The US House of Representatives has unveiled a new legislative package dubbed “One Big and Beautiful Bill,” a phrase frequently echoed by President Donald Trump across his social media platforms. This bill aims to position key elements of Trump’s agenda, particularly around tax reductions.
Beyond tax cuts, the legislation also introduces various initiatives focusing on border security, energy, and spending. If it passes, it could mark a significant achievement for Trump’s administration, but it still must clear the Senate. Treasury Secretary Scott Bessent has expressed a desire for this bill to be enacted by July 4th. Here are five points investors should note:
1. A $5 trillion tax cut
Since Trump’s election victory in November, tax cuts have been a topic of discussion among Republicans, and now they are almost here. This new bill proposes a 10-year tax reduction that builds on the earlier tax cuts passed in the 2017 Tax Exemption Act. Key features of the bill include reductions in individual tax rates between 1% and 4%, a consistent corporate tax rate of 21%, and increases in standard deductions.
The proposed tax cuts would also include temporary suspensions of federal taxes on tips and overtime pay. Additionally, small business deductions might rise from 3% to 23%, and real estate tax exemptions could surge from $1.4 million to $15 million. There are plans for temporary boosts to the standard deduction and a rise in the child tax credit from $500 to $2,500, along with changes to state and local tax credit limits.
However, early estimates from the Tax Commission suggest these initiatives could cost over $5 trillion in the coming decade, though Trump claims he has a plan to fund it through customs duties, remaining an ongoing negotiation concern.
2. No new taxes for billionaires
A proposal to increase taxes on wealthy individuals has surprised both Democrats and some Republicans. There have been discussions about the possibility that tax cuts from the 2017 bill could expire for those earning between $2.5 million and $5 million. While Republicans are committed to cutting spending and reducing budget deficits, implementing bills that tally trillions of dollars won’t be straightforward. Acknowledging that increasing taxes on the rich might not be well-received, it seems this idea has not gained traction among House Republicans.
3. Ending electric vehicle tax credits
The bill also suggests phasing out various tax incentives aimed at promoting electric vehicle (EV) purchases. Currently, buyers receive a $7,500 tax credit, which is set to remain until 2026, but starting next year, it will only apply to companies that have sold fewer than 200,000 EVs. Moreover, the $4,000 credit for used EVs will be eliminated by the end of 2025, and the goal remains at $7,500 solely for commercial businesses. This shift could significantly affect leasing costs for consumers, according to estimates.
4. Allocation for border security
Support for Trump’s immigration stance appears to be strong, with Republicans planning to allocate over $69 billion to the Department of Homeland Security for border security measures. This includes about $46 billion aimed at updating the construction of the wall along the US-Mexico border, a contentious topic during Trump’s first term. The intended funding covers a 700-mile primary wall and an additional 900-mile fence, as reported by the Associated Press. Additionally, there is a plan to hire 3,000 new Border Patrol agents.
The Judiciary Committee seeking to reform immigration laws is looking for $110 billion from the bill, aiming to deport one million migrants annually and house 100,000 in detention facilities. These funds could also support hiring an additional 10,000 officers for immigration enforcement, potentially introducing fees for various immigration processes ranging from $1,000 to $3,500.
5. Efforts to cut spending, including potential Medicaid reductions
Amid these initiatives, Republicans are under pressure to financially support the bill, especially as tariff rates are expected to decline. Earlier this year, the House tasked the Energy and Commerce Committee with finding ways to reduce costs by $880 billion over the next decade to back this legislative proposal. Various analyses have indicated that this might mean substantial cuts to Medicaid, a federal health insurance program for low-income individuals, potentially leaving millions without coverage.
Furthermore, the package includes reforms intended to impose stricter income verification and possible work or volunteer requirements for Medicaid participants.
