‘Big beautiful' tax bill summary: what does it mean for Medicaid?

Times

19 hours ago

President Trump's flagship policy bill has spent months being debated and voted on in Congress. If it is finally passed it will herald trillions of dollars in tax cuts, hundreds of billions in extra funding for defence and border security, and sharp cuts to Medicaid.
The package is set to cost a record $3.3 trillion over a decade, according to congressional forecasters, and contains almost $4.5 trillion in tax cuts.
Trump has described it as 'one of the most consequential bills ever'.
Some of his fellow Republicans, however, voiced concerns as it made its way through both chambers. Some argued the debt level would rise unsustainably and the bill needed bigger spending cuts. Others, eyeing competitive midterm races next year, pushed to ease cuts to Medicaid and food stamp programmes for fear of alienating key voters.
Even some of those who have voted for it are not content. Josh Hawley, a senator from Missouri who had opposed its cuts to Medicaid but eventually supported the legislation, said he would spend two years fighting for the cuts to be reversed.
These are the four key areas the bill covers:
Trump has called the bill 'the biggest tax cut in the history of our country … bigger than any Ronald Reagan tax cut'. The centrepiece of the bill will extend Trump's 2017 cuts, which include a reduction in the marginal rate of income tax. These were the signature achievements of Trump's first term and were due to expire at the end of the year. Retaining them will cost about $4.5 trillion.
They also include Trump's promise from the election campaign to abolish taxes on tips and overtime. The abolition is due to last until 2028.
The bill boosts border security funding by about $175 billion. This includes nearly $47 billion for border wall construction, $30 billion for supporting Immigration and Customs Enforcement (ICE), the agency that carries out deportation raids, and $45 billion on increasing detention capacity.
There will also be a $100 minimum fee for asylum seekers. This fee had originally been $1,000 but was cut to $100 after the Senate parliamentarian, who advises on the chamber's rules, said it would be in breach of them.
Defence will receive a big spending boost. When Trump signed an executive order establishing the Department of Government Efficiency, military spending was cordoned off from cuts. Now funding for the armed services will rise by $150 billion. When combined with the administration's proposed defence budget, the Pentagon's spending will top $1 trillion a year next year for the first time.
In an attempt to offset the cost of extending Trump's tax cuts, the bill makes significant cuts to Medicaid and food stamps.
The cuts to Medicaid amount to an estimated $1 trillion, according to the Congressional Budget Office, which has said almost 12 million people will lose their health insurance by 2034.
The bill will also make a number of changes to the supplemental nutrition assistance programme, commonly known as Snap, which provides monthly food stamps to about 42 million low-income Americans. Work requirements have been tightened and states will be forced to contribute to the costs of the programme. Congressional forecasters estimate about three million recipients will lose their benefits.
Most of the clean energy tax credits introduced by President Biden's Inflation Reduction Act will end, removing the incentives for wind, solar and other renewable energy projects.
The bill will also phase out, by the end of this year, the $7,500 tax break for buyers of electric cars. They were originally due to last to the end of 2032.
Trump has called spending on clean energy a 'green new scam', but the measures in the bill have not been uncontroversial among Republicans, given more than three quarters of the investment created by the Inflation Reduction Act was due to take place in Republican districts.