The US House of Representatives on Thursday passed Donald Trump’s massive tax-and-spending bill after Senate Republicans on Tuesday narrowly passed it, with JD Vance casting the tie-breaking vote.
Here’s what’s in the final version of the bill, which now heads to Donald Trump’s desk:
Extending big tax cuts
After taking office in 2017, Trump signed the Tax Cuts and Jobs Act, which lowered taxes and increased the standard deduction for all taxpayers, but generally benefited high earners more than most. Those provisions are set to expire after this year, but the “big, beautiful bill” makes them permanent, while increasing the standard deduction by $1,000 for individuals, $1,500 for heads of households and $2,000 for married couples, albeit only through 2028.
Cutting tax on tips or overtime
The bill has an array of new tax write-offs – but only while Trump is president. Several of the new exemptions stem from promises Trump made while campaigning last year. Taxpayers will be able to write off income from tips and overtime, and interest made on loans to purchase cars assembled in the United States. People aged 65 and over are eligible for an additional deduction of $6,000, provided their adjusted gross income does not exceed $75,000 for single filers or $150,000 for couples. But all of these incentives expire at the end of 2028, right before Trump’s term as president ends.
Money for mass deportations and a border wall
As part of Trump’s plan to remove undocumented immigrants from the country, Immigration and Customs Enforcement (Ice) will receive $45bn for detention facilities, $14bn for deportation operations and billions of dollars more to hire an additional 10,000 new agents by 2029. More than $50bn is allocated for the construction of new border fortifications, which will probably include a wall along the border with Mexico.
Slashing Medicaid and food stamps
Republicans have attempted to cut down on the bill’s cost by slashing two major federal safety-net programs: Medicaid, which provides healthcare to poor and disabled Americans, and the Supplemental Nutrition Assistance Program (Snap), which helps people afford groceries. Both are in for funding cuts, as well as new work requirements. The left-leaning Center on Budget and Policy Priorities estimates the Medicaid changes could cost as many as 10.6 million people their healthcare, and about eight million people, or one in five recipients, their Snap benefits.
Cuts to green energy
The bill will phase out many tax incentives created by Congress during Joe Biden’s presidency meant to encourage consumers and businesses to use electric vehicles and other clean-energy technology. Credits for cleaner cars will end this year, as will subsidies for Americans seeking to upgrade their homes to cleaner or more energy-efficient appliances. While a draft of the bill targeted wind- and solar-energy projects with a new excise tax, senators voted to remove that at the last minute.
State and local tax relief (Salt)
One of the thorniest issues the bill addresses is how much relief to provide from state and local taxes (Salt), which many Americans must also pay in addition to their federal tax. Several House Republicans representing districts in Democratic-led states withheld their support from the bill until the Salt deductibility cap was raised from $10,000 to $40,000, but Senate Republicans made clear they would change that. The Senate’s version keeps the $40,000 cap, but only through 2028.
Raising the debt ceiling
The bill will increase the US government’s authority to borrow, known as the debt limit, by $5tn. The US treasury secretary, Scott Bessent, has predicted the government will hit the limit by August, at which point it could default on its debt and spark a financial crisis.
More benefits for the rich than the poor
Wealthier taxpayers appear set to receive more benefits from this bill than poorer ones, according to the Budget Lab at Yale University. Taxpayers in the lowest-income quintile will see a 2.5% decrease in their incomes, largely due to the Snap and Medicaid cuts, while the highest earners will see their incomes grow by 2.4%, the Budget Lab estimated. The impact could change based on which amendments the Senate adopts.
A huge price tag
Despite the GOP’s attempts to use the bill as a vehicle to rein in government spending, the bill would increase the deficit by $3.3tn through 2034, according to the non-partisan Congressional Budget Office. Most of that price tag is the extension of the 2017 tax cuts.
source:theguardian
