The House of Representatives on Thursday narrowly approved a sweeping Republican tax and spending package that slashes billions from safety net programs, while cementing former President Donald Trump’s signature tax cuts and introducing a host of new conservative policy goals.
Described by Trump as his “one big, beautiful bill,” the package faces a tough road ahead in the Senate, where Republicans aim to use budget reconciliation to bypass Democratic opposition.
The legislation would make permanent the individual income tax breaks from the 2017 Tax Cuts and Jobs Act and introduce temporary tax reliefs for tips and overtime pay, key Trump campaign promises. According to the Congressional Budget Office, the tax components alone would add $3.8 trillion to the national debt over ten years.
At the same time, the plan demands deep spending cuts. Medicaid would lose nearly $700 billion in federal funding, while food stamp support would shrink by $267 billion. The Medicaid overhaul includes strict new work requirements for adults ages 19 to 64, accelerating implementation to 2026 and mandating biannual eligibility checks.
Critics warn that millions could lose coverage. A CBO analysis projected an additional 8.6 million uninsured Americans by 2034 if the changes take effect.
Other provisions penalize states that offer Medicaid coverage to undocumented immigrants, limit the use of provider taxes, and delay streamlined enrollment rules until 2035. In a nod to non-expansion states, the bill offers more generous hospital payments, incentivizing them to avoid expanding Medicaid access.
On the tax side, the bill temporarily boosts the child tax credit to $2,500 per child, introduces a $4,000 deduction bump for seniors, and adds a car loan interest deduction capped at $10,000 per year. A new “Trump account” savings plan would grant newborn U.S. citizens a $1,000 government credit between 2025 and 2028.
High earners are excluded from the breaks on tips, overtime, and some deductions. Yet, the package still offers lasting benefits to wealthier Americans, including an expanded estate tax exemption and a bolstered pass-through business deduction.
The measure also addresses longstanding GOP priorities such as increasing border enforcement, launching a new missile defense shield, and overhauling the air traffic system. Notably, it raises the cap on state and local tax (SALT) deductions to $40,000 for households earning under $500,000, offering relief to taxpayers in high-tax states.
The Senate is expected to revise many of the House’s provisions in the coming weeks. The clock is now ticking for Republicans to strike a balance between fiscal ambition and political feasibility.
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