial strain for families and sparking voter backlash. These potential consequences prompted some Senate Republicans to oppose the bill, concerned about the harm it could cause in their states.
According to a report by the New York Times, Alex Jacquez, who served on the National Economic Council under President Joseph R. Biden Jr., said, 'They want to try to get past elections and try to hide the ball on the damage they're imposing on health care and food assistance.'
The tax bill fulfils the president's pledge to make tips and overtime pay tax-deductible from 2025 to 2028. However, not all workers will benefit, especially lower earners who already fall below the standard deduction threshold and therefore won't gain anything from the additional deduction.
The first of these changes take effect next year, when new rules for enrolling in health insurance begin. These include added paperwork requirements and the elimination of automatic renewals for Affordable Care Act subsidies, potentially making coverage harder to maintain for millions.
Tax cuts Time High standard deduction Expanded starting 2025 No taxes on tips and overtime Starting 2025, these earnings will be tax-exempt State and Local Tax (SALT) Deduction Cap increased Cap raised- 2025 Electric Vehicle tax credit End by September 30, 2025 Home Energy Efficiency credits End by December 31, 2025 Food Stamp Work Requirements Could take effect in 2025 (pending legislation) New rules on Health insurance Start in 2026 Medicaid work requirements Enforced by 31st December 2026 in most states Child tax credit Starting in 2025 Medicaid, food stamp formula changes Starting in 2028 Additional deduction for seniors Starting in 2025 State and local tax deduction Starting in 2025
'America's winning, winning, winning like never before,' Trump said, noting last month's bombing campaign against Iran's nuclear program, which he said the flyover was meant to honour. 'Promises made, promises kept, and we've kept them.'
Critics assailed the package as a giveaway to the rich that will rob millions more lower-income people of their health insurance, food assistance and financial stability.
Every member of Congress who voted for this devastating bill picked the pockets of working people to hand billionaires a $5 trillion gift.
'Today, Donald Trump signed into law the worst job-killing bill in American history. It will rip health care from 17 million workers to pay for massive tax giveaways to the wealthy and big corporations, amounting to the country's largest money grab from the working class to the ultra-rich,' AFL-CIO President Liz Shuler said in a statement. 'Every member of Congress who voted for this devastating bill picked the pockets of working people to hand billionaires a $5 trillion gift.'
(With inputs from AP and NYT)