President Donald Trump’s sweeping new tax proposal, dubbed the “One Big Beautiful Bill Act,” is advancing through Congress and sparking intense debate across the political spectrum. The 1,100-page bill combines tax cuts, social program reductions, and immigration enforcement into a single legislative package.
Key Tax Provisions
1. Making 2017 Tax Cuts Permanent
The bill seeks to make the individual and estate tax cuts from the 2017 Tax Cuts and Jobs Act permanent, preventing their scheduled expiration in 2026.
2. Exemptions for Tips, Overtime, and Social Security
A signature feature is the elimination of federal income taxes on tips, overtime pay, and Social Security benefits, aimed at providing relief to working-class Americans.
3. Expanded Deductions and Credits
-
The standard deduction would increase to $32,000 for joint filers.
-
The child tax credit would temporarily rise to $2,500 per child through 2028 but would be limited to children whose parents have Social Security numbers.
-
A new $4,000 deduction is proposed for seniors over 65 with limited incomes.
4. Business Incentives
The bill includes enhanced write-offs for research and development and equipment purchases, aiming to stimulate business investment.
Social Program Cuts and Immigration Measures
To offset the tax reductions, the bill proposes significant cuts to social programs:
-
Medicaid and food assistance programs would face deep reductions, with new work requirements potentially affecting millions.
-
The bill allocates $46.5 billion for border wall construction and deportation efforts, aiming to remove 1 million immigrants annually.
Economic Impact and Criticism
Analysts warn that the bill could significantly increase the national debt:
-
The Tax Foundation estimates a reduction in federal revenues by $4.1 trillion between 2025 and 2034.
-
Moody's has downgraded the U.S. credit rating, citing concerns over the bill's fiscal implications.
Critics argue that the bill disproportionately benefits high-income earners while cutting essential social programs. The Institute on Taxation and Economic Policy notes that two-thirds of the tax cuts in 2027 would go to the top 20% of families.
Political Outlook
The bill faces challenges in Congress, with unified Democratic opposition and divisions among Republicans. Some GOP members express concern over the bill's impact on the deficit and social programs.
