One Big "Beautiful" Bill

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The OBBBA[8][9] includes hundreds of provisions, is estimated to add roughly $3 trillion to the national debt[10][11] and is projected to cut approximately $4.46 trillion in tax revenue over a 10-year period.[12][13] The bill:

  • Permanently extends the individual tax rates Trump signed into law in 2017, which were set to expire at the end of the year;[14]
  • Increases the cap on the state and local tax deduction to $40,000 for taxpayers making less than $500,000, with the cap reverting to $10,000 after 5 years, at an estimated cost of $142 billion. Republican representatives Elise Stefanik, Mike Lawler, Nick LaLota, and Andrew Garbarino of New York, Representative Young Kim of California, and Representative Tom Kean Jr. of New Jersey cut this deal with House Speaker Mike Johnson in exchange for their votes;[citation needed]
  • Creates a new tax deduction for tips and overtime pay for workers making less than $150,000. The Senate bill caps this deduction to $25,000, while the earlier House bill was uncapped. This provision would expire in 2028;[15]
  • Allows car buyers to deduct up to $10,000 per year in auto loan interest for cars assembled in the United States and purchased between 2025 and 2028. The deduction would phase out for individuals making over $100,000 or couples making over $200,000;[16]
  • Permanently eliminates the personal exemption, which had been temporarily eliminated by the Tax Cuts and Jobs Act of 2017. It offers a temporary tax deduction, set to expire in 2028, of up to $6,000 for seniors. The deduction phases out for individuals with modified adjusted gross income (MAGI) exceeding $75,000 ($150,000 for married couples).[14] According to the Council of Economic Advisors, this would result in 88% of seniors being able to claim enough deductions to clear their Social Security tax burden, up from 64% under current law;[17]
  • Increases the maximum amount of the child tax credit from $2,000 to $2,200 per child, and indexes the amount of the credit to inflation.[14][18] The refundable portion of the credit is also indexed to inflation, but is not increased, meaning that low-income households do not see an increased credit.[18]
  • Establishes a 1% tax on remittances. The House bill called for a 3.5% tax, but would reimburse U.S. citizens. The Senate provision was estimated to raise up to $10 billion over 10 years;[19]
  • Establishes a new 2.5% tax credit for metallurgical coal.[20][a]
  • In order to gain the support for Alaskan senators, the bill includes an increased tax deduction for whaling boat captains and a waiver process for an exemption for planned SNAP cuts for Alaska along with Hawaii;[22][23]
  • Increases taxes on investment income from college endowments, estimated to raise $761 million over 10 years. Colleges with more than 3,000 students and an endowment per student ratio of $500,000 would be taxed starting at 1.4%, with the tax rate increasing to 8% for the wealthiest colleges. The original House bill proposed a tax of up to 21% with no exemptions based on size. An exemption for religious colleges was removed for violating the Byrd Rule;[24]
  • Includes the creation of Trump Accounts, which allow for parents to contribute $1,000 on the birth of a child born between 2025 and 2028[25] and $5,000 per year, with the money growing tax-deferred, with uses for higher education, job training, or a down payment on a home;[26][b]
  • Phases out clean energy tax credits passed in the Biden-era Inflation Reduction Act. Wind and solar tax credits would be phased out for projects starting construction after June 2026 or placed in service after 2027.[c] Electric vehicle tax credits would be phased out by September 2025, and EV charging tax credits would be phased out by June 2026.[29][30] Fees on methane emissions would be postponed for 10 years, while tax credits for biofuels would be extended an additional four years to 2031;[10] and
  • Raises the United States debt ceiling by $5 trillion.[6]
  • Reverses aspects of Medicare's price negotiation program, allowing more drugs to be exempt and increasing costs for consumers. The Congressional Budget Offices estimates $5 billion in lost savings for the government over ten years.[31]

The defense portion of the bill would allocate an additional $150 billion in defense spending. This figure includes:

The bill includes $170 billion for spending on border security, creating the capacity to deport up to one million people each year.[34]

The bill increases the funding for ICE from $10 billion to more than $100 billion by 2029, making it the single most heavily funded law enforcement agency in the federal government.[35][36] These funds include:

  • $46.5 billion to build a wall on the United States–Mexico border;[37]
  • $45 billion over four years in order to add 100,000 new migrant detention beds. This would be a 365% increase in ICE's budget for detentions;[37][38]
  • $29.9 billion to Immigration and Customs Enforcement for hiring new agents and covering transportation and deportation costs, with the aim of hiring 10,000 new officers;[39]
  • $17.3 billion to support state and local law enforcement with border enforcement;[39]
  • $10 billion to reimburse the Department of Homeland Security for costs related to border security;[40]
  • $7.8 billion for hiring Border Patrol agents and vehicles, with the aim of hiring 3,000 new agents;[39]
  • $6.2 billion for border technology;[39] and
  • $3.3 billion for hiring immigration judges and staff.[41]

The bill would establish a $100 annual fee to apply for asylum, down from $1,000 in the House bill, a $550 fee to apply for employment authorization for asylum seekers and migrants on humanitarian parole or temporary protected status, and a $500 fee to apply for temporary protected status.[41] It would also increase fees for non-immigrant visas to $250.[10]

The bill cuts over $1.2 trillion in federal spending,[10] primarily from Medicaid[14] and nutrition funding SNAP.[42] The bill:

  • Requires states to charge enrollees with family incomes between 100 and 138 percent of the federal poverty level up to $35 for each health care service, if they qualify for Medicaid bases on income alone.[43]
  • Adds work requirements for Medicaid recipients for the first time, with individuals ages 19 to 64 required to work at least 80 hours per month. Some exemptions would be offered for adults with dependent children ages 14 and under and those with medical conditions;[44]
  • Cuts to the Medicaid provider tax, which helps states fund their Medicaid costs, from 6% to 3.5% by 2031;[10]
  • Requires states to check eligibility of people on Medicaid expansion every six months instead of annually;[10]
  • Prevents expansion states from using state-directed payments to pay Medicaid providers higher prices than Medicare would pay;[10]
  • Requires minimum staffing ratios for nursing homes;[10]
  • Requires a five-year waiting period for green card holders before applying to Medicaid, and reduce retroactive Medicaid payments from three months to one month;[10]
  • Limits premium tax credits for immigrants;[10]
  • Reduces Medicaid payments to states with errors and other improper payments;[10]
  • Prohibits Medicaid from being used for funding Planned Parenthood and hypothetical similar organizations for one year;[10][45]
  • Requires SNAP (federal food assistance) beneficiaries ages 18–64 to work at least 80 hours per month, compared to 18–54 under current law;[46]
  • Requires states with an error rate above 6% to contribute to up to 15% of SNAP benefit costs. Alaska and Hawaii would receive special exemptions after lobbying from Senators Lisa Murkowski and Dan Sullivan;[46]
  • Repeals the National Education and Obesity Prevention Grant Program;[10]
  • Reduces federal nutrition funding by $186 billion between 2025 and 2034.[42] Increases the share of state costs to administer the SNAP program from 50% to 75%;[47] and
  • Restricts future updates to the Thrifty Food Plan used to calculate SNAP benefit levels,[47]
  • Prohibits "federal payment under Medicaid or CHIP for specified gender transition procedures", thus restricting transgender people from gender-affirming surgeries and hormone therapy.[48] An exception is made for procedures to "rectify chromosomal abnormalities" (possibly referring to intersex people) or for transgender people attempting to detransition.[48]

The bill also:

The bill contains the following additional provisions:[10]

Removed provisions

The following provisions were at one point included in the bill, but were removed:

Additionally, many provisions in the House bill were removed to comply with the Byrd rule in the Senate. These included:

  • The official short title of the bill;[64]
  • A ban on pharmacy benefit managers using spread pricing;[65]
  • A ban on Medicaid from being used for gender-affirming care for adults and children (the Crenshaw Amendment) starting in 2027;[66]
  • Changes to the Medicaid funding formula to increase benefits for Alaska and Hawaii;[10]
  • An expansion of Pell Grants to cover workforce-training programs;[67]
  • Requiring states that use their own funds to offer health insurance for undocumented immigrants to pay a higher share of Medicaid funding;[10]
  • A crackdown on the pandemic-era employee retention tax credit;[68]
  • $2 billion allocated for Pentagon military intelligence programs and $500 million allocated for missile development;[68]
  • A policy that would have ended SNAP assistance for some households that are also eligible for other assistance;[68] and
  • A provision to allow mining around the Boundary Waters wilderness.[69]

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