Trump's new proposal includes tax cuts, student loan reforms, and stricter rules for Medicaid and SNAP. Here's what the four biggest changes could mean for you.
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President Donald Trump's Big Beautiful Bill is one step closer to becoming law — and reshaping policy from Medicaid to taxes.
The House passed the massive spending bill on Thursday afternoon in a 218-214 vote.
Every Democrat voted against the bill, along with two Republicans: Reps. Thomas Massie of Kentucky and Brian Fitzpatrick of Pennsylvania.
The final passage came after House Minority Leader Hakeem Jeffries spoke for roughly eight hours and 45 minutes in opposition to the bill, breaking the record for the longest House floor speech in American history.
The bill now heads to Trump's desk for signing, which could happen as soon as Friday, July 4.
The bill underwent a number of changes since the House passed an initial version in May. That included the eventual removal of a provision aimed at preventing states from regulating AI for 10 years. The bill passed the upper chamber on Tuesday, with Vice President JD Vance casting the tie-breaking vote after three GOP senators opposed it.
The bill will have a sweeping impact on Americans' wallets and the country's fiscal health. In addition to extending the 2017 tax cuts, making cuts to Medicaid, and repealing student loan forgiveness, the bill is also expected to add trillions to the deficit over the next ten years.
In May, Moody's Analytics downgraded the US's credit rating, citing rising federal debt. This could lead to higher interest rates on mortgages, auto loans, and more down the road.
Republicans passed the bill despite vehement opposition from Elon Musk, the former face of DOGE.
Musk had criticized the bill's impact on the deficit and its phase-out of green energy tax credits, some of which benefit Tesla. That led to his epic feud with Trump, which remains ongoing to this day.
On Monday, Musk vowed to support primary challengers against any Republicans who supported the bill and said that if it passed, he would form a new political party, called the America Party.
Republicans have largely brushed all of that off.
"Similar threats have been made before, and I'm unsure if anything's come of those threats," Rep. Brian Jack of Georgia told BI on Wednesday.
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From taxes to student loan forgiveness, provisions in President Donald Trump's "Big Beautiful Bill" will soon be impacting Americans' wallets.
On Thursday, the House passed the final version of the bill, which would extend the president's 2017 tax cuts and make key changes to the tax system, along with implementing significant changes to Medicaid and the Supplemental Nutrition Assistance Program.
Beyond the effects on Americans' wallets, the legislation provides roughly $150 billion to ramp up immigration enforcement.
The bill first passed the House in May before undergoing changes in the Senate, where it narrowly passed on Tuesday. Trump could sign the bill into law as soon as Friday, July 4.
The nonpartisan Congressional Budget Office said the bill would add at least $3.3 trillion to the US deficit. In May, Moody's Analytics downgraded the US's credit rating last week, citing rising federal debt. It said an extension of Trump's 2017 taxes could add $4 trillion to the deficit over the next decade. This could lead to higher interest rates on mortgages, auto loans, and more down the road.
Here are four other key ways the tax bill could affect Americans' finances.
Many of Trump's campaign promises are included in the tax bill.
The legislation would eliminate taxes on tips and overtime wages. About two-thirds of tipped workers earn enough to owe federal income tax. After a final bill is signed, the Trump administration will release a list of qualifying occupations.
The Senate bill includes a $6,000 tax deduction for older people making less than $75,000 a year ($150,000 for couples). Seniors making above that threshold would see a decreasing deduction until hitting a cap of $175,000 ($250,000 for couples.) Lower-income seniors likely won't benefit from the deduction. The provision is how lawmakers are trying to fulfill Trump's promise to end taxes on Social Security payments. The deduction would run through 2028.
Another provision would permanently raise the child tax credit to $2,200. Additionally, it would eliminate electric vehicle tax credits after September. It also proposes ending tax credits for homeowners to install solar panels or energy-efficient heat pumps and incentives for new energy-efficient homes and home weatherization projects by the end of this year.
The bill would also make Trump's 2017 tax cuts permanent and increase the state and local tax deduction, known as SALT, from $10,000 to $40,000 in 2025, $40,400 in 2026, and increase an additional 1% every year through 2029 before reverting to $10,000 in 2030. Lifting the SALT cap allows wealthy taxpayers in states and cities with high taxes to claim a bigger federal deduction, and the cap is something some Republican lawmakers have sought to raise or eliminate.
Under the Senate bill, millions of student loan borrowers would see their repayment options change. The legislation proposes eliminating existing income-driven repayment plans and replacing them with two options: the Repayment Assistance Plan and a standard repayment plan.
The Repayment Assistance Plan would allow for loan forgiveness after 360 qualifying payments based on the borrowers' income, while the standard repayment plan would require a fixed monthly payment over a period set by the servicer.
The bill also would repeal former President Joe Biden's SAVE plan, an income-driven repayment plan that promised cheaper monthly payments and a shorter timeline for debt relief. The plan is blocked in court pending a final legal decision.
If the bill passes, parents could get extra money for their kids down the line. The tax bill includes a "Trump account," previously called a "money account for growth and advancement," or MAGA account. The government would put $1,000 into accounts for babies born after December 31, 2024, and before January 1, 2029. The baby would be required to have been born in the US and have a Social Security number to receive the cash. The money would need to be invested in a qualified index fund and can't be touched until the child turns 18. Parents and others could contribute up to $5,000 a year to each account.
The accounts would have tax incentives; earnings would be tax-deferred, meaning taxes on the accounts would not need to be paid right away. Withdrawals from the accounts would also be taxed at the long-term capital-gains rate, which is dependent on income and typically lower than the regular income tax rate.
Lower-income Americans could face bigger healthcare costs or lose federal assistance benefits. The tax bill would mean significant changes for the millions who rely on Medicaid and SNAP. The legislation would mandate that states implement an 80-hour-a-month work requirement by the end of 2026 for childless adults on Medicaid without a disability.
The Congressional Budget Office previously estimated that work requirements on Medicaid could strip coverage from over 8 million Americans over the next decade.
Additionally, the bill would extend the age range of adults subject to work requirements to receive SNAP to include adults ages 55 to 64. Currently, adults ages 18 to 54 without children can receive SNAP benefits only if they work at least 20 hours a week.
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President Donald Trump is pausing one of the harshest consequences for student-loan borrowers who default on their debt.
On Monday evening, the Department of Education confirmed to Business Insider that it would be pausing Social Security garnishment for defaulted student-loan borrowers after restarting collections on May 5.
"The Department has not offset any social security benefits since restarting collections on May 5, and has put a pause on any future social security offsets," Ellen Keast, an Education Department spokesperson, told BI.
"The Trump Administration is committed to protecting social security recipients who oftentimes rely on a fixed income," Keast continued. "In the coming weeks, the Department will begin proactive outreach to recipients about affordable loan repayment options and help them back into good standing."
A notice posted to the Department of Education's debt resolution page also said that the department is "delaying offsets of these monthly benefits for a couple of months and plans to resume sometime this summer."
The notice added that the department still intends to resume wage garnishment "later this summer."
This announcement comes after a five-year pause that Trump started during the pandemic, halting negative credit reporting and collections on defaulted student loans. Linda McMahon, Trump's education secretary, said that collections would resume once again in an effort to restore accountability to the student-loan system.
"Borrowing money and failing to pay it back isn't a victimless offense. Debt doesn't go away; it gets transferred to others," McMahon wrote in a May opinion piece.
A federal borrower typically enters default after missing payments for more than 270 days. Those who are in default can rehabilitate their loans or consolidate their loans — both of which can be time-consuming — or file for bankruptcy.
Over 5 million borrowers are currently in default. The New York Federal Reserve recently found that the number of borrowers who moved into serious delinquency surged to 8.04% in the first quarter of 2024, meaning that millions more could enter default this summer.
Some student-loan borrowers previously told BI that they cannot afford to lose their Social Security income if they default on their debt.
"There will be no retirement. I'll die on the job," James Southern, a 63-year-old borrower, said. "Even if I were at my full retirement age, they'd garnish the Social Security, so I'm still going to have to work in order to survive."
Are you in default, or concerned about defaulting on your student loans? Share your story with this reporter at [email protected].
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For months, President Donald Trump has pursued his sweeping agenda through executive actions. Now comes the hard part.
Republicans on Capitol Hill are finally putting pen to paper on what Trump has called the "One Big Beautiful Bill," a sweeping fiscal package that will serve as the centerpiece of the president's legislative agenda.
The bill includes GOP priorities like no taxes on tips or overtime, cuts to Medicaid, "MAGA accounts" for children and several other provisions.
It will take weeks for lawmakers in the House and Senate to work out the final details, and it's likely that some changes will be made along the way. Republicans hope to send the bill to Trump's desk by July 4.
Here's what you should know about what's in the "One Big Beautiful Bill."
As part of the plan approved by the House Energy and Commerce Committee, states would implement work requirements in 2029 for childless adults on Medicaid who do not have a disability, mandating they work for 80 hours a month.
A component of the plan would increase the price of doctors' visits, mandating beneficiaries making above the federal poverty limit to pay co-payments of up to $35. States would also be required to stop taxing hospitals and nursing homes in order to secure more federal funding.
Medicaid recipients in some states would have more paperwork to regularly confirm their residency status and income. And the plan would lower federal funding for some recipients in states that fund medical coverage for undocumented immigrants.
The Congress Budget Office estimated the legislation would save about $912 billion over the next decade in federal spending, about $715 billion of which would derive from Medicaid and Affordable Care Act cuts. The CBO said about 8.6 million people could lose their insurance coverage.
The plan came short of expectations among some ultraconservatives who wanted more Medicaid cuts at the federal level. Some GOP leaders wanted per-capita caps for those in Medicaid expansion states and a lower across-the-board rate at which the federal government supplements each state's funding for Medicaid programs.
Democrats have strongly opposed the bill, emphasizing that millions of Americans will potentially have their lives uprooted by Medicaid cuts.
Some of Trump's flashiest campaign promises were to remove taxes on tips, overtime, and Social Security. This bill largely gets those done, but only for the next four years — lawmakers will have to decide whether to renew the cuts in 2029.
The bill would allow workers in an "occupation that traditionally and customarily receives tips" to claim a tax deduction for the sum of all tips that they received in the previous year. It would also do the same for overtime wages. Neither deduction is available to anyone who is a "highly compensated employee."
To help accomplish Trump's "no taxes on Social Security" pledge, Republicans created a new $4,000 tax deduction for seniors making less than $75,000 per year. There's also a provision in the bill to fulfill Trump's promise of no taxes on car loan interest.
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There's also an extension of the child tax credit, which is currently $2,000 but was set to decrease to $1,000 after this year. The bill would increase the credit to $2,500 through 2028, then it would drop to $2,000 permanently after that.
If you're thinking of buying an electric vehicle, you might want to do so before the end of the year. The bill would eliminate existing tax credits for new and used EVs, and it would impose an annual registration fee of $250 for EV owners.
The bill also makes permanent a slew of tax cuts that Trump and Republicans enacted in 2017. The average American won't feel much of a difference, since they've probably gotten used to the existing tax rates and brackets that have existed since 2018. But it's the most consequential part of the bill from a budgetary perspective, adding trillions to the deficit over the next several years.
The bill establishes "Money account for growth and advancement" accounts, or MAGA accounts, for children. The idea was originally proposed by Republican Sen. Ted Cruz of Texas.
The federal government would pay $1,000 to babies born from 2024 through 2028. After the cutoff, parents will still be able to put $5,000 per year into each account.
Cruz's proposal is similar to previous Democratic-led efforts for "baby bonds," but the biggest difference is that there is no income cutoff. Sen. Cory Booker of New Jersey, a Democrat, envisioned a program primarily targeted at low-income families.
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If enacted, the reconciliation bill would mean major changes for student-loan borrowers. The legislation proposes terminating all existing income-driven student-loan repayment plans, including Biden's SAVE income-driven repayment plan, which would have shortened the timeline for debt relief and provided cheaper monthly payments. While SAVE is currently paused due to litigation, Trump and Republican lawmakers have said they would not carry out the plan if it survives in court.
Under the bill, borrowers would have two repayment plan options: one, called the Repayment Assistance Plan, would allow for loan forgiveness after 360 qualifying payments, and the other option would be a standard repayment plan with a fixed monthly payment over a fixed time period set by the servicer.
Payments made under the Repayment Assistance Plan would be calculated based on the borrower's income and would count toward Public Service Loan Forgiveness.
House lawmakers handed a major win to Big Techby including a 10-year federal preemption on all state artificial intelligence laws in the larger bill. Congress has talked about a federal AI policy, but no serious legislative proposals have emerged.
In the meantime, states have tried to fill to void. Major tech companies have long fought state-level AI regulations. Last year, California lawmakers passed the nation's most sweeping AI legislation only for Gov. Gavin Newsom to veto it.
Meta, OpenAI, and Anthropic lobbied against California's bill. Meta recently wrote to the White House that state laws "could impede innovation and investment."
The issue isn't going away. In the 2024 legislative session, lawmakers in at least 45 states introduced AI-related bills, according to the National Conference of State Legislatures.
Unlike most of the other provisions on this list, the AI regulation ban faces major hurdles to making it into law. Republicans must adhere to strict parliamentary rules to pass Trump's bill without facing a Democratic filibuster in the Senate. One rule is that all provisions must be primarily fiscal in nature, and many expect that the AI provision will fail that test.
Avoiding default: Republicans would raise the debt limit by $4 trillion, staving off a potential default that could come later this summer. One way or another, Congress will have to address the debt issue soon. The federal government is expected to exhaust its borrowing ability sometime in August.
Billions for missile defense: Trump wants the US to have a futuristic missile defense system inspired by Israel's vaunted "Iron Dome" air defenses, but the US shield would include space-based components and focus on longer-range missile threats rather than the smaller weapons Israel faces. House Republicans have allocated roughly $25 billion for overall missile defense, most of which will go to the "Golden Dome" project.
700 more miles of Trump's border wall: Republicans proposed spending roughly $47 billion on border barriers, which will cover 701 miles of "primary wall," 900 miles of river barriers, and 629 miles of secondary barriers. Trump repeatedly fought in his first term to build a massive border wall between the US and Mexico but struggled to get funding through Congress.
A big tax increase on large university endowments: Republicans would significantly increase Trump's 2017 groundbreaking tax on colleges and universities with large endowments. Under the bill, the tax rate would be tied to the size of their endowment, adjusted by student enrollment.At the low end, the rate would remain at 1.4%. At the highest level, universities would pay 21% tax if they have an endowment of $2 million or more per student.
IRS direct file: The big beautiful bill would officially kill off the IRS's Direct File program, a Biden-era initiative that has long been a subject of Republican ire. In April, a Treasury Department official told BI that it was a failed and disappointing program. The new legislation would instead allocate funding towards studying a public-private partnership to provide free filing for a majority of taxpayers.
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