The One Big Beautiful Bill Act, signed into law by President Trump on July 4, 2025, represents the largest tax overhaul since 2017, with sweeping changes to tax policy, government spending, border security, energy, and more.
Key provisions include permanent extensions of the 2017 tax cuts, new deductions, changes to estate taxes, business incentives, cuts to Medicaid and SNAP, increased military and border security funding, and a $5 trillion debt ceiling increase.
The bill is projected to add $3-4 trillion to the deficit over 10 years, with economic projections indicating GDP and wage growth but also significant debate over its societal impact.
Action Items
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Overview and Key Provisions of the One Big Beautiful Bill Act
Tax Provisions
Permanently extends individual tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA), preventing a scheduled increase in several tax brackets.
Introduces a temporary above-the-line deduction for tips (up to $25,000) and overtime pay (up to $12,500 single/$25,000 joint), for incomes below $150,000 (single) or $300,000 (joint); deduction expires after 2028.
Adds a temporary auto loan interest deduction (up to $10,000) for US-assembled vehicles, phases out above $100,000 (single) or $200,000 (joint), effective 2025-2028.
Raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for incomes under $500,000, with cap phasing down above this threshold but not below $10,000; reverts in 2030 unless extended.
Permanently expands the child tax credit to $2,200 per child, inflation-adjusted, with phase-outs starting at $200,000 (single) or $400,000 (joint).
Permanently raises the standard deduction to $15,750 (single) and $31,500 (joint), inflation-adjusted.
Offers an extra $6,000 deduction for seniors (65+) with incomes below $75,000 ($12,000 for joint filers under $150,000), phasing out at higher incomes, effective 2025-2028.
New Accounts and Estate Tax
Establishes "Trump Accounts," a government-seeded children’s savings account with a $1,000 initial deposit for children born 2025–2028, tax-deferred, managed by parents, with qualified withdrawals allowed for education, home purchase, or starting a business.
Permanently increases the estate tax exemption to $15 million, inflation-adjusted from 2026 onward.
Repeal/Reduction of Credits and Environmental Policy
Eliminates most Inflation Reduction Act clean energy credits after 2025, including the $7,500 electric vehicle tax credit (expires September 30, 2025) and residential clean energy credits.
Repeals methane taxes, unlocks oil and gas development on federal land, invests in coal incentives, and supports aviation fuel production.
Business Tax Incentives
Permanently restores 100% bonus depreciation for qualifying business property placed in service after January 19, 2025.
Allows immediate expensing of domestic research and development expenses.
Permanently extends the 20% Qualified Business Income (QBI) deduction for pass-through entities.
Raises Section 179 expensing limits to $2.5 million (phase-out at $4 million) for property placed in service after December 31, 2024.
Spending Cuts and Social Program Changes
Cuts about $1 trillion in Medicaid and CHIP spending over a decade by tightening eligibility and other provisions.
Reforms SNAP by shifting more costs to states, imposing work requirements (80 hours/month for able-bodied adults under 65), and reducing federal spending by up to $100 billion over ten years.
Security, Military, and Infrastructure
Allocates $46.5 billion for border wall construction, increases ICE staffing, and funds new detention facilities.
Increases military spending by over $100 billion, including funds for missile defense, shipbuilding, and nuclear deterrence.
Provides $12.5 billion to modernize FAA air traffic systems.
Fiscal Policy and Economic Impact
Raises the federal debt ceiling by $5 trillion, more than the previously proposed $4 trillion, to avoid default.
Congressional Budget Office estimates the bill will add $3-4 trillion to the deficit over ten years.
The Tax Foundation projects the bill will increase GDP by 1.2%, create about 938,000 jobs, and raise wages by 4%.
Revenue loss from tax cuts is partially offset by spending cuts and tariffs.
Political and Public Response
Supported by the White House, major business groups, and industry associations for economic and security benefits.
Criticized by Democrats for Medicaid and SNAP cuts; House Minority Leader characterized it as a regressive tax policy.
Popular campaign promises met except for the elimination of Social Security income taxes and lowering the corporate tax rate (remains at 21%).
Decisions
Permanently extend 2017 TCJA tax cuts — To prevent scheduled tax increases and provide ongoing tax relief.
Increase standard and senior deductions — To maintain tax relief and support lower-income seniors.
Establish Trump Accounts and increase estate tax exemption — To support generational wealth and savings.
Eliminate clean energy credits and increase traditional energy incentives — To shift energy policy focus and align with the new administration's priorities.
Restore and enhance business tax incentives — To spur investment and economic growth.
Reduce Medicaid and SNAP spending — To offset revenue losses from tax cuts and reduce federal expenses.
Increase defense, border, and infrastructure spending — To advance administration priorities for security and modernization.
Raise debt ceiling by $5 trillion — To ensure government solvency and avoid default.
Open Questions / Follow-Ups
Will the SALT and senior deduction provisions be extended beyond their expiration dates (2028, 2030)?
How will states respond to new SNAP cost-sharing and administrative requirements?
What are the specific implementation details and investment options for Trump Accounts?
Potential for future legislation to address Social Security income tax elimination and further corporate tax cuts.