Congress has unveiled a significant fiscal package, featuring a comprehensive revision of tax policies, federal spending, and eligibility programs, all under what President Trump has termed a “big beautiful bill.”
The proposal aims for permanent extensions of several key aspects from the 2017 Tax Cuts and Jobs Act. It also includes substantial investments in defense and border security, along with stricter eligibility criteria for Medicaid and federal student loans.
Here’s a quick breakdown of what’s in the plan.
Tax
- Many provisions from the 2017 Tax Cuts and Jobs Act will be extended permanently.
- A cap of $25,000 on overtime wage deductions for three years, with overtime wages above a $12,500 cap for individuals.
- The standard deduction will increase by $750 for single filers, bringing it to $15,750.
- The child tax credit will rise to $2,200.
- Individuals earning under $100,000 (or couples under $200,000) will be eligible for up to a $10,000 deduction on car loan interest for purchasing U.S.-made vehicles.
- The cap on state and local tax credits will be raised to $40,000 by 2029.
- Wealthy universities with at least 3,000 students will face an increased excise tax on donations, rising up to 8%, while institutions with lower assets will have lower rates of 4% or 1.4%.
New Expenditures
- The debt ceiling will rise by $5 trillion.
- There’s nearly $150 billion allocated for border security, including $46.5 billion and about $30 billion for immigration and customs enforcement aimed at constructing the U.S. border wall.
- Approximately $154 billion is earmarked for increased defense spending, which covers $25 billion for the president’s proposed space-based “Golden Dome” missile defense system, and $29 billion to enhance shipyards.
- $50 billion will be dedicated to funding Medicaid rural hospitals.
- A new “Trump” savings account will be introduced for parents or guardians of children born between January 1, 2024, and December 31, 2028, with the Fed contributing the initial $1,000.
Reductions and Restrictions
- Healthier adults and parents with children over 15 will have to meet an 80-hour work requirement to qualify for Medicaid.
- Billionaires will be prohibited from claiming unemployment benefits.
- Medicaid funds will not be available to major abortion providers like Planned Parenthood.
- A lifetime borrowing limit of $257,500 has been established for federal student loans, with specific caps for various degree programs.
