Congress passed Donald Trump’s sweeping tax and spending bill, marking a hard-fought and significant victory for the president and his domestic agenda.
- The legislation generates savings through cuts to public benefits for food and healthcare, and by reducing tax exemptions for clean energy projects.
- 1. Extension of Trump’s 2017 Tax Cuts
- 2. Major Cuts to Healthcare Subsidies
- 3. Social Security Taxes
- 4. Cuts to Food Benefits
- 5. No Taxes on Overtime or Tips
- 6. Tax Cuts for Clean Energy
- What Happens Next?
After a grueling session on Capitol Hill, the House of Representatives approved the bill 218-214 this Thursday afternoon. On Tuesday, the Senate passed the bill by a single vote.
Trump had given the Republican-controlled Congress until July 4 to send him the final version of the bill for signing, which he will do this Friday in a special ceremony.
The Congressional Budget Office estimates that the bill could add $3.3 trillion to the federal deficit over the next 10 years and leave millions without healthcare coverage, a projection the White House disputes.
The legislation generates savings through cuts to public benefits for food and healthcare, and by reducing tax exemptions for clean energy projects.
It also fulfills two of Trump’s key campaign promises: making his 2017 tax cuts permanent and eliminating taxes on tips, overtime, and Social Security beneficiaries, at a cost of $4.5 trillion over 10 years.
Approximately $150 billion will be allocated to border security, detention centers, and immigration agents. Another $150 billion will go toward military spending, including the president’s “Golden Dome” missile defense program.
Democrats, who had used procedural maneuvers to delay the vote in the House, sharply criticized the final bill.
They described it as a measure that strips millions of Americans of healthcare and food subsidies while giving tax cuts to the wealthy.
Here are some of the key points of the controversial bill.
1. Extension of Trump’s 2017 Tax Cuts
In his first term, Trump signed the Tax Cuts and Jobs Act, which lowered taxes for corporations and individuals across most income levels.
Trump had promoted the law as one that would boost economic growth, but experts argue it has benefited wealthier Americans the most.
Key provisions of that law were set to expire in December, but the sweeping budget bill passed this Thursday will make those tax cuts permanent.
2. Major Cuts to Healthcare Subsidies
To help fund tax cuts in other areas, Republicans have added restrictions and additional requirements to Medicaid, the healthcare program relied on by millions of low-income and disabled Americans.
Changes to Medicaid, one of the largest components of federal spending, have been a major source of conflict.
One of the changes includes new work requirements for able-bodied adults without children.
To qualify, starting in December 2026, they must work at least 80 hours per month.
Another proposed change to the program is requiring Medicaid re-enrollment to shift from annual to every six months.
Enrollees will also have to provide additional income and residency verifications.
The Congressional Budget Office estimates that nearly 12 million Americans could lose healthcare coverage by the end of the next decade as a result of the proposed changes.
3. Social Security Taxes
During his campaign, Trump promised to eliminate taxes on Social Security benefits—payments for retirees or disabled individuals.
The bill does not fulfill that promise but does temporarily increase the standard deduction by up to $6,000 annually for some individuals over 65. This deduction would be in effect from 2025 to 2028.
It will not benefit lower-income seniors who already do not pay taxes on Social Security, those who claim benefits before turning 65, or those who exceed a defined income threshold.
4. Cuts to Food Benefits
Reforms have also been introduced to the Supplemental Nutrition Assistance Program (SNAP), used by more than 40 million low-income Americans.
The bill requires states to contribute more to the program, which is currently fully funded by the federal government.
The federal government will continue to fully fund benefits for states with a payment error rate below 6%, but states with higher error rates will assume between 5% and 15% of the program’s costs.
The change will take effect in 2028.
The bill also adds work requirements for able-bodied SNAP participants without dependents.
5. No Taxes on Overtime or Tips
The bill’s “no taxes on tips” provision was one of Trump’s campaign promises.
The final version of the bill allows workers to deduct up to $25,000 in tips and up to $12,500 ($25,000 for joint filers) in overtime, but these deductions are temporary and expire on December 31, 2028.
6. Tax Cuts for Clean Energy
One of the most notable divisions between House and Senate Republicans was the Senate’s proposal for clean energy tax exemptions.
While both chambers called for ending Biden-era federal tax credits for clean energy, Senate Republicans approved a phase-out.
For example, the Senate extended the deadline for companies building wind and solar farms to continue benefiting from tax credits.
However, both the House and Senate versions sought to deny credits to companies whose supply chains may have ties to a “foreign entity of concern,” such as China.
Companies that begin construction this year could qualify for the full tax exemption. This would be reduced to 60% if construction begins in 2026 and 20% if it begins in 2027. The credit would disappear in 2028.
What Happens Next?
Now that the bill has passed the House, its next step is to go to the president’s desk for official signing.
The White House says President Trump will sign it in a ceremony on July 4 at 5:00 PM local time (9:00 PM ET).
Image: DiarioNY
