Seven key provisions in Trump’s ‘big, beautiful bill’

US President, Donald Trump’s ‘big, beautiful bill’ is set to become law after it passed a final vote in the House of Representatives, with the president poised to sign the bill into law during a ceremony on Friday.

The Congressional Budget Office (CBO) estimates the bill could add $3.3tn to federal deficits over the next 10 years and leave millions without health coverage – a forecast that the White House disputes.

During a vote in the US Senate earlier this week, Vice-President JD Vance was forced to cast the tie-breaking vote to pass the bill.

Let’s look at key provisions in Trump’s ‘big, beautiful bill’

Major slashes to Medicaid programme spending

To support broader tax cuts in other areas, Republicans have proposed a series of changes that would significantly restrict access to Medicaid, the government healthcare program used by millions of low-income and disabled Americans.

These changes are part of a broader budget plan aimed at reducing federal spending while funding tax breaks. Critics, however, argue that the burden of these spending cuts would fall disproportionately on vulnerable populations who depend on Medicaid for essential healthcare services.

One of the key changes includes the introduction of a work requirement for certain Medicaid recipients. Specifically, childless adults without disabilities would be required to work, volunteer, or participate in a work-related activity to maintain their eligibility.

Another administrative change would require recipients to re-enrol every six months instead of once a year, while also undergoing more frequent income and residency verifications. These additional requirements are expected to increase paperwork and administrative barriers for beneficiaries.

The plan also includes a gradual reduction in the provider tax cap], which states use to finance their share of Medicaid. Currently capped at 6%, this would be lowered to 3.5% by 2032. This move has sparked concern in states—especially rural ones—that rely heavily on these taxes to fund healthcare services.

According to CBO, the changes could result in nearly 12 million Americans losing their health coverage over the next decade.

Social insurance payroll deductions

During his campaign, Trump vowed to eliminate taxes on Social Security income – monthly payments to Americans of retirement age and people with disabilities.

The House bill did not fully meet expectations, but it did include a temporary provision to boost the standard deduction by up to $4,000 for individuals aged 65 and older. This increase would be available for a limited period, specifically from 2025 through 2028, offering modest tax relief for senior citizens during those years.

Meanwhile, Senate Republicans advanced a more generous proposal by extending Social Security-related tax breaks and introducing a new deduction. Their plan would allow older Americans earning $75,000 or less annually to claim a $6,000 tax deduction, providing broader financial support to low- and middle-income seniors.

Renewal of Trump’s 2017 Tax Reform Measures

Trump during his first term, signed the Tax Cuts and Jobs Act, which lowered taxes for corporations and for individuals across most income brackets. While corporate tax cuts were made permanent, the individual tax cuts were set to expire at the end of 2025.

As part of his 2024 campaign and legislative agenda, Trump proposed to extend and possibly expand these individual tax cuts, arguing they are essential for continued economic growth and financial relief for American families.

The proposed extension would preserve lower income tax rates, the higher standard deduction, and the expanded child tax credit. Trump also wants to maintain the 20% deduction for small businesses and protect the increased exemption threshold for the estate tax.

Trump also argues that these provisions encourage job creation, increase take-home pay, and support working-class Americans. By locking in these benefits beyond 2025, Trump believes it will bring long-term stability to the economy and prevent what he calls a “massive tax hike” on middle-income families if the cuts are allowed to expire.

Raising the cap on SALT deductions

The bill increases the deduction limit for state and local taxes (Salt).

There is currently a $10,000 cap on how much taxpayers can deduct from the amount they owe in federal taxes. That expires this year.

The Senate’s approved bill raises it from $10,000 to $40,000 – but after five years, it would return to $10,000.

Salt taxes were a big sticking point in the House, especially Republican holdouts in some Democratic-controlled urban areas. The House’s version of the spending bill did not include a five-year limit, so the Senate’s changes could pose a problem for some House Republicans.

Cuts to food benefits

Reforms have also been added to the Supplemental Nutrition Assistance Program (Snap), which is used by over 40 million low-income Americans.

The Senate bill requires states to contribute more to the programme, which is currently fully funded by the federal government.

The government would continue to fully fund the benefits for states that have an error payment rate below 6%, but states with higher error rates would be on the hook for anywhere from 5% to 15% of the programme’s costs.

The Senate bill also adds work requirements for able-bodied Snap enrollees who do not have dependents.

Increase in Defense and Border Security Funding

Trump’s ‘big, beautiful bill’ provides a substantial financial boost to the U.S. military, allocating an additional \$150 billion to strengthen national defence.

A portion of this funding will go toward expanding the military’s shipbuilding capabilities and supporting the development of Trump’s “Golden Dome” missile defence initiative, aimed at enhancing the country’s protection against missile threats.

In addition to defence spending, the bill directs a significant increase in funding for immigration enforcement. Immigration and Customs Enforcement (ICE) will receive \$100 billion, allowing it to nearly double its detention capacity and expand its workforce.

This funding, which will continue through 2029, elevates ICE’s annual budget well beyond its previous \$8 billion, making it the largest federal law enforcement agency, according to the Brennan Center for Justice.

The “no tax on tips” provision in the budget bill would mark a win for one of Trump’s promises during the campaign.

The Senate bill being considered by the House would allow individuals to deduct a certain amount of tip wages and overtime from their taxes. However, they propose gradually phasing out those benefits based on annual income, starting at $150,000 for individuals and $300,000 for joint filers.

Clean energy incentives reduction

One of the most notable divisions between House and Senate Republicans is the Senate’s proposal for clean energy tax breaks.

Although both call for an end to the Biden-era federal clean energy tax credits, Senate Republicans approved phasing them out more slowly.

For instance, the Senate has extended the runway for businesses that build wind and solar farms to still benefit from the tax credits. However, both the House and Senate versions seek to deny the 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 break. That drops to 60% if they begin construction in 2026 and 20% if they begin in 2027. The credit would disappear in 2028.

The House version of the bill sought to end the tax breaks for those companies almost immediately.

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