The House narrowly passed its massive GOP tax and spending cuts package on Thursday, sending President Donald Trump’s “one big, beautiful bill” over to the Senate, where it will likely face many changes. The package includes several controversial measures that would deeply cut into two of the nation’s key safety net programs – Medicaid and food stamps – while making permanent essentially all of the trillions of dollars of individual income tax breaks contained in the GOP’s 2017 Tax Cuts and Jobs Act. What’s more, it would fulfill Trump’s campaign promises to cut taxes on tips and overtime, albeit temporarily. The magnitude of the measures is evident in the estimates of the cost they would incur or the savings they would produce. The tax changes in the package would add $3.8 trillion to the nation’s debt over a decade, according to a Congressional Budget Office analysis released Wednesday before last-minute changes were made to the bill late that night. Funding for Medicaid would be slashed by nearly $700 billion, according to CBO, though that figure will likely grow even larger once CBO factors in the late-night update. The food stamps program would see a cut of $267 billion in federal support. House Republicans included other Trump campaign promises, such as significant investments in staffing at the US southern border, new systems to discourage immigration into the US and a gigantic new missile defense shield. Then there are other longtime GOP policy goals, such as an overhaul of the nation’s outdated air traffic system, new fees targeting electric cars and a pivot away from federal student loans. Overall, the House was looking for at least $1.5 trillion in spending reductions to offset the legislation’s sweeping tax breaks and investments in defense and immigration control. Senate Republicans are likely to make additional changes, which could soften some of the deep cuts in the House bill. The Senate also has stricter rules for what can be included since congressional Republicans are pushing the legislation through the budget reconciliation process, so they don’t need Democratic support in the Senate. CNN is still reviewing the last-minute changes to the legislation. Here’s what we know about the House GOP package: Medicaid work requirements For the first time in Medicaid’s 60-year history, certain recipients ages 19 to 64 would be required to work at least 80 hours a month to retain their benefits. They could also meet the controversial mandate by engaging in community service, attending school or participating in a work program. The requirement would now take effect by the end of 2026, instead of at the start of 2029. Advancing the date is expected to lead to more people losing their health insurance coverage and to cut more deeply into Medicaid’s federal support. The mandate would not apply to parents, pregnant women, medically frail individuals and those with substance-abuse disorders, among others. Republicans have long sought to add work requirements to Medicaid, which provides health insurance to more than 71 million low-income Americans. The first Trump administration granted waivers to several states to implement such a mandate, but the efforts were halted by federal courts. The new Medicaid work requirements are expected to result in millions of people losing their health care coverage, multiple analyses have shown. While many adults on Medicaid have jobs, they may have trouble meeting the reporting requirements, obtaining exemptions or landing enough hours each month to maintain their eligibility. The package also mandates states to check Medicaid expansion enrollees’ eligibility every six months, instead of annually, and to require that certain low-income adults covered under Medicaid expansion pay for a portion of their care. Recipients would also have to prove they have US citizenship or legal immigration status. In addition, the legislation would penalize states that have expanded Medicaid and that provide Medicaid coverage to undocumented immigrants using state funds. These states would see a 10% reduction in their federal matching funds for the expansion population. Several states, including California, New York, Utah and Illinois, cover undocumented children, adults or both in state health plans. It would also limit states’ ability to levy taxes on health care providers. States use this revenue to boost provider rates and fund health-related initiatives, among other uses. All but one state levy at least one type of provider tax, which some Republicans claim is a scheme by states to get more federal matching funds. And the legislation includes an incentive for the 10 states that have not expanded Medicaid under a last-minute change. Those states would be permitted to funnel larger supplemental payments to hospitals and other providers, giving the states another reason not to broaden their Medicaid programs to low-income adults. Expansion states would be more limited in the supplemental payments they could send to providers. The package would postpone implementation of a Biden administration rule aimed at streamlining Medicaid eligibility and enrollment until 2035. Such a delay would make it harder for people to enroll in the program and renew their coverage. However, the House did not include several other controversial proposals that would have reduced the share of federal funds that states receive. The bill also calls for codifying a Trump administration proposal that would make changes to the Affordable Care Act enrollment process, including shortening the open enrollment period and eliminating the ability of low-income Americans to sign up year-round. Plus, in a last-minute change to the bill, GOP lawmakers added a provision to restore funding for federal subsidies that help reduce out-of-pocket costs for lower-income Obamacare enrollees. Trump nixed the funding for the assistance, known as cost-sharing reduction subsidies, in his first term. However, reinstating the cost-sharing subsidies’ funding would likely reduce the generosity of premium subsides for some enrollees, which could prompt them to drop their coverage. The Medicaid and Affordable Care Act provisions in the package could result in 8.6 million more people being uninsured in 2034, according to an early CBO estimate released by Democratic lawmakers. That number is expected to grow with the latest changes. Larger child tax credit The child tax credit would rise to $2,500, up from $2,000, per child from 2025 through 2028. Single parents earning up to $200,000 and married couples earning up to $400,000 qualify. The credit phases out for those with higher incomes. Also, the legislation would require that parents, in addition to the child, have Social Security numbers. Currently, parents can claim the credit if they have individual taxpayer identification numbers, which some noncitizens who are not eligible for Social Security numbers use to file federal taxes. The change would mean 2 million fewer children would be eligible next year, according to the JCT. Trump accounts for kids The package would create a new “money account for growth and advancement,” or MAGA account – which House lawmakers renamed “Trump accounts.” The federal government would provide a one-time $1,000 credit to the accounts of children born from 2025 through 2028 who are US citizens at birth. The annual contribution limit to the tax-preferred accounts would be $5,000, and money could not be withdrawn before the beneficiary turns 18. After that, the funds could be used for higher education or a first-time home purchase, among other purposes, and taxed at capital gains rates. After a beneficiary turns 31, the account would cease to be a Trump account. No taxes on tips and overtime Certain taxpayers would be able to deduct the income they receive from tips on their tax returns, fulfilling a key Trump campaign promise, under the proposal. But it would only apply to occupations that traditionally receive tips, in an effort to prevent employers and workers from recharacterizing their income as tips to escape taxes. The Treasury secretary would be tasked with publishing a list of such jobs. Highly compensated individuals, who make more than $160,000 in 2025, would not qualify. The deduction would apply to 4 million tipped workers, according to a fact sheet from Rep. Jason Smith, chair of the House Ways and Means Committee. Likewise, many hourly employees who receive overtime would not have to pay taxes on that extra compensation. It would apply to 80 million hourly workers, according to Smith. Those who are highly compensated would not qualify. Both breaks would be available to taxpayers who do not itemize their deductions, who are the majority of Americans. However, the measures would only be in effect from 2025 through 2028. A boost for senior citizens Senior citizens would receive a $4,000 increase to their standard deduction from 2025 through 2028, according to the package. But the benefit would start to phase out for individuals with incomes of more than $75,000 and couples with incomes double that amount. This measure is aimed at fulfilling Trump’s promise to end taxes on Social Security benefits since lawmakers cannot include such a measure under the rules of budget reconciliation, which Republicans are using to advance the package without Democratic support in the Senate. Car loan interest deduction The legislation calls for a new temporary deduction for the interest on car loans, in keeping with Trump’s campaign promise. Eligible taxpayers could deduct up to $10,000 in interest annually from 2025 through 2028. But the tax break would start to phase out for single filers earning more than $100,000 and married couples earning $200,000. It applies to taxpayers who get car loans starting in 2025 and who buy passenger vehicles that had their final assembly in the US. More tax breaks The package would temporarily boost the standard deduction by $1,000 for single filers and $2,000 for married couples. And it includes some measures that would benefit wealthy Americans. It would make permanent the larger estate tax exemption, which would be set at $15 million per person for 2026 and would be indexed to inflation thereafter. Plus, it would make permanent a special deduction for the owners of certain pass-through entities who pay their business taxes on their individual tax returns. It would beef up that deduction to 23%, up from 20%. These so-called pass-through businesses include partnerships, such as those formed by lawyers, doctors or investors. State and local tax deductions The latest version of the bill would also hike the current limit on state and local tax deductions to $40,000 annually, up from $10,000. But the full amount would be limited to those making $500,000 or less, before it starts to phase back down to $10,000. The beefed up cap, which would rise gradually over time, would last until 2034. Republican lawmakers from high-tax states, including California and New York, had been demanding an increase to the so-called SALT cap for years since it disproportionately hits their constituents. The limit mainly affects higher-income residents in those states. Republicans introduced the cap as part of their 2017 tax cuts package as a way to help pay for the sweeping legislation. Trump had promised to eliminate the cap on the campaign trail last year, but doing so would be very costly. Business tax breaks The package would restore a tax break from the 2017 tax package that allowed businesses to fully write off the cost of equipment in the first year it was purchased. The incentive has been phasing out since 2023. Also, the legislation would once again allow businesses to write off the cost of research and development in the year it was incurred. The TCJA required that companies deduct those expenses over five years, starting in 2022. The two provisions would expire after 2029. The bill would also temporarily allow companies to immediately deduct the cost of constructing or making improvements to certain types of buildings, including manufacturing plants. However, the package would limit writing off the purchases of professional sports teams. Higher taxes for universities and foundations Some universities currently pay a 1.4% tax on the net investment income from their endowments. The bill calls for raising that rate to as high as 21%, depending on the endowment’s size. Similarly, private foundations would see their tax rate jump to as much as 10%, up from roughly 1.4%. Raising the debt ceiling The legislation would also raise the debt ceiling by $4 trillion. Congress needs to raise the debt limit before its August recess to prevent the nation from defaulting on its obligations, Treasury Secretary Scott Bessent wrote to lawmakers last week. Expanded work mandate for food stamps Under the package, more food stamp recipients would have to work to qualify for benefits. Currently, adults ages 18 to 54 without dependent children can only receive food stamps for three months over a 36-month period unless they work 20 hours a week or are eligible for an exemption. The legislation would extend the work requirement to those ages 55 to 64, as well as to parents of children between the ages of 7 and 18. Plus it would curtail states’ ability to receive work requirement waivers in difficult economic times, limiting them only to counties with unemployment rates above 10%. The bill would also require states to pay for a portion of the benefit costs – at least 5% – for the first time, starting in fiscal year 2028. States with higher payment error rates would have to shoulder more of the burden – as much as 25% of the costs for those with error rates of at least 10%. Plus, states would have to pick up 75% of the administrative costs, rather than 50%. Advocates quickly criticized the proposals, saying recipients could lose crucial food assistance and states would be on the hook for millions of dollars, which could lead them to cut benefits and eligibility. Some 42 million Americans are enrolled in the Supplemental Nutrition Assistance Program, or SNAP, the formal name for food stamps. Clean energy programs axed The legislation would effectively deal a blow to the Inflation Reduction Act, former President Joe Biden’s major clean energy law passed in 2022. In last-minute changes, Republicans sped up the timelines for phasing out key clean energy tax credits to the end of 2028. They also put in a new, narrow set of requirements for energy companies building solar, wind, battery or geothermal to generate electricity, only allowing companies to recoup the credit if they started construction within a 60-day window after the bill was signed into law, and their power was in service by the end of 2028. Analysts have also said the move will increase Americans’ electricity bills, since it would prevent cheaper wind, solar and batteries from getting on the grid at the same time power-hungry data centers and AI are coming online. The only carve-out was for nuclear energy, a form of clean energy touted by Trump and Republicans that is much more expensive and time-intensive to build than solar and wind. Nuclear companies could claim a tax break if they started construction by 2028. The package also claws back unspent IRA funds, targeting a $27 billion grant program at the Environmental Protection Agency and other EPA and Energy Department programs. Republicans ultimately stripped a provision of the bill that would have sold off 500,000 acres of public land in Utah and Nevada, a measure that was opposed by some Western Republican lawmakers. Federal student loans The legislation would dramatically restructure the way students can borrow from the federal government for college, as well as make big changes to the popular Pell grant program. The package, which CBO projects would save about $350 billion over a decade by limiting the federal role in the student borrowing process, would cap the total amount of federal aid a student can receive annually at the “median cost of college” and end economic hardship and unemployment deferments. Plus, it would bar loan servicers from temporarily suspending student loan payments for more than nine months over a two-year period. The changes also include terminating the subsidized loan program for undergraduate students and the Graduate PLUS loan program for new borrowers, with a three-year exception for students with such loans. The bill would amend the maximum annual and aggregate loan limits for unsubsidized loans, as well as require undergraduate students to exhaust their unsubsidized loan options before their parents can take out Parent PLUS loans. In addition, the legislation would terminate all income-contingent repayment plans — including Biden’s SAVE plan, which has been blocked in federal court. Instead, borrowers would have a choice of a standard repayment plan or a repayment assistance plan based on borrowers’ income. The bill also calls for alterations to the Pell grant program, including requiring students attend school at least half time and increasing the number of credit hours needed for full-time enrollment. But it would expand eligibility for such grants for students enrolled in short-term workforce programs. And the legislation would create “skin-in-the-game accountability” for colleges participating in the Direct Loan program by requiring them to reimburse the Department of Education for a portion of loans that aren’t fully repaid. It would also establish a “Promise” program to provide colleges with performance-based grants of up to $5,000 per federal student aid recipient. The colleges must provide students with a guaranteed maximum total price for their program of study based on income and financial needs categories. The formula would reward institutions for strong earnings outcomes, low tuition, and enrollment and graduation of low-income students. Immigration fees and ICE funds Immigrants applying for asylum and work authorization, as well as those applying for humanitarian parole and temporary protected status, would have to pay new or higher fees, under the package. Asylum seekers and parolees would have to pay $1,000 to apply and $550 for an initial work permit, for instance. Plus, sponsors of unaccompanied children would have to pay up to $3,500. The bill also provides $45 billion to build new immigration detention facilities, including family detention centers, to allow the detention of at least 100,000 people a day, on average. It supports hiring 10,000 more Immigration and Customs Enforcement officers, including money for retention and signing bonuses for the agents, and provides funding for 1 million annual deportations through ground and air transportation. And it provides $1.3 billion to hire immigration judges and support staff, as well as to expand courtroom capacity. Border security The legislation calls for tens of billions of dollars to bolster border security, including $46.5 billion to expand and modernize the border barrier system. Planned investments include the completion of 700 miles of primary wall, the construction of 900 miles of river barriers, and the replacement of 141 miles of vehicle and pedestrian barriers. The package would also provide $5 billion to acquire, construct or improve Customs and Border Protection facilities. Plus, it would funnel $4.1 billion for the agency to hire and train 3,000 new Border Patrol agents, 5,000 new Office of Field Operations customs officers, 200 new Air and Marine Operations agents, 290 support staff, and eligible retired agents and officers. It would also invest $2 billion in annual retention bonuses and signing incentives. The bill would provide nearly $1.1 billion to strengthen technology to detect and disrupt the smuggling of illegal drugs and people into the US, and $2.7 billion for border surveillance technology, including tunnel detection capability and unmanned aircraft systems. And it includes $1 billion for security and planning for the 2028 Olympics in Los Angeles, as well as $625 million for the 2026 FIFA World Cup, which will be hosted by the US, Canada and Mexico. It would also provide $300 million for the Federal Emergency Management Agency for the reimbursement of extra law enforcement costs for protecting presidential residences. Electric and hybrid vehicle fees Electric vehicles would have to pay an annual registration fee of $250 and hybrid vehicles would be assessed an annual fee of $100, under the package. The funds would be deposited into the Highway Trust Fund. But a proposal to levy a $20 annual tax on gas vehicles was dropped, after it faced swift pushback from conservatives. The legislation would also eliminate seven green programs authorized by the Democrats’ 2022 Inflation Reduction Act, including the Low-Carbon Transportation Materials Grants Program and the Federal Aviation Administration’s Alternative Fuel and Low-Emission Aviation Technology Program. Air traffic control The bill would appropriate $12.5 billion for the modernization of the nation’s air traffic control system. The funds would begin replacing outdated technology and enhance the hiring of air traffic controllers. Financial company oversight The package would limit the embattled Consumer Financial Protection Bureau’s authority to draw funds from the Federal Reserve. Also, it would essentially eliminate the Public Company Accounting Oversight Board, which was established by Congress to oversee the audits of public companies, by shifting its responsibilities to the Securities and Exchange Commission and barring it from collecting fees from companies and brokers and dealers. Defense The legislation calls for adding roughly $150 billion to strengthen the nation’s defense programs. The package includes nearly $25 billion for Trump’s “Golden Dome” missile defense initiative, which calls for developing a space-based system and quickly accelerating defense capabilities against hypersonic threats. It would provide nearly $34 billion for ship building and more than $20 billion for munitions, including ramping up the domestic production of rare earth and critical minerals. Also, the bill would funnel more than $8.5 billion to improving service members’ quality of life, including renovating military barracks, providing supplemental payments of the Basic Housing Allowance, expanding educational opportunities and child care fee assistance, and broadening professional licensure assistance programs for military spouses. Judges’ power to hold Trump administration in contempt The package would defund the enforcement of contempt orders if the judge had previously not ordered the plaintiffs in the case to put up a security bond with a preliminary injunction or temporary restraining order granted in their favor. The goal is to stop frivolous lawsuits, according to a committee spokesperson. Impact on the deficit Although the package includes deep reductions in spending, its tax cuts would slash revenue even more, according to several independent analyses. CBO has yet to release an official score of the entire bill. A preliminary estimate from the Committee for a Responsible Federal Budget said the legislation would add $3.3 trillion to the nation’s debt over the next decade. And annual deficits would jump from $1.8 trillion in 2024 to $2.9 trillion by 2034 as the federal government would continue to spend more than it would raise in revenue, the committee projected. Similarly, the Penn Wharton Budget Model also found that the package would cost $3.3 trillion over 10 years. It noted that the tax proposals would reduce revenue by $4.6 trillion, while spending on defense, homeland security and immigration enforcement would add more than $300 billion. But the savings in the bill only amount to $1.6 trillion. These estimates were released before House Republicans updated the bill ahead of a floor vote. Some House Republicans are downplaying the legislation’s impact on the deficit, arguing that the enhanced economic growth spurred by the package will bring in more revenue. White House press secretary Karoline Leavitt on Monday told reporters, “This bill does not add to the deficit.” This story has been updated with additional developments. CNN’s Ella Nilsen, Sarah Ferris, Manu Raju, Lauren Fox, Tierney Sneed and Fredreka Schouten contributed to this report.
What’s in Trump’s ‘big, beautiful’ bill that passed the House
Published:
The House narrowly passed its massive GOP tax and spending cuts package on Thursday, sending President Donald Trump’s “one big, beautiful bill” over to the Senate, where it will likely face many changes. The package includes several controversial measures that would deeply cut into two of the nation’s key safety net programs – Medicaid and food stamps – while making permanent essentially all of the trillions of dollars of individual income tax breaks contained in the GOP’s 2017 Tax Cuts and Jobs Act. What’s more, it would fulfill Trump’s campaign promises to cut taxes on tips and overtime, albeit temporarily. The magnitude of the measures is evident in the estimates of the cost they would incur or the savings they would produce. The tax changes in the package would add $3.8 trillion to the nation’s debt over a decade, according to a Congressional Budget Office analysis released Wednesday before last-minute changes were made to the bill late that night. Funding for Medicaid would be slashed by nearly $700 billion, according to CBO, though that figure will likely grow even larger once CBO factors in the late-night update. The food stamps program would see a cut of $267 billion in federal support. House Republicans included other Trump campaign promises, such as significant investments in staffing at the US southern border, new systems to discourage immigration into the US and a gigantic new missile defense shield. Then there are other longtime GOP policy goals, such as an overhaul of the nation’s outdated air traffic system, new fees targeting electric cars and a pivot away from federal student loans. Overall, the House was looking for at least $1.5 trillion in spending reductions to offset the legislation’s sweeping tax breaks and investments in defense and immigration control. Senate Republicans are likely to make additional changes, which could soften some of the deep cuts in the House bill. The Senate also has stricter rules for what can be included since congressional Republicans are pushing the legislation through the budget reconciliation process, so they don’t need Democratic support in the Senate. CNN is still reviewing the last-minute changes to the legislation. Here’s what we know about the House GOP package: Medicaid work requirements For the first time in Medicaid’s 60-year history, certain recipients ages 19 to 64 would be required to work at least 80 hours a month to retain their benefits. They could also meet the controversial mandate by engaging in community service, attending school or participating in a work program. The requirement would now take effect by the end of 2026, instead of at the start of 2029. Advancing the date is expected to lead to more people losing their health insurance coverage and to cut more deeply into Medicaid’s federal support. The mandate would not apply to parents, pregnant women, medically frail individuals and those with substance-abuse disorders, among others. Republicans have long sought to add work requirements to Medicaid, which provides health insurance to more than 71 million low-income Americans. The first Trump administration granted waivers to several states to implement such a mandate, but the efforts were halted by federal courts. The new Medicaid work requirements are expected to result in millions of people losing their health care coverage, multiple analyses have shown. While many adults on Medicaid have jobs, they may have trouble meeting the reporting requirements, obtaining exemptions or landing enough hours each month to maintain their eligibility. The package also mandates states to check Medicaid expansion enrollees’ eligibility every six months, instead of annually, and to require that certain low-income adults covered under Medicaid expansion pay for a portion of their care. Recipients would also have to prove they have US citizenship or legal immigration status. In addition, the legislation would penalize states that have expanded Medicaid and that provide Medicaid coverage to undocumented immigrants using state funds. These states would see a 10% reduction in their federal matching funds for the expansion population. Several states, including California, New York, Utah and Illinois, cover undocumented children, adults or both in state health plans. It would also limit states’ ability to levy taxes on health care providers. States use this revenue to boost provider rates and fund health-related initiatives, among other uses. All but one state levy at least one type of provider tax, which some Republicans claim is a scheme by states to get more federal matching funds. And the legislation includes an incentive for the 10 states that have not expanded Medicaid under a last-minute change. Those states would be permitted to funnel larger supplemental payments to hospitals and other providers, giving the states another reason not to broaden their Medicaid programs to low-income adults. Expansion states would be more limited in the supplemental payments they could send to providers. The package would postpone implementation of a Biden administration rule aimed at streamlining Medicaid eligibility and enrollment until 2035. Such a delay would make it harder for people to enroll in the program and renew their coverage. However, the House did not include several other controversial proposals that would have reduced the share of federal funds that states receive. The bill also calls for codifying a Trump administration proposal that would make changes to the Affordable Care Act enrollment process, including shortening the open enrollment period and eliminating the ability of low-income Americans to sign up year-round. Plus, in a last-minute change to the bill, GOP lawmakers added a provision to restore funding for federal subsidies that help reduce out-of-pocket costs for lower-income Obamacare enrollees. Trump nixed the funding for the assistance, known as cost-sharing reduction subsidies, in his first term. However, reinstating the cost-sharing subsidies’ funding would likely reduce the generosity of premium subsides for some enrollees, which could prompt them to drop their coverage. The Medicaid and Affordable Care Act provisions in the package could result in 8.6 million more people being uninsured in 2034, according to an early CBO estimate released by Democratic lawmakers. That number is expected to grow with the latest changes. Larger child tax credit The child tax credit would rise to $2,500, up from $2,000, per child from 2025 through 2028. Single parents earning up to $200,000 and married couples earning up to $400,000 qualify. The credit phases out for those with higher incomes. Also, the legislation would require that parents, in addition to the child, have Social Security numbers. Currently, parents can claim the credit if they have individual taxpayer identification numbers, which some noncitizens who are not eligible for Social Security numbers use to file federal taxes. The change would mean 2 million fewer children would be eligible next year, according to the JCT. Trump accounts for kids The package would create a new “money account for growth and advancement,” or MAGA account – which House lawmakers renamed “Trump accounts.” The federal government would provide a one-time $1,000 credit to the accounts of children born from 2025 through 2028 who are US citizens at birth. The annual contribution limit to the tax-preferred accounts would be $5,000, and money could not be withdrawn before the beneficiary turns 18. After that, the funds could be used for higher education or a first-time home purchase, among other purposes, and taxed at capital gains rates. After a beneficiary turns 31, the account would cease to be a Trump account. No taxes on tips and overtime Certain taxpayers would be able to deduct the income they receive from tips on their tax returns, fulfilling a key Trump campaign promise, under the proposal. But it would only apply to occupations that traditionally receive tips, in an effort to prevent employers and workers from recharacterizing their income as tips to escape taxes. The Treasury secretary would be tasked with publishing a list of such jobs. Highly compensated individuals, who make more than $160,000 in 2025, would not qualify. The deduction would apply to 4 million tipped workers, according to a fact sheet from Rep. Jason Smith, chair of the House Ways and Means Committee. Likewise, many hourly employees who receive overtime would not have to pay taxes on that extra compensation. It would apply to 80 million hourly workers, according to Smith. Those who are highly compensated would not qualify. Both breaks would be available to taxpayers who do not itemize their deductions, who are the majority of Americans. However, the measures would only be in effect from 2025 through 2028. A boost for senior citizens Senior citizens would receive a $4,000 increase to their standard deduction from 2025 through 2028, according to the package. But the benefit would start to phase out for individuals with incomes of more than $75,000 and couples with incomes double that amount. This measure is aimed at fulfilling Trump’s promise to end taxes on Social Security benefits since lawmakers cannot include such a measure under the rules of budget reconciliation, which Republicans are using to advance the package without Democratic support in the Senate. Car loan interest deduction The legislation calls for a new temporary deduction for the interest on car loans, in keeping with Trump’s campaign promise. Eligible taxpayers could deduct up to $10,000 in interest annually from 2025 through 2028. But the tax break would start to phase out for single filers earning more than $100,000 and married couples earning $200,000. It applies to taxpayers who get car loans starting in 2025 and who buy passenger vehicles that had their final assembly in the US. More tax breaks The package would temporarily boost the standard deduction by $1,000 for single filers and $2,000 for married couples. And it includes some measures that would benefit wealthy Americans. It would make permanent the larger estate tax exemption, which would be set at $15 million per person for 2026 and would be indexed to inflation thereafter. Plus, it would make permanent a special deduction for the owners of certain pass-through entities who pay their business taxes on their individual tax returns. It would beef up that deduction to 23%, up from 20%. These so-called pass-through businesses include partnerships, such as those formed by lawyers, doctors or investors. State and local tax deductions The latest version of the bill would also hike the current limit on state and local tax deductions to $40,000 annually, up from $10,000. But the full amount would be limited to those making $500,000 or less, before it starts to phase back down to $10,000. The beefed up cap, which would rise gradually over time, would last until 2034. Republican lawmakers from high-tax states, including California and New York, had been demanding an increase to the so-called SALT cap for years since it disproportionately hits their constituents. The limit mainly affects higher-income residents in those states. Republicans introduced the cap as part of their 2017 tax cuts package as a way to help pay for the sweeping legislation. Trump had promised to eliminate the cap on the campaign trail last year, but doing so would be very costly. Business tax breaks The package would restore a tax break from the 2017 tax package that allowed businesses to fully write off the cost of equipment in the first year it was purchased. The incentive has been phasing out since 2023. Also, the legislation would once again allow businesses to write off the cost of research and development in the year it was incurred. The TCJA required that companies deduct those expenses over five years, starting in 2022. The two provisions would expire after 2029. The bill would also temporarily allow companies to immediately deduct the cost of constructing or making improvements to certain types of buildings, including manufacturing plants. However, the package would limit writing off the purchases of professional sports teams. Higher taxes for universities and foundations Some universities currently pay a 1.4% tax on the net investment income from their endowments. The bill calls for raising that rate to as high as 21%, depending on the endowment’s size. Similarly, private foundations would see their tax rate jump to as much as 10%, up from roughly 1.4%. Raising the debt ceiling The legislation would also raise the debt ceiling by $4 trillion. Congress needs to raise the debt limit before its August recess to prevent the nation from defaulting on its obligations, Treasury Secretary Scott Bessent wrote to lawmakers last week. Expanded work mandate for food stamps Under the package, more food stamp recipients would have to work to qualify for benefits. Currently, adults ages 18 to 54 without dependent children can only receive food stamps for three months over a 36-month period unless they work 20 hours a week or are eligible for an exemption. The legislation would extend the work requirement to those ages 55 to 64, as well as to parents of children between the ages of 7 and 18. Plus it would curtail states’ ability to receive work requirement waivers in difficult economic times, limiting them only to counties with unemployment rates above 10%. The bill would also require states to pay for a portion of the benefit costs – at least 5% – for the first time, starting in fiscal year 2028. States with higher payment error rates would have to shoulder more of the burden – as much as 25% of the costs for those with error rates of at least 10%. Plus, states would have to pick up 75% of the administrative costs, rather than 50%. Advocates quickly criticized the proposals, saying recipients could lose crucial food assistance and states would be on the hook for millions of dollars, which could lead them to cut benefits and eligibility. Some 42 million Americans are enrolled in the Supplemental Nutrition Assistance Program, or SNAP, the formal name for food stamps. Clean energy programs axed The legislation would effectively deal a blow to the Inflation Reduction Act, former President Joe Biden’s major clean energy law passed in 2022. In last-minute changes, Republicans sped up the timelines for phasing out key clean energy tax credits to the end of 2028. They also put in a new, narrow set of requirements for energy companies building solar, wind, battery or geothermal to generate electricity, only allowing companies to recoup the credit if they started construction within a 60-day window after the bill was signed into law, and their power was in service by the end of 2028. Analysts have also said the move will increase Americans’ electricity bills, since it would prevent cheaper wind, solar and batteries from getting on the grid at the same time power-hungry data centers and AI are coming online. The only carve-out was for nuclear energy, a form of clean energy touted by Trump and Republicans that is much more expensive and time-intensive to build than solar and wind. Nuclear companies could claim a tax break if they started construction by 2028. The package also claws back unspent IRA funds, targeting a $27 billion grant program at the Environmental Protection Agency and other EPA and Energy Department programs. Republicans ultimately stripped a provision of the bill that would have sold off 500,000 acres of public land in Utah and Nevada, a measure that was opposed by some Western Republican lawmakers. Federal student loans The legislation would dramatically restructure the way students can borrow from the federal government for college, as well as make big changes to the popular Pell grant program. The package, which CBO projects would save about $350 billion over a decade by limiting the federal role in the student borrowing process, would cap the total amount of federal aid a student can receive annually at the “median cost of college” and end economic hardship and unemployment deferments. Plus, it would bar loan servicers from temporarily suspending student loan payments for more than nine months over a two-year period. The changes also include terminating the subsidized loan program for undergraduate students and the Graduate PLUS loan program for new borrowers, with a three-year exception for students with such loans. The bill would amend the maximum annual and aggregate loan limits for unsubsidized loans, as well as require undergraduate students to exhaust their unsubsidized loan options before their parents can take out Parent PLUS loans. In addition, the legislation would terminate all income-contingent repayment plans — including Biden’s SAVE plan, which has been blocked in federal court. Instead, borrowers would have a choice of a standard repayment plan or a repayment assistance plan based on borrowers’ income. The bill also calls for alterations to the Pell grant program, including requiring students attend school at least half time and increasing the number of credit hours needed for full-time enrollment. But it would expand eligibility for such grants for students enrolled in short-term workforce programs. And the legislation would create “skin-in-the-game accountability” for colleges participating in the Direct Loan program by requiring them to reimburse the Department of Education for a portion of loans that aren’t fully repaid. It would also establish a “Promise” program to provide colleges with performance-based grants of up to $5,000 per federal student aid recipient. The colleges must provide students with a guaranteed maximum total price for their program of study based on income and financial needs categories. The formula would reward institutions for strong earnings outcomes, low tuition, and enrollment and graduation of low-income students. Immigration fees and ICE funds Immigrants applying for asylum and work authorization, as well as those applying for humanitarian parole and temporary protected status, would have to pay new or higher fees, under the package. Asylum seekers and parolees would have to pay $1,000 to apply and $550 for an initial work permit, for instance. Plus, sponsors of unaccompanied children would have to pay up to $3,500. The bill also provides $45 billion to build new immigration detention facilities, including family detention centers, to allow the detention of at least 100,000 people a day, on average. It supports hiring 10,000 more Immigration and Customs Enforcement officers, including money for retention and signing bonuses for the agents, and provides funding for 1 million annual deportations through ground and air transportation. And it provides $1.3 billion to hire immigration judges and support staff, as well as to expand courtroom capacity. Border security The legislation calls for tens of billions of dollars to bolster border security, including $46.5 billion to expand and modernize the border barrier system. Planned investments include the completion of 700 miles of primary wall, the construction of 900 miles of river barriers, and the replacement of 141 miles of vehicle and pedestrian barriers. The package would also provide $5 billion to acquire, construct or improve Customs and Border Protection facilities. Plus, it would funnel $4.1 billion for the agency to hire and train 3,000 new Border Patrol agents, 5,000 new Office of Field Operations customs officers, 200 new Air and Marine Operations agents, 290 support staff, and eligible retired agents and officers. It would also invest $2 billion in annual retention bonuses and signing incentives. The bill would provide nearly $1.1 billion to strengthen technology to detect and disrupt the smuggling of illegal drugs and people into the US, and $2.7 billion for border surveillance technology, including tunnel detection capability and unmanned aircraft systems. And it includes $1 billion for security and planning for the 2028 Olympics in Los Angeles, as well as $625 million for the 2026 FIFA World Cup, which will be hosted by the US, Canada and Mexico. It would also provide $300 million for the Federal Emergency Management Agency for the reimbursement of extra law enforcement costs for protecting presidential residences. Electric and hybrid vehicle fees Electric vehicles would have to pay an annual registration fee of $250 and hybrid vehicles would be assessed an annual fee of $100, under the package. The funds would be deposited into the Highway Trust Fund. But a proposal to levy a $20 annual tax on gas vehicles was dropped, after it faced swift pushback from conservatives. The legislation would also eliminate seven green programs authorized by the Democrats’ 2022 Inflation Reduction Act, including the Low-Carbon Transportation Materials Grants Program and the Federal Aviation Administration’s Alternative Fuel and Low-Emission Aviation Technology Program. Air traffic control The bill would appropriate $12.5 billion for the modernization of the nation’s air traffic control system. The funds would begin replacing outdated technology and enhance the hiring of air traffic controllers. Financial company oversight The package would limit the embattled Consumer Financial Protection Bureau’s authority to draw funds from the Federal Reserve. Also, it would essentially eliminate the Public Company Accounting Oversight Board, which was established by Congress to oversee the audits of public companies, by shifting its responsibilities to the Securities and Exchange Commission and barring it from collecting fees from companies and brokers and dealers. Defense The legislation calls for adding roughly $150 billion to strengthen the nation’s defense programs. The package includes nearly $25 billion for Trump’s “Golden Dome” missile defense initiative, which calls for developing a space-based system and quickly accelerating defense capabilities against hypersonic threats. It would provide nearly $34 billion for ship building and more than $20 billion for munitions, including ramping up the domestic production of rare earth and critical minerals. Also, the bill would funnel more than $8.5 billion to improving service members’ quality of life, including renovating military barracks, providing supplemental payments of the Basic Housing Allowance, expanding educational opportunities and child care fee assistance, and broadening professional licensure assistance programs for military spouses. Judges’ power to hold Trump administration in contempt The package would defund the enforcement of contempt orders if the judge had previously not ordered the plaintiffs in the case to put up a security bond with a preliminary injunction or temporary restraining order granted in their favor. The goal is to stop frivolous lawsuits, according to a committee spokesperson. Impact on the deficit Although the package includes deep reductions in spending, its tax cuts would slash revenue even more, according to several independent analyses. CBO has yet to release an official score of the entire bill. A preliminary estimate from the Committee for a Responsible Federal Budget said the legislation would add $3.3 trillion to the nation’s debt over the next decade. And annual deficits would jump from $1.8 trillion in 2024 to $2.9 trillion by 2034 as the federal government would continue to spend more than it would raise in revenue, the committee projected. Similarly, the Penn Wharton Budget Model also found that the package would cost $3.3 trillion over 10 years. It noted that the tax proposals would reduce revenue by $4.6 trillion, while spending on defense, homeland security and immigration enforcement would add more than $300 billion. But the savings in the bill only amount to $1.6 trillion. These estimates were released before House Republicans updated the bill ahead of a floor vote. Some House Republicans are downplaying the legislation’s impact on the deficit, arguing that the enhanced economic growth spurred by the package will bring in more revenue. White House press secretary Karoline Leavitt on Monday told reporters, “This bill does not add to the deficit.” This story has been updated with additional developments. CNN’s Ella Nilsen, Sarah Ferris, Manu Raju, Lauren Fox, Tierney Sneed and Fredreka Schouten contributed to this report.
