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Seniors, students, taxpayers, children, parents, low-income Americans and just about everyone else will be affected by the massive tax and spending bill being hashed out in real time on Capitol Hill.
Republicans call it President Donald Trump’s “One Big Beautiful Bill Act,” but there have been several versions. The latest passed the Senate on Tuesday with Vice President JD Vance’s tie-breaking vote.
Senate Republicans’ version of the bill differs in key ways from what the House passed in May. Both chambers will ultimately have to pass the same version to send the package to Trump’s desk by his desired July Fourth deadline.
But the general contours of the massive piece of legislation are known. It extends Trump’s first-term tax cuts, funds his vision for a border wall, and offsets some of that revenue loss and additional spending with cuts to federal support for the social safety net that helps Americans afford food and health insurance.
Here’s what we know about how the Senate bill will affect …
For many Medicaid enrollees, the biggest impact would be the new work requirement. Certain able-bodied Americans ages 19 to 64 who are enrolled through the Medicaid expansion would have to work, volunteer, attend school or participate in job training at least 80 hours a month. The mandate would also apply to parents of children ages 14 and older.
Read more from Tami Luhby here.
In addition, expansion enrollees would have their eligibility reviewed more frequently and would have to pay up to $35 for certain care.
Overall, Medicaid enrollees could face other changes, since states would receive less federal funding for the program. This could force some states to eliminate certain benefits or tighten enrollment, among other alterations.
Plus, many enrollees would face more paperwork and verification requirements, which could make it harder for some to apply for and maintain their benefits. The bill would delay the implementation of some provisions in two Biden administration rules aimed at streamlining enrollment and renewing coverage.
Nearly 12 million more people would be uninsured in 2034, with many of them losing coverage because of the Medicaid provisions in the bill, according to a Congressional Budget Office analysis published Sunday, before subsequent changes to the bill that the Senate ultimately passed.
More Americans who receive food stamps would have to work to keep their benefits. The bill would broaden the existing work mandate to enrollees ages 55 to 64 and parents of children ages 14 and older, as well as to veterans, former foster youth and people experiencing homelessness.
Enrollees in the Supplemental Nutrition Assistance Program, known as SNAP, the formal name for food stamps, may also face other changes: Many states would also have to cover part of the benefit costs for the first time and pay more of the administrative costs, both of which may force them to tighten benefits, cut eligibility or make other alterations, including potentially withdrawing from the safety-net program. Also, the growth of food stamp benefits would be limited in the future.
Read more from Tami about an earlier iteration of the Senate bill’s food stamp changes here.
Americans looking for coverage on the Obamacare exchanges could have a tougher time enrolling in plans and receiving federal subsidies to help pay their premiums. The bill would increase verification requirements and would effectively end automatic reenrollment. The CBO estimates that millions of people would lose their Obamacare coverage.
Just because you aren’t on Medicaid doesn’t mean your health care wouldn’t be affected by the bill. Hospitals are warning that the steep cuts to Medicaid could force some hospitals — particularly in rural locations — to close their doors, limit services and reduce staff.
“The real-life consequences of these reductions will result in irreparable harm to access to care for all Americans,” Rick Pollack, CEO of the American Hospital Association, wrote in a letter to senators Sunday.
The bill could also affect those who don’t receive food stamps. A trade group for independent grocers warned that cutting federal support for the program could hurt local food retailers, which increase access to groceries, provide jobs and help local economies — particularly in rural and underserved areas.
State lawmakers would likely have to make tough decisions since they would face massive reductions in federal support for Medicaid and food stamps. They could try to limit the cost of the programs by cutting benefits or eligibility, but they might also decide to try to save money in other areas, such as education or infrastructure.
The bill would reduce the amount of taxes that state and local governments can levy on providers, notably hospitals, which is a key source of funding for states. Also, it would require many states to start paying for part of the food stamp benefits and shoulder more of the administrative costs.
Many taxpayers would continue to benefit from the array of individual income tax cuts from the 2017 Trump tax package that are set to expire at year’s end. The current bill would permanently extend essentially all those tax breaks, including the lower individual rates and a near-doubling of the standard deduction.
But a lot of those taxpayers may not notice this tax relief because it would be a continuation of provisions that have been in place since the 2017 law was enacted. Some, however, may benefit from the larger child tax credit and temporary increase in the cap on state and local tax deductions, as well as other new tax breaks in the bill.
Households would see their taxes reduced by $2,900, on average, according to a Tax Policy Center analysis of the tax provisions in the bill. But that figure varies widely depending on taxpayers’ income. More on that later.
Senior citizens would receive a $6,000 boost to their standard deduction from 2025 through 2028. The benefit would start to phase out for individuals with incomes of more than $75,000 and couples with incomes double that amount.
This tax break is in lieu of Trump’s campaign promise to eliminate taxes on Social Security benefits.
Some lower-income seniors enrolled in both Medicare and Medicaid, however, could be affected by the Medicaid cuts in the bill. They could lose their Medicaid coverage, which helps them cover their Medicare premiums and out-of-pocket costs. They could also lose benefits they receive through Medicaid, such as long-term care and dental services.
New caps would be placed on the amount students can borrow in federal student loans for graduate school and how much parents can borrow to help pay students’ tuition. There would be fewer opportunities for deferments or forbearance. There would also be limits on lending for part-time students and a much more limited set of repayment options, veering away from the loan forgiveness programs of the Biden era.
A primary focus of the bill is tax cuts, but not everyone who pays taxes will pay less. Private universities are generally tax-exempt, although they do pay a 1.4% tax on income from their endowments. This bill would jack up that endowment income tax to a top rate of 8% for colleges whose endowments exceed $2 million per enrolled student. We’re talking about schools like Harvard, Yale, Stanford, MIT and Princeton.
Good news for anyone buying a new American-made car with a loan: This bill will allow up to $10,000 in interest to be deducted from taxable income.
Bad news for anyone wanting to buy an electric vehicle: EV tax credits, which ranged up to $7,500 and were enacted by Democrats under President Joe Biden, would end at the end of September. They had been scheduled to last through 2032.
Many parents would get a larger tax break: The legislation would permanently beef up the child tax credit to $2,200 per kid, up from the current $2,000.
Single parents earning up to $200,000 and married couples earning up to $400,000 would qualify. The credit would phase out for those with higher incomes.
However, other parents could lose out on government assistance since many of those with children ages 14 and older would have to work to continue receiving Medicaid and food stamps.
In a three-year pilot program, every American baby born between 2025 and 2028 would get a $1,000 nest egg from the government to be invested in an index fund. Parents could then add $5,000 each year to those accounts and watch the interest grow during childhood. No deductions would be allowed until the child turns 18. Originally called a “baby bonus,” or a “MAGA account,” the name was changed to “Trump accounts” over the course of this year. It bears some similarities to proposals put forward by Democrats, including Sen. Cory Booker. Read more from CNN’s Jeanne Sahadi.
Many workers who receive tips or overtime compensation would get a tax break through 2028.
Employees who work in jobs that traditionally receive tips could deduct up to $25,000 in tip income from their federal income taxes, while workers who receive overtime could deduct up to $12,500 of that extra pay.
Highly compensated individuals who make more than $160,000 in 2025 would not qualify.
… people planning on solar and wind tax credits: will have to hurry
The bill speeds up the end of tax incentives for renewable energy projects to 2027.
The bill would limit eligibility for federal benefits — including food stamps, Medicaid, Affordable Care Act premium subsidies and Medicare — to a smaller set of noncitizens.
Some immigrants, such as refugees, asylees and victims of domestic violence and sex trafficking, would no longer qualify.
In addition, immigrants would have to pay new or higher fees to apply for various programs, including asylum, work authorization, humanitarian parole and Temporary Protected Status, as well as for most immigration court filings.
Wealthy Americans would benefit far more from the tax package than those lower on the income scale, according to a Tax Policy Center analysis of the Senate bill.
While all households would see their taxes reduced, some 60% of the benefits would go to those making $217,000 or more (the top 20%). These folks would receive an average tax cut of $12,500, or 3.4% of their after-tax income, in 2026, the analysis found.
But the lowest-income households, who earn about $35,000 or less, would receive an average tax cut of only $150, less than 1% of their after-tax income. Middle-income households would see their taxes reduced by about $1,800, or 2.3% of their after-tax income, on average.
This analysis does not take into account the historic cuts to the nation’s safety-net program, which would hurt lower-income Americans. They would see their income reduced after factoring in the changes to Medicaid and food stamps, according to a report from the Budget Lab at Yale.
It’s hard to believe, but according to a Congressional Research Service report, thousands of people who made $1 million or more claimed unemployment benefits in 2021 and 2022. This bill puts an end to that.
Musk is furious about the bill and howling about it on social media. Not only does he disagree with the deficit-exploding tax cuts, he would also prefer more spending cuts.
The Tesla CEO also vehemently opposes the abrupt end to EV tax credits.
“It gives handouts to industries of the past while severely damaging industries of the future,” he wrote on X. He predicted “political suicide” for Republicans if they turn this bill into law.
The bill would increase the deficit by $3.3 trillion over the next decade, according to the Congressional Budget Office report published Sunday. Republicans have embraced a budget gimmick to argue the impact of the bill is much smaller. But nobody should expect the roughly $36 trillion national debt to shrink as a result of the package.
The legislation would also raise the debt ceiling by $5 trillion to allow the Treasury Department to borrow more to pay the bills that have already been incurred.
Many Americans could feel the consequences of the nation’s ever-growing debt in their wallets. The bill would increase interest rates, according to a CBO analysis of the House version. That could make mortgages, car loans and credit card payments more expensive.
Read more from CNN’s Matt Egan here.
The money Trump could not secure for a border wall during his first term is in this bill. It allocates $46.5 billion for border wall construction and $45 billion for the detention of undocumented people apprehended by Immigration and Customs Enforcement.
