What’s in Trump’s big bill that passed Congress and will soon become law

Key Takeaways:

• Permanent extension of tax cuts from Trump’s first term, totaling $4.5 trillion.
• Allocation of $350 billion for defense and border security, aiming to deport 1 million people annually.
• Introduction of cuts and work requirements for Medicaid and food assistance programs.
• Rollback of tax breaks for clean energy projects, affecting renewable energy initiatives.
• Projected increase of nearly $3.3 trillion in federal deficits over the next ten years.

Congress Passes Trump’s Massive Tax and Spending Bill

President Donald Trump’s expansive tax and spending bill has cleared Congress, marking a significant shift in the nation’s fiscal policy. The House passed the nearly 900-page legislation with a 218-214 vote, following the Senate’s approval where Vice President JD Vance cast the tie-breaking vote. The bill is set to enact $4.5 trillion in tax cuts and introduce sweeping changes across various sectors.

Permanent Tax Cuts Solidified

At the heart of the legislation is the permanence of tax cuts approved during Trump’s first term. Republicans assert that making these cuts permanent prevents a “massive tax increase” that would have occurred after December when the initial breaks were set to expire.

The bill not only solidifies existing rates but also introduces new deductions:

• Temporary deductions on tips, overtime, and auto loans.
• A $6,000 deduction for older adults earning no more than $75,000 annually, addressing Trump’s pledge to end taxes on Social Security benefits.
• An increase of the child tax credit from $2,000 to $2,200, though millions of lower-income families may not receive the full benefit.
• An adjustment to the state and local tax (SALT) deduction cap, increasing it to $40,000 for five years.

Businesses stand to gain significantly, with provisions allowing immediate write-offs of 100% of equipment and research costs. Proponents argue that these measures will stimulate economic growth.

However, analysis from the Congressional Budget Office (CBO) indicates that the wealthiest households could see a $12,000 annual increase, while the poorest may lose $1,600 per year, primarily due to reductions in Medicaid and food aid.

Boosting Defense and Border Security

A substantial $350 billion is allocated to advance Trump’s border and national security agenda. This includes funding for the U.S.-Mexico border wall, the creation of 100,000 migrant detention facility beds, and hiring 10,000 new Immigration and Customs Enforcement officers, each receiving a $10,000 signing bonus.

The ambitious plan aims to deport approximately 1 million people per year. To offset costs, the bill introduces various new fees for immigrants, including those seeking asylum protections.

The Pentagon is set to receive billions for shipbuilding, munitions systems, and quality-of-life improvements for service members. Additionally, $25 billion is earmarked for the development of the Golden Dome missile defense system, with $1 billion designated for border security efforts.

Cuts to Medicaid and Food Assistance

In a bid to partially offset lost revenue from tax cuts and increased spending, the bill introduces significant reductions to Medicaid and food assistance programs. Republicans contend that these changes rightsize safety net programs and eliminate “waste, fraud, and abuse.”

Key changes include:

• New 80-hour-per-month work requirements for many adults receiving Medicaid and food stamps, extending up to age 65.
• Parents of children aged 14 and older must meet work requirements.
• Introduction of a $35 copayment for Medicaid services.

The CBO estimates that by 2034, an additional 11.8 million Americans could become uninsured, and 3 million may lose eligibility for Supplemental Nutrition Assistance Program (SNAP) benefits.

Rollback of Clean Energy Incentives

The legislation significantly diminishes tax breaks for clean energy projects, impacting initiatives fueled by renewable sources like wind and solar. These tax breaks were central to President Joe Biden’s 2022 bill aimed at combating climate change.

Democratic Senator Ron Wyden of Oregon described the GOP provisions as a “death sentence for America’s wind and solar industries and an inevitable hike in utility bills.”

Additionally, tax credits for new or used electric vehicles will expire on September 30 of this year, earlier than the previous 2032 end date.

Deficit Projections and Budget Debates

The CBO projects that the bill would increase federal deficits by nearly $3.3 trillion from 2025 to 2034. However, Republicans propose an alternative accounting method, asserting that the existing tax breaks should not be counted as new costs since they represent “current policy.”

Under this GOP perspective, the bill would reduce deficits by almost half a trillion dollars over a decade. Critics, including the Committee for a Responsible Federal Budget, argue that this approach employs an “accounting gimmick” that obscures the true fiscal impact.

Last-Minute Amendments and Provisions

In an overwhelming 99-1 vote, the Senate removed a proposal intended to deter states from regulating artificial intelligence, following pushback from Republican governors.

Other notable provisions include:

• An increase in funding for rural hospitals, totaling $50 billion over five years.
• The elimination of a new tax on wind and solar projects utilizing components from China.
• Establishment of the National Garden of American Heroes with a $40 million budget.
• Creation of Trump Accounts, a children’s savings program with potential $1,000 deposits from the Treasury.
• Expansion of the Radiation Exposure Compensation Act, a key provision advocated by GOP Senator Josh Hawley of Missouri.

Implications for the Future

As the bill awaits President Trump’s signature, its wide-ranging provisions promise to reshape aspects of the American economy, healthcare system, and energy sector. Supporters hail it as a necessary advancement of Republican priorities, while critics warn of its potential to increase deficits and negatively impact vulnerable populations.