From $4.5 trillion tax cuts to medicaid work mandates: What’s inside Trump’s ‘Big Beautiful Tax’ bill set to become law

In a major legislative victory for US President Donald Trump, House Republicans on Thursday pushed through a sweeping tax and spending cut bill, paving the way for what the president has dubbed the “Big Beautiful Tax” plan to reach his desk by the self-imposed 4 July deadline.

Spanning nearly 900 pages, the legislation is a vast collection of tax breaks, welfare rollbacks, and GOP priorities — from border security to defence spending and new work mandates for safety net programmes.

Despite united opposition from Democrats, Republicans managed to push the bill through the Senate with Vice President JD Vance casting the deciding vote, and through the House with a narrow 218-214 margin after earlier passing an initial version in May by just one vote.

Also Read:‘One Big Beautiful’ Bill: Trump’s multitrillion-dollar tax and spending bill clears House  

Here’s a look at what the bill contains and when the key provisions come into effect.

$4.5 trillion tax cuts: GOP seeks to make Trump-era breaks permanent

Republicans argue the bill is necessary to avoid a sharp tax increase when Trump-era tax cuts expire in December. It includes approximately $4.5 trillion in tax reductions, with current tax rates and brackets made permanent. New deductions are added for tips, overtime pay, and auto loans. Older adults earning up to $75,000 a year would get a $6,000 deduction — seen as Trump fulfilling his pledge to stop taxing Social Security benefits.

The child tax credit increases from $2,000 to $2,200, although lower-income families may not receive the full benefit. The cap on state and local tax deductions (SALT) jumps from $10,000 to $40,000 for five years — a key issue for high-tax states like New York. While the House wanted a 10-year extension, the final compromise settled for five.

For businesses, the bill offers immediate 100 per cent write-offs for equipment and research expenses. Republicans believe this will fuel economic growth.

According to a nonpartisan Congressional Budget Office (CBO) analysis, the wealthiest households would gain about $12,000 annually, while the poorest could lose up to $1,600 per year — largely due to cuts in Medicaid and food assistance.

Also Read:‘Call your representative, tell them to vote no’: Obama urges Americans to block Trump’s ‘megabill’ as House faces tense showdown

$350 billion for border wall, deportations and missile defence

The bill devotes nearly $350 billion to Trump’s national security agenda. This includes funds for the US-Mexico border wall and 100,000 migrant detention beds, aligning with Trump’s pledge for the largest mass deportation in American history.

It also allocates hiring bonuses for 10,000 new Immigration and Customs Enforcement officers and expands Border Patrol staffing. The target: 1 million deportations annually.

New immigration-related fees would be levied on asylum seekers to help cover the costs. Defence spending includes billions for shipbuilding, munitions, and troop welfare, along with $25 billion for developing the “Golden Dome” missile shield. An additional $1 billion would go to the Department of Defense for border operations.

Medicaid, SNAP hit with cuts and new work rules

To offset the enormous tax breaks, Republicans are scaling back safety net programmes. Medicaid and food stamps (SNAP) are central targets.

The bill imposes 80-hour monthly work requirements on many adult beneficiaries, including individuals up to 65 years old and parents of children aged 14 or above. A new $35 co-payment could be charged to Medicaid recipients.

While over 71 million people use Medicaid and 40 million rely on SNAP, the CBO estimates that 11.8 million Americans would lose health coverage by 2034 and 3 million would become ineligible for food aid.

States will also be required to share SNAP costs from 2028 if their payment error rate surpasses 6 per cent. However, an amendment delays this requirement for high-error states like Alaska — a carve-out secured by Sen. Lisa Murkowski, R-Alaska.

Clean energy tax credits slashed, fossil fuel incentives expanded

In a major rollback of Biden-era climate policy, the bill slashes green energy tax breaks, which had been central to Democrats’ 2022 legislation aimed at tackling climate change. A tax break for electric vehicle buyers will expire on 30 September this year — years ahead of the current 2032 deadline. Republicans have also removed proposed taxes on renewable projects sourcing components from China.

A credit for the production of critical materials has been expanded to include metallurgical coal, used in steel production.  Senator Ron Wyden, D-Oregon, called the provisions a “death sentence” for the wind and solar industry.

Trump Accounts, hero garden and a ban on abortion-linked Medicaid payments

Beyond taxes and safety net reforms, the bill reflects several symbolic and political aims:

A new children’s savings account scheme — dubbed “Trump Accounts” — will receive up to $1,000 per child from the Treasury.

$40 million is set aside to build the “National Garden of American Heroes.”

The bill eliminates a $200 tax on gun silencers and short-barrelled weapons.

For one year, Medicaid payments to providers offering abortions, including Planned Parenthood, are blocked.

An excise tax of 1per cent will apply to remittances — money sent abroad from the US.

The Radiation Exposure Compensation Act is expanded, a victory for Sen. Josh Hawley, R-Missouri.

Space exploration efforts are bolstered with billions for the Artemis Moon mission and Mars exploration, alongside $88 million for a pandemic response committee.

Additionally, the debt ceiling will be raised by $5 trillion, allowing further federal borrowing.

AI curbs dropped, rural hospitals get $50 billion lifeline

A controversial plan to curb state regulation of artificial intelligence was dropped following backlash from Republican governors. The Senate removed the clause in a 99-1 vote.

To win over rural-state Republicans, the bill now promises $10 billion annually for five years — totalling $50 billion — to support rural hospitals. This is double the original proposal of $25 billion.

Price Tag: Up to $3.3 trillion in new deficit — or not?

According to the CBO, the bill could add $3.3 trillion to the national deficit between 2025 and 2034. However, Senate Republicans argue that extending existing tax cuts should not count as new costs, calling it “current policy.” Under this alternate method, the bill would reduce the deficit by nearly $500 billion.

Democrats and budget watchdogs have labelled this “magical maths.” The Committee for a Responsible Federal Budget likened it to an “accounting gimmick that would make Enron executives blush.” Whether seen as an economic boost or a fiscal risk, Trump’s “Big Beautiful Tax” bill is poised to reshape American tax and welfare systems for years to come.

(With Inputs from AP)