By Jacob Bogage — New tax cuts. Massive spending on border security. Cuts to social safety net programs. Pullbacks on investments to fight climate change. New limits on student loans. If it becomes law, President Donald Trump and congressional Republicans’ massive bill will reshape much of the federal government – and the U.S. economy.
GOP majorities in the House and Senate are attempting to move swiftly to reverse many of President Joe Biden’s legislative accomplishments and cement Trump’s legacy in the tax code, on the southern border and in generations-old anti-poverty benefits.
The House’s bill would devote hundreds of billions of dollars to finishing Trump’s border wall, fortifying maritime border crossings, outfitting the Defense Department and more. It would extend the tax cuts that were one of the signature legislative achievements of Trump’s first term, create new savings accounts for newborns and fulfill some – but not all – of the president’s campaign promises.
The legislation still must pass the House, where it faces stiff opposition from blue-state Republicans, and the Senate, where tax writers are eyeing their own policy changes. GOP leaders are using the budget reconciliation process to shepherd the measure, which would allow them to dodge a Democratic filibuster in the Senate and pass it on party lines. Trump on Monday broadly embraced the legislation, which he has taken to calling his “big, beautiful bill.”
Here’s what’s in the proposal.
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Extend the 2017 Trump tax cuts
Trump’s 2017 Tax Cuts and Jobs Act cut taxes for individuals of nearly all income levels, concentrating most of the benefits among the wealthiest earners and corporations. The business tax cuts are permanent, but the individual portions expire at the end of the year, meaning that if Congress doesn’t act, tax rates will go up on most households. The Republican bill would extend the lower rates for individuals.
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Increase the standard deduction
The Tax Cuts and Jobs Act doubled the standard deduction, the baseline amount of income filers can collect tax-free. This legislation would preserve that policy and add to it for the next four years, increasing the deduction by up to $2,000 for married couples filing jointly and $1,000 for single filers, to $32,000 for couples and $16,000 for individuals.
– – –
Cuts to Medicaid
To meet budget goals, Republican plans to cut Medicaid spending could strip coverage from 8.7 million people and lead to 7.6 million more uninsured people over 10 years. The legislation calls for new requirements for beneficiaries, including co-pays for those above 100 percent of the federal poverty level and work requirements for many able-bodied, childless adults. It wouldalso tighten eligibility verification rules and limit taxes states charge medical providers as a roundabout way of collecting more federal Medicaid dollars.
– – –
A little SALT
A group of blue-state Republicans are at loggerheads with House GOP leadership over the state and local tax deduction, which lets filers write off the amount they paid in local taxes from their federal tax bill. The 2017 tax law capped the SALT deduction at $10,000, but that limit expires at the end of the year. The Republican proposal raises that cap to $30,000, far below what those blue-state GOP lawmakers had demanded. The impasse could imperil the fate of the entire package because of House Republicans’ slim majority.
– – –
Making states pay for SNAP
The legislation would pass on more of the cost for administering SNAP, the Supplemental Nutrition Assistance Program formerly known as food stamps, to state governments, potentially forcing local officials to decide whether to cut benefits or dig into their state and municipal budgets. Twenty-eight states with higher rates of improper payments would be required to shoulder 25 percent of benefits costs in addition to 75 percent of administrative costs. Currently, states only pay half of the program’s overhead and do not contribute to benefits.
– – –
Increase the child tax credit – for some
The child tax credit is a tax break for filers with children. The Republican measure would increase the credit to $2,500 per child, from $2,000. But not every family can qualify: The legislation limits eligibility to parents or guardians with Social Security numbers, essentially requiring those people to be citizens. That would mostly exclude noncitizen parents from claiming the credit on behalf of a child who is a citizen.
– – –
A border wall, other barriers and immigration restrictions
The bill designates more than $140 billion for the Trump administration’s border and immigration crackdown. More than $50 billion of that total would go toward completing the wall along the U.S.-Mexico border and other fortifications, including at maritime crossings. Roughly $45 billion would go to building and maintaining detention centers to house families of deportees, and $14 billion is marked for deportee transportation.
– – –
New taxes on colleges and universities
The legislation aggressively taxes income generated by the endowments of colleges and universities. Current law imposes a 1.4 percent tax on those institutions. This bill creates a new system that would set varying tax rates depending on the size of the endowment per enrolled student.
Endowment size per student and tax rate:
More than $500,000, but less than $750,000: 1.4 percent
More than $750,000, but less than $1,250,000: 7 percent
More than $1,250,000 but less than $2,000,000: 14 percent
At least $2,000,000: 21 percent
– – –
Savings accounts for newborns
The proposal would give newborn babies a $1,000 “‘money account for growth and advancement,” or “MAGA account.” Parents or beneficiaries could contribute $5,000 each year to that account tax-free until the beneficiary is 31 years old. The idea mirrors a pitch from Democratic Sen. Cory Booker (New Jersey) for “baby bonds.”
– – –
No tax on tips
Trump campaigned heavily on ending taxes on tips, and now that policy is in the bill. The legislation wouldallow a tax deduction for the total amount of tipped income received. It contains some guardrails to prevent “highly compensated employees” from claiming their earnings as tips and specifically identifies food service, hair care, nail care, aesthetics, and body and spa treatments as applicable professions to receive eligibility for the deduction.
– – –
No tax on overtime
Another of Trump’s campaign promises, this provision would exempt overtime wages from taxes through a newdeduction. The legislation wouldn’t allow deduction of overtime wages from tips or for “highly compensated employees,” and requires filers to use a Social Security number when claiming the deduction, essentially deeming noncitizens ineligible.
– – –
No tax on car loan interest
The bill would allow purchasers of American-made cars to deduct up to $10,000 in car loan interest payments for four years – an idea Trump talked about on the campaign trail and then returned to as his tariffs began to bite the auto industry. For tax filers earning more than $100,000 (or $200,000 for married couples filing jointly), the loan interest deduction would decrease by $200 for every $1,000 of additional income.
– – –
A bonus deduction for seniors
Trump promised last year to end taxes on Social Security benefits. The bill doesn’t include that provision, but it would add an extra $4,000 to the standard deduction for people over 65 years old. The policy would be in place for four years and would taper off as a recipient’s income increased.
– – –
Billions for defense, including Trump’s ‘Golden Dome’
There is roughly $150 billion in the bill for the Defense Department, spread over a number of priorities: $34 billion for the munition and defense supply chain; $33.6 billion for shipbuilding; and $20 billion for missile defense and space capabilities – that’s partially for Trump’s “Golden Dome” continental missile defense system. This spending could increase when the measure gets to the Senate: The upper chamber aims to spend more on defense than the House.
– – –
Repeal Biden student loan forgiveness
The legislation would save $295 billion over 10 years by repealing the Biden administration’s student loan forgiveness program and making other changes to loan repayments.
– – –
Tax credits for home schooling or private school
The bill includes up to $5 billion per year, for four years, in tax credits that benefit people who donate to organizations that help families pay for private-school tuition or home-schooling. It would create a 100 percent tax credit for donations to scholarship-granting organizations, with taxpayers fully reimbursed for their donations when they file their taxes. The program would be capped at $5 billion in the first of four years and grow modestly each subsequent year if there is sufficient demand. Under the proposal, families earning up to three times their area median income would qualify for vouchers. That’s more than $450,000 per year in Washington, D.C., or more than $270,000 in Morgantown, West Virginia.
– – –
Rescind money to fight climate change
The proposal would gut elements of Biden’s signature 2022 climate law, the Inflation Reduction Act. It would eliminate a federal tax credit of up to $7,500 that consumers can receive for buying an electric vehicle. Republicans are also seeking to phase out incentives for the production of clean energy, such as wind and solar power.
– – –
New oil and gas production
The Natural Resources Committee expects to collect roughly $20 billion by mandating new oil and gas lease sales in the Gulf of Mexico and in protected Alaskan wildlands. There is some dispute about whether that language can stay in the bill, though, because it may run afoul of the strict rules that govern the reconciliation process in the Senate.
– – –
Auction electromagnetic spectrum
The electromagnetic spectrum is necessary for everything from wireless technologies to military communications and radars. The legislation would renew the Federal Communications Commission’s authority to auction off bands of spectrum that the Congressional Budget Office says could bring in $88 billion over 10 years.
– – –
Raise the debt ceilin
The debt ceiling sets the amount of money the federal government can borrow to pay for expenses already incurred. The government technically eclipsed the limit at the end of 2024, but the Treasury Department is taking “extraordinary measures” to put off the need to take on more debt. But those measures will expire sometime in August, the Treasury Department said Friday. The House bill would raise the debt limit by $4 trillion.
Marianna Sotomayor, Mariana Alfaro, Laura Meckler, Paige Winfield Cunningham and Maxine Joselow contributed to this report.
New tax cuts. Massive spending on border security. Cuts to social safety net programs. Pullbacks on investments to fight climate change. New limits on student loans. If it becomes law, President Donald Trump and congressional Republicans’ massive bill will reshape much of the federal government – and the U.S. economy.
GOP majorities in the House and Senate are attempting to move swiftly to reverse many of President Joe Biden’s legislative accomplishments and cement Trump’s legacy in the tax code, on the southern border and in generations-old anti-poverty benefits.
The House’s bill would devote hundreds of billions of dollars to finishing Trump’s border wall, fortifying maritime border crossings, outfitting the Defense Department and more. It would extend the tax cuts that were one of the signature legislative achievements of Trump’s first term, create new savings accounts for newborns and fulfill some – but not all – of the president’s campaign promises.
The legislation still must pass the House, where it faces stiff opposition from blue-state Republicans, and the Senate, where tax-writers are eyeing their own policy changes. GOP leaders are using the budget reconciliation process to shepherd the measure, which would allow them to dodge a Democratic filibuster in the Senate and pass it on party lines. Trump on Monday broadly embraced the legislation, which he has taken to calling his “big, beautiful bill.”
Here’s what’s in the proposal.
– – –
Extend the 2017 Trump tax cuts
Trump’s 2017 Tax Cuts and Jobs Act cut taxes for individuals of nearly all income levels, concentrating most of the benefits among the wealthiest earners and corporations. The business tax cuts are permanent, but the individual portions expire at the end of the year, meaning that if Congress doesn’t act, tax rates will go up on most households. The Republican bill would extend the lower rates for individuals.
– – –
Increase the standard deduction
The Tax Cuts and Jobs Act doubled the standard deduction, the baseline amount of income filers can collect tax-free. This legislation would preserve that policy and add to it for the next four years, increasing the deduction by up to $2,000 for married couples filing jointly and $1,000 for single filers, to $32,000 for couples and $16,000 for individuals.
– – –
Cuts to Medicaid
To meet budget goals, Republican plans to cut Medicaid spending could strip coverage from 8.7 million people and lead to 7.6 million more uninsured people over 10 years. The legislation calls for new requirements for beneficiaries, including co-pays for those above 100 percent of the federal poverty level and work requirements for many able-bodied, childless adults. It wouldalso tighten eligibility verification rules and limit taxes states charge medical providers as a roundabout way of collecting more federal Medicaid dollars.
– – –
A little SALT
A group of blue-state Republicans are at loggerheads with House GOP leadership over the state and local tax deduction, which lets filers write off the amount they paid in local taxes from their federal tax bill. The 2017 tax law capped the SALT deduction at $10,000, but that limit expires at the end of the year. The Republican proposal raises that cap to $30,000, far below what those blue-state GOP lawmakers had demanded. The impasse could imperil the fate of the entire package because of House Republicans’ slim majority.
– – –
Making states pay for SNAP
The legislation would pass on more of the cost for administering SNAP, the Supplemental Nutrition Assistance Program formerly known as food stamps, to state governments, potentially forcing local officials to decide whether to cut benefits or dig into their state and municipal budgets. Twenty-eight states with higher rates of improper payments would be required to shoulder 25 percent of benefits costs in addition to 75 percent of administrative costs. Currently, states only pay half of the program’s overhead and do not contribute to benefits.
– – –
Increase the child tax credit – for some
The child tax credit is a tax break for filers with children. The Republican measure would increase the credit to $2,500 per child, from $2,000. But not every family can qualify: The legislation limits eligibility to parents or guardians with Social Security numbers, essentially requiring those people to be citizens. That would mostly exclude noncitizen parents from claiming the credit on behalf of a child who is a citizen.
– – –
A border wall, other barriers and immigration restrictions
The bill designates more than $140 billion for the Trump administration’s border and immigration crackdown. More than $50 billion of that total would go toward completing the wall along the U.S.-Mexico border and other fortifications, including at maritime crossings. Roughly $45 billion would go to building and maintaining detention centers to house families of deportees, and $14 billion is marked for deportee transportation.
– – –
New taxes on colleges and universities
The legislation aggressively taxes income generated by the endowments of colleges and universities. Current law imposes a 1.4 percent tax on those institutions. This bill creates a new system that would set varying tax rates depending on the size of the endowment per enrolled student.
Endowment size per student and tax rate:
More than $500,000, but less than $750,000: 1.4 percent
More than $750,000, but less than $1,250,000: 7 percent
More than $1,250,000 but less than $2,000,000: 14 percent
At least $2,000,000: 21 percent
– – –
Savings accounts for newborns
The proposal would give newborn babies a $1,000 “‘money account for growth and advancement,” or “MAGA account.” Parents or beneficiaries could contribute $5,000 to that account tax-free until the beneficiary is 31 years old. The idea mirrors a pitch from Democratic Sen. Cory Booker (New Jersey) for “baby bonds.”
– – –
No tax on tips
Trump campaigned heavily on ending taxes on tips, and now that policy is in the bill. The legislation wouldallow a tax deduction for the total amount of tipped income received. It contains some guardrails to prevent “highly compensated employees” from claiming their earnings as tips and specifically identifies food service, hair care, nail care, aesthetics, and body and spa treatments as applicable professions to receive eligibility for the deduction.
– – –
No tax on overtime
Another of Trump’s campaign promises, this provision would exempt overtime wages from taxes through a newdeduction. The legislation wouldn’t allow deduction of overtime wages from tips or for “highly compensated employees,” and requires filers to use a Social Security number when claiming the deduction, essentially deeming noncitizens ineligible.
– – –
No tax on car loan interest
The bill would allow purchasers of American-made cars to deduct up to $10,000 in car loan interest payments for four years – an idea Trump talked about on the campaign trail and then returned to as his tariffs began to bite the auto industry. For tax-filers earning more than $100,000 (or $200,000 for married couples filing jointly), the loan interest deduction would decrease by $200 for every $1,000 of additional income.
– – –
A bonus deduction for seniors
Trump promised last year to end taxes on Social Security benefits. The bill doesn’t include that provision, but it would add an extra $4,000 to the standard deduction for people over 65 years old. The policy would be in place for four years and would taper off as a recipient’s income increased.
– – –
Billions for defense, including Trump’s ‘Golden Dome’
There’s roughly $150 billion in the bill for the Defense Department spread over a number of priorities: $34 billion for the munition and defense supply chain; $33.6 billion for shipbuilding; and $20 billion for missile defense and space capabilities – that’s partially for Trump’s “Golden Dome” continental missile defense system. This spending could increase when the measure gets to the Senate: The upper chamber aims to spend more on defense than the House.
– – –
Repeal Biden student loan forgiveness
The legislation would save $295 billion over 10 years by repealing the Biden administration’s student loan forgiveness program and making other changes to loan repayments.
– – –
Tax credits for home schooling or private school
The bill includes up to $5 billion per year, for four years, in tax credits that benefit people who donate to organizations that help families pay for private-school tuition or home-schooling. It would create a 100 percent tax credit for donations to scholarship-granting organizations, with taxpayers fully reimbursed for their donations when they file their taxes. The program would be capped at $5 billion in the first of four years and grow modestly each subsequent year if there is sufficient demand. Under the proposal, families earning up to three times their area median income would qualify for vouchers. That’s more than $450,000 per year in Washington, D.C., or more than $270,000 in Morgantown, West Virginia.
– – –
Rescind money to fight climate change
The proposal would gut elements of Biden’s signature 2022 climate law, the Inflation Reduction Act. It would eliminate a federal tax credit of up to $7,500 that consumers can receive for buying an electric vehicle. Republicans are also seeking to phase out incentives for production of clean energy, such as wind and solar power.
– – –
New oil and gas production
The Natural Resources Committee expects to collect roughly $20 billion by mandating new oil and gas lease sales in the Gulf of Mexico and in protected Alaskan wildlands. There is some dispute about whether that language can stay in the bill, though, because it may run afoul of the strict rules that govern the reconciliation process in the Senate.
– – –
Auction electromagnetic spectrum
Electromagnetic spectrum is necessary for everything from wireless technologies to military communications and radars. The legislation would renew the Federal Communications Commission’s authority to auction off bands of spectrum that the Congressional Budget Office says could bring in $88 billion over 10 years.
– – –
Raise the debt ceiling
The debt ceiling sets the amount of money the federal government can borrow to pay for expenses already incurred. The government technically eclipsed the limit at the end of 2024, but the Treasury Department is taking “extraordinary measures” to put off the need to take on more debt. But those measures will expire sometime in August, the Treasury Department said Friday. The House bill would raise the debt limit by $4 trillion.
– – –
Marianna Sotomayor, Mariana Alfaro, Laura Meckler, Paige Winfield Cunningham and Maxine Joselow contributed to this report.
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