Trump's ‘One Big, Beautiful Bill’ With Trillions in Tax Cuts: What to Know

From the start of his second term as president, Donald Trump said he wanted to tackle three top priorities — tax cuts, climate policy rollbacks, and border security — all at once and in one bill to deliver on campaign promises.

On social media, Trump described the effort as “THE ONE, BIG, BEAUTIFUL BILL … the most significant piece of Legislation that will ever be signed in the History of our Country!”

But there is also some legislative reasoning behind this “big bill” approach: the reconciliation process.

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Reconciliation is a special procedure in Congress that allows certain bills to pass the Senate with a simple majority (51 votes, instead of the usual 60). That lets the majority party enact major fiscal changes without minority party support. (Although some strict rules prevent certain non-budgetary provisions from being included.)

So, lawmakers have to focus on policies with clear fiscal impact: taxes, entitlement programs, and spending levels.

That’s why Congressional Republicans have crafted a single, massive package. Enter the One Big Beautiful Bill Act (OBBBA).

What’s in the One Big Beautiful Bill Act?

As mentioned, OBBBA is the GOP’s attempt to roll a wide range of Republican priorities into a single, sprawling package.

If approved by both chambers and signed by President Trump, the legislation would, broadly speaking, lock in many 2017 Trump-era tax cuts, unwind many of the Biden administration’s climate and energy policies and tax incentives, and pour billions of dollars into border security.

However, to help pay for that, the bill proposes some of the steepest reductions to Medicaid in years. It also includes several provisions that have little to do with the federal budget.

Key Individual Tax Provisions

Permanent Tax Cuts

Both the House and Senate are focused on making Trump's 2017 tax cuts permanent, including lower individual and corporate rates.

SALT Deduction Cap

Under the House GOP version of the OBBBA, the cap on state and local tax (SALT) deductions would increase from $10,000 to $40,000 starting in 2025.

• This higher cap would phase out for single filers with income above $250,000 and joint filers above $500,000.
• The cap would gradually increase by 1% per year from 2026 to 2033, then remain fixed.
• The bill would also end popular SALT workaround strategies for certain pass-through business owners.

*The Senate's proposal hadn't increased the SALT deduction cap, though some say maintaining the $10,000 cap was merely a placeholder.

No Federal Tax on Tips and Overtime

Income from tips and overtime pay would be exempt from federal income tax under the bill, a change aimed at benefiting service and hourly workers.

Car Loan Interest Deduction

The legislation introduces a new deduction for interest paid on auto loans, which would allow taxpayers to write off a portion of their car loan interest — something not previously available under federal law.

"MAGA /Trump Accounts"

As Kiplinger has reported, the bill would create new “MAGA Accounts,” now called "Trump Accounts," tax-advantaged savings accounts for some children seeded with $1,000 from the federal government.

Health Savings Account (HSA) Expansion

Annual HSA contribution limits would be increased, allowing individuals and families to save more pre-tax dollars for medical expenses.

Bonus Standard Deduction for Over 65

The standard deduction for taxpayers age 65 and older would receive a boost beyond the current extra standard deduction. The change is intended to provide extra tax relief for retirees and those on fixed incomes. For more information, see: Big Standard Deduction Increase Proposed for Older Adults.

Child Tax Credit (CTC) Changes

• The House bill would temporarily increase the CTC to $2,500 per child for tax years 2025–2028, after which it would revert to $2,000 per child. The credit would be indexed for inflation starting after 2026,
• Would impose a new requirement: both the taxpayer and their spouse (if filing jointly) would need to have Social Security numbers to claim the credit, not just the child.
• That rule would make millions of children ineligible, especially those in mixed-status families, even if the children are U.S. citizens.

*The Senate has proposed a lower increase to the CTC.

EV Tax Credit

The House bill repeals or phases out many clean energy and electric vehicle tax credits established under the Inflation Reduction Act of 2022. That includes terminating most residential energy efficiency and clean energy credits after December 31, 2025, several years earlier than initially scheduled.

• For electric vehicles, the bill ends the main federal EV tax credit for most new purchases after 2025, with only a limited exception for manufacturers that have sold fewer than 200,000 qualifying vehicles.
• The legislation also eliminates or shortens incentives for domestic manufacturing, renewable energy projects, and clean hydrogen production, requiring many projects to begin construction within just 60 days of enactment to remain eligible.

*The Senate is proposing a slower phaseout for clean-energy tax credits, and some environmental rule rollbacks have been dropped from the legislation for procedural reasons.

Note: This is not an all-inclusive list of proposals. Cost estimates for the bill range from $2.1 trillion to over $5 trillion over ten years.

Also, these provisions are subject to change as the bill moves through the Senate, but they represent some key individual tax changes in the House GOP version of the legislation.

Medicaid cuts and changes

According to the Congressional Budget Office (CBO), federal Medicaid spending under the bill would shrink by $600 billion to $700 billion over the next decade.

• The House version of the legislation would require most adults between 19 and 64 to work or volunteer at least 80 hours a month to keep their coverage, with some exceptions for students and caregivers.
• States would have to check eligibility twice a year instead of once, a hurdle likely to result in many people losing coverage due to missing paperwork.
• For those above the poverty line, doctor visits would come with copays as high as $35, far more than what most Medicaid recipients pay now.

The CBO estimates that more than 10 million people could lose Medicaid coverage over the next ten years, with additional losses expected from tighter Affordable Care Act enrollment rules.

The House GOP bill would also prohibit Medicaid from covering abortion providers and gender transition care, expanding these bans to all adults.

*The Senate's draft included deeper cuts to Medicaid than the House version, but a Senate Parliamentarian ruling blocked some of the most aggressive Medicaid cuts. Senate Republicans are reportedly looking for workarounds.

Unusual provisions in the OBBBA

Not everything in the big bill is about taxes or spending.

• The House GOP version would eliminate federal tax and registration requirements for gun silencers, a move that gun control advocates call dangerous and unnecessary.
• It would also block states from passing their own laws regulating artificial intelligence (AI), a provision that has alarmed some digital rights groups and state lawmakers.
• SNAP (food stamp) benefits would be cut under the House version by roughly $230 billion over a decade.

The fiscal impact of the GOP tax bill

Proponents argue the bill’s tax cuts and spending changes will boost growth and jobs. But the numbers tell a more complicated story.

The CBO projects the bill would add about $2.4 trillion to the national debt over ten years, even after accounting for the spending reductions and new revenue measures.

Other independent estimates, which factor in the interest on that additional debt, put the true cost closer to $3.5 trillion or more over a decade.

Who benefits from Trumps big bill?

A Tax Foundation analysis shows the largest tax cuts would go to households earning above $400,000. The top 1% would receive a disproportionate share of benefits compared to those making under $100,000.

What about the public? Some public skepticism is reflected in a CBS News/YouGov poll conducted in early June: 47% of respondents said the bill would hurt the middle class, and 54% believe it would negatively affect low-income people, while 60% expect the wealthy to benefit most.

The One Big Beautiful Bill Act: Bottom line

The “One Big Beautiful Bill” promises sweeping tax cuts and a dramatic shift in federal policy. But some say it does so by slashing social programs, adding to the deficit, and introducing unrelated or controversial provisions.

Expect fierce debate in the coming weeks as the Senate takes up the bill.

Also, keep in mind that House Speaker Mike Johnson and U.S. Treasury Secretary Scott Bessent had set a July 4 target date for getting the bill signed by the president. The United States could run afoul of the debt limit as soon as August.

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