The Key Item In "The One Big Beautiful Bill Act"

 The One Big Beautiful Bill Act, passed by the U.S. House and Senate in 2025, is a budget reconciliation bill aimed at implementing key policies from President Donald Trump’s second-term agenda. Below are the key points based on available information, focusing on its major provisions across tax policy, spending, border security, and social programs:

1. Tax Policy Changes

Extension of 2017 Tax Cuts and Jobs Act (TCJA): Permanently extends most provisions of the TCJA, which were set to expire at the end of 2025, including lower corporate and individual tax rates.

Child Tax Credit Increase: Permanently raises the child tax credit to $2,200 (Senate version) from the current $2,000, though the House initially proposed $2,500 until 2028. Only one parent needs a Social Security number in the Senate version.

State and Local Tax (SALT) Deduction: Increases the SALT deduction cap from $10,000 to $40,000 for taxpayers earning less than $500,000, but reverts to $10,000 after 2029 (Senate version). The House proposed making the $40,000 cap permanent.

Senior Deduction: Provides a $6,000 tax deduction for individuals 65 and older (up from $4,000 in the House bill), phasing out for incomes above $75,000 (single) or $150,000 (married), expiring in 2028. Affects 88% of seniors, clearing their Social Security tax burden.

No Tax on Tips and Overtime: Temporarily allows deductions for tip income and overtime pay (2025–2028) for workers earning less than $160,000 (adjusted for inflation), excluding high earners.

Auto Loan Interest Deduction: Offers a $10,000 deduction for interest on loans for U.S.-assembled cars (2025–2028), phasing out for incomes above $100,000 (single) or $200,000 (joint).

Business Tax Provisions:

Increases the small business deduction (Section 199A) from 20% to 23%, making it permanent.

Restores 100% immediate expensing for investments in manufacturing, agriculture, and extraction sectors (2025–2032).

Makes the Base Erosion and Anti-Abuse Tax (BEAT) permanent at 10.5%.

Extends Opportunity Zones through 2033 for investments in disadvantaged areas.

Estate Tax: Permanently sets the estate tax exemption at $15 million (adjusted for inflation), preventing a drop to $7 million in 2026.

Standard Deduction Increase: Temporarily increases the standard deduction by $1,000 for individuals, $1,500 for heads of households, and $2,000 for married couples (through 2028).

2. Border Security and Immigration

Funding for Border Security: Allocates $350 billion, including:

$46.5 billion for U.S.-Mexico border wall construction.

$45 billion for 100,000 migrant detention beds.

$30 billion for hiring 10,000 ICE agents, training, and resources, with $10,000 signing bonuses, aiming to deport 1 million people annually.

Asylum Fee: Imposes a $100 fee for asylum applications (down from $1,000 in the House bill after Senate adjustments).

Customs and Border Protection: Funds modern technology to combat drug and human smuggling.

3. Defense and National Security

Defense Spending: Allocates $150 billion, including:

$16 billion for military innovation, such as AI, kamikaze drones, uncrewed aircraft, drone boats, and underwater drones.

$4.6 billion for a second Virginia-class submarine and $5.4 billion for two additional Guided Missile Destroyer ships.

Funds for shipbuilding, including $250 million for turbine generators, $450 million for additive manufacturing, $492 million for next-generation techniques, and more.

Golden Dome Missile Defense: Funds a missile defense system to enhance national security.

4. Social Program Reforms

Medicaid Reforms: Introduces work requirements for able-bodied adults and more frequent eligibility checks.

Aims to reduce waste, fraud, and abuse, targeting coverage for pregnant women, children, seniors, and people with disabilities.

Congressional Budget Office (CBO) estimates that 11.8 million people could lose Medicaid coverage over 10 years due to stricter eligibility.

Supplemental Nutrition Assistance Program (SNAP):

Limits benefits to U.S. citizens, lawful permanent residents, certain Cuban nationals, or those under Compacts of Free Association.

Eliminates the SNAP Nutrition Education and Obesity Prevention Grant Program (SNAP-ED).

Removes the tolerance for small payment errors in SNAP calculations, increasing scrutiny.

No Cuts to Medicare: The bill explicitly avoids reducing Medicare benefits.

5. Energy and Infrastructure

Energy Provisions:

Phases out clean energy tax credits for wind and solar projects starting after June 2026 or placed in service after 2027.

Phases out electric vehicle (EV) tax credits by September 2025 and EV charging credits by June 2026.

Postpones methane emissions fees for 10 years and extends biofuel tax credits to 2031.

Repeals Biden-era methane tax and unlocks oil and gas development on federal lands.

Air Traffic Control Modernization: Allocates $12.5 billion to update outdated air traffic control systems, addressing staffing shortages and antiquated equipment.

Rural Hospital Support: Provides targeted funds and state flexibility to support rural hospitals, countering claims of harm to rural healthcare.

6. Debt Ceiling and Fiscal Impact

Debt Ceiling Increase: Raises the debt ceiling by $5 trillion (Senate version) compared to $4 trillion in the House bill to avoid default by mid-2025.

Deficit Impact: CBO estimates the bill adds $3.3–$4.1 trillion to federal deficits over 10 years, including $600–$700 billion in interest costs. Republicans dispute this, arguing that maintaining current tax rates doesn’t add new debt, and spending cuts reduce deficits by $1.6 trillion.

Economic Impact: The Tax Foundation estimates a 1.2% long-run GDP increase from tax provisions but a $5 trillion revenue reduction over 10 years.

7. Other Provisions

Farm and Agriculture Support:

Updates farm bill programs, increases reference prices, and extends estate tax exemptions to help farmers.

Reauthorizes organic production data initiatives and the Organic Certification Cost Share Program through 2031.

Sound Recording Deduction: Expands tax deductions for U.S.-produced sound recordings to $150,000.

Regulatory Reforms: Funds the Office of Management and Budget to revise regulatory processes and prohibits certain DOJ settlement payments.

Welfare Reform: Claims the largest-ever welfare reform by reducing waste and enforcing eligibility, though critics argue it cuts support for low-income families.