Trump's 'big, beautiful' bill unveiled: Tax cuts, mass deportations, child credit and more

Economic Times

14 hours ago

AP
Trump's megabill renews the tax cuts Trump signed into law in his first term
After hours of debate, negotiations and stalemate, Republicans in the US Senate have narrowly passed Donald Trump's mega-bill on tax and spending. The One Big Beautiful Bill Act passed with Vice-President JD Vance casting a tie-breaking vote after more than 24 hours of debate. The bill now heads back to House, where it still faces more opposition.The tax and spending bill is projected to cost more than $3 trillion during that time, but would be partially paid for with about $1 trillion in cuts to Medicaid. Almost 12 million lower-income Americans would lose their health insurance by 2034, according to the Congressional Budget Office.Trump's megabill renews the tax cuts Trump signed into law in his first term and pays for them in part with steep cuts to Medicaid, food aid programs and clean energy funding.
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-Extend big tax cuts: At the center of the bill is an extension to President Trump's 2017 Tax Cuts and Jobs Act, slated to sunset at year's end, seeking to make the cuts permanent in what has been a key priority for Senate Republicans. When Trump took office in 2017, Trump signed the Tax Cuts and Jobs Act, which lowered taxes and increased the standard deduction for all taxpayers. These provisions are set to expire this year but the big, beautiful bill makes them permanent. It increases the standard deduction by $1,000 for individuals, $1,500 for heads of households and $2,000 for married couples, albeit only through 2028, reported The Guardian. -No tax on tips, overtime and car loans: The bill would exempt tips and overtime pay from federal income taxes, fulfilling two of Trump's campaign promises. It would also allow taxpayers to deduct up to $10,000 of auto loan interest for U.S.-made vehicles. The bill also features a temporary tax break of $6,000 for seniors that phases down as income increases. Moreover, people who are above the age of 65 are eligible for an additional deduction of $6,000, provided their adjusted gross income does not exceed $75,000 for single filers or $150,000 for couples. But all of these incentives expire at the end of 2028, right before Trump's term as president ends.
-Child tax credit: The current $2,000 child tax credit is set to return to the pre-2017 level of $1,000 in 2026. The tax credit would permanently increase to $2,200 under the Senate bill, $300 less than the House-passed hike. The House version reverts the increase to $2,000 after 2028, according to CBS News.
-State and local tax relief (Salt): The bill includes an increase to the cap on the state and local tax deduction, raising it from $10,000 to $40,000. After five years, it would return to $10,000, a departure from the House-passed bill. The Senate's version keeps the $40,000 cap, but only through 2028.
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-Cut to food aids and Medicaid: Trump's 'big, beautiful bill' would slash two major federal safety net programs: Medicaid, which provides healthcare to poor and disabled Americans, and the Supplemental Nutrition Assistance Program (Snap), which helps people afford groceries. It would reduce Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, by around 20%. As per estimates, Medicaid changes could cost as many as 10.6 million people their healthcare, and about eight million people, or one in five recipients, their Snap benefits.
-More focus on mass deportation: President Trump has asked for more money to expand immigration enforcement. The bill would fund new sections of border wall, increase surveillance, and build more detention facilities. As part of Trump's plan to remove undocumented immigrants from the country, Immigration and Customs Enforcement (Ice) will receive $45bn for detention facilities, $14bn for deportation operations and billions of dollars more to hire an additional 10,000 new agents by 2029, according to The Guardian. Also, more than $50 billion will be earmarked for the construction of new border fortifications, which will probably include a wall along the border with Mexico.
-Cuts to green energy: Subsidies and tax breaks for clean energy projects, including solar panels, wind farms, heat pumps, and electric vehicles, would be rolled back. The bill even proposes a new tax on clean energy projects. Federal incentives for cleaner cars and energy-efficient home upgrades are set to expire by the end of this year. At the same time, wind and solar power projects will face a new excise tax. According to the American Clean Power Association, this tax could raise consumer electricity bills by 8% to 10% and cost businesses between $4 billion and $7 billion by 2036.
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-Student loan relief scaled back: The bill proposes major changes to Pell Grant eligibility and student loan access, threatening to lock thousands out of higher education entirely. The proposal would remove some student loan repayment options and limit the government's ability to offer debt relief. Critics say it would cause more defaults and keep people in debt for longer, according to reports.
-Trump accounts: A lesser-known provision in the bill proposes the creation of $1,000 government-funded savings accounts for newborns, dubbed 'Trump accounts.' The bill also allocates funding for air traffic control, the Secret Service, and preparations for America's 250th anniversary celebrations in 2026.
-Trump's Golden Dome: The bill includes more funding for shipbuilding, weapons, and Trump's 'Golden Dome' missile defence system. For the Pentagon, the bill would provide billions for ship building, munitions systems, and quality of life measures for servicemen and women, as well as $25 billion for the development of the Golden Dome missile defense system. The Defense Department would have $1 billion for border security.