What’s in Trump’s major tax bill? Extended cuts, deportations and more

 

The U.S. Senate, led by Republicans, passed a sweeping tax and spending bill on Tuesday, following an overnight session dedicated to debating amendments. Officially titled the One Big Beautiful Bill Act, the legislation now returns to the House of Representatives for reconciliation with its previously passed version. President Donald Trump has set a deadline of Friday for the bill to reach his desk. Below are the key provisions of the Senate’s version of the bill:

Extension of 2017 Tax Cuts

The legislation seeks to make permanent several provisions of the 2017 Tax Cuts and Jobs Act, which significantly lowered tax rates and increased the standard deduction but disproportionately benefited high-income earners. Under the new bill, the standard deduction will increase by $1,000 for individuals, $1,500 for heads of households, and $2,000 for married couples. These changes, however, are only in effect through 2028.

New Temporary Tax Exemptions A set of temporary tax breaks, many of which stem from campaign promises, are also included. These allow for deductions on income earned through tips and overtime, as well as on interest from loans used to purchase U.S.-assembled vehicles. Seniors aged 65 and older with adjusted gross incomes below $75,000 (or $150,000 for joint filers) may claim an additional $6,000 deduction. These measures will sunset in 2028, coinciding with the end of Trump’s potential second term.

Increased Funding for Immigration Enforcement and Border Security The bill significantly boosts immigration enforcement funding, allocating $45 billion to Immigration and Customs Enforcement (ICE) for detention facilities and $14 billion for deportation operations. It also earmarks billions more for hiring an additional 10,000 agents by 2029. Over $50 billion is set aside for new border infrastructure, potentially including the continuation of a wall along the U.S.-Mexico border.

Reductions to Medicaid and SNAP In an effort to curb overall spending, the bill includes substantial cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP). It also introduces new work requirements for recipients. The Center on Budget and Policy Priorities estimates that the Medicaid changes could affect coverage for up to 10.6 million individuals, while approximately 8 million SNAP recipients one in five could lose benefits.

Rollback of Green Energy Incentives The legislation proposes the rollback of numerous tax credits and subsidies introduced under President Joe Biden to promote clean energy adoption. Tax incentives for electric vehicles and energy-efficient home upgrades will be eliminated by year’s end. A proposed excise tax on wind and solar projects was ultimately removed during Senate negotiations.

State and Local Tax (SALT) Deduction Adjustment A contentious aspect of the bill is its handling of the SALT deduction cap. After pressure from House Republicans in high-tax states, the Senate version temporarily raises the cap from $10,000 to $40,000 but only until 2028.

Debt Ceiling Increase The bill authorizes a $5 trillion increase in the U.S. debt ceiling. Treasury Secretary Scott Bessent has warned that without this adjustment, the federal government could default as early as August, potentially triggering a financial crisis.

Disproportionate Benefits for Wealthier Americans Analysis by the Budget Lab at Yale University suggests the legislation will offer more significant financial benefits to high-income earners than to low-income households. The poorest 20% of taxpayers could see their after-tax incomes decrease by 2.5% due to safety-net program cuts, while the top 20% could see their incomes rise by 2.4%.

Projected $3.3 Trillion Increase in Deficit Despite intentions to reduce federal spending, the bill would add an estimated $3.3 trillion to the national deficit by 2034, primarily due to the extension of the 2017 tax cuts, according to the Congressional Budget Office. The rising fiscal burden could hinder the bill’s passage in the House, where deficit reduction remains a core demand among fiscal conservatives.

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