The United States House of Representatives narrowly passed the “One Big Beautiful Bill Act” with a vote of 215 to 214 in the early hours of Thursday (May 22). The bill aims to comprehensively advance President Trump’s policy agenda and has now been sent to the Senate for consideration.
This over 1,000-page bill covers a wide range of federal government policies and expenditures, including tax reform, Medicaid, and border security.
Despite some areas of government spending cuts in the bill, the Congressional Budget Office (CBO) projects that the federal deficit will increase by approximately $3.8 trillion over the next 10 years.
Key points of the bill include focusing on tax reform as a central component, permanently extending the tax cuts from the 2017 Tax Cuts and Jobs Act to ensure tax stability.
In terms of individual income taxes, the lowest tax rate will remain at 10%, with gradual increases based on income levels leading to a maximum marginal tax rate of 37%. Additionally, the standard deduction has been increased, and married joint filers can now add an extra $2,000 on top of the existing deduction, reaching a total of $32,000 by 2028.
To fulfill Trump’s policy promises during the 2024 election, the bill stipulates that overtime and tip income will be tax-free. Furthermore, in an effort to boost domestic manufacturing, individuals can enjoy a tax deduction of up to $10,000 on car loan interest for purchasing American-made vehicles within a specified timeframe.
Regarding childcare expenses, the Child Tax Credit will be permanently set at $2,000 per child, temporarily increasing to $2,500 per child until 2028.
The bill implements many conservative policies, including raising the tax rate on large, predominantly tax-exempt endowments held by major educational institutions across the United States.
According to the bill, endowments will be taxed based on the “per-student average corresponding endowment amount.” Schools with a per-student endowment exceeding $2 million will see their tax rate significantly increase from the current 1.4% to 21%.
The bill also makes significant and controversial changes to Medicaid policy and fund allocation, aiming to shift more spending responsibilities to the states and reduce the federal financial burden on the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps.
SNAP, which has an annual budget of around $113 billion, provides food assistance to tens of millions of low-income Americans. Under the new law:
– The federal participation percentage in SNAP funding will decrease from 100% to 95%, with administrative costs decreasing from 50% to 25%.
– The age limit for the “work requirement exemption” will be raised from 54 to 64, excluding those caring for children under the age of 7.
– Illegal immigrants will not be eligible for SNAP benefits.
The bill also includes approximately $150 billion in increased military-related expenditures, including expansion of shipbuilding projects, weapons stockpiling, modernization of nuclear forces, and research and development of the sixth-generation stealth fighter F-47.
Additionally, $250 billion will be allocated for Trump’s proposed “Golden Dome” missile defense system. The entire system is estimated to cost $1.75 trillion and is expected to be completed within three years.
Trump mentioned in the Oval Office of the White House on Tuesday (May 20) that once the Golden Dome is completed, it will be able to intercept missiles launched from around the world, even from space, making it the strongest defense system in history.
The bill incorporates a series of border security-related policies, a key platform of Trump’s 2024 campaign, including allocating $40 billion to recruit 3,000 border patrol agents and 5,000 customs officers, as well as reserving an additional $21 billion for signing bonuses and retention incentives.
Furthermore, the bill will provide funding to recruit 10,000 Immigration and Customs Enforcement (ICE) officers and investigators as ICE plays a key role in carrying out the Trump administration’s large-scale deportation operations.
The bill will also allocate nearly $50 billion for the continued construction of the southern border wall, a major political promise of Trump since entering politics in 2015.
As per the bill, federal employees hired before 2014 will now contribute 4.4% of their salary to federal retirement funds, the same as post-2014 hires. The current contribution percentages vary by date of employment and have not been uniformly adjusted.
The House Oversight Committee estimates that by adjusting the federal retirement fund system, around $51 billion can be cut from the federal deficit.
The bill will gradually phase out the clean energy tax credits initially included in the 2022 Inflation Reduction Act, with full termination expected before 2028. However, non-carbon energy projects initiated within 60 days of the bill’s enactment and completed before 2028 will still be eligible for tax incentives. Nuclear power plant construction projects can apply for investment and production tax credits upon commencement, rather than upon operation.
The House version of the bill proposes raising the debt limit by $4 trillion, differing from the Senate’s $5 trillion proposal, which is expected to last beyond the 2026 mid-term elections.
U.S. Treasury Secretary Scott Bessent cautioned that the current use of “extraordinary measures” will be exhausted by August, and failure to increase the debt limit in a timely manner could pose a risk of debt default.
The Senate is expected to make adjustments to the bill’s content. Subsequently, a conference will be held between the House and Senate to unify versions, after which the bill must be passed by both chambers before being formally sent to the President for signature to become law.