By John Meyer, consultant in financial affairs – Eurasia Business News, May 22, 2025. Article No 1526.
The U.S. House of Representatives narrowly passed President Trump’s major tax and domestic policy bill, known as the “One Big Beautiful Bill,” after last-minute changes and intense negotiations. The final vote was 215 to 214, with nearly all House Republicans supporting the bill except for a few holdouts, while all Democrats opposed it.
Key last-minute changes included increasing the state and local tax (SALT) deduction cap from $30,000 to $40,000 per household for incomes up to $500,000, a concession to moderate Republicans from high-tax states. The bill also includes permanent extensions of the 2017 Trump-era individual and estate tax cuts, new tax relief such as no tax on tips, overtime, and auto loan interest, and an expanded child tax credit temporarily increased by $500 for 2025 through 2028.
In addition to tax provisions, the legislation allocates increased funding for defense and border security, while proposing significant spending cuts to Medicaid, food assistance, education, and clean energy programs to partially offset costs. The bill is projected to add trillions to the federal deficit over the next decade.
The passage in the House followed intense last-minute negotiations, including a White House meeting with dissenting Republicans, and strong pressure from President Trump and Speaker Mike Johnson to unify the party.
Despite this victory, the bill faces significant hurdles in the Senate, where some Republicans have voiced opposition and are expected to seek changes.
The House passed Trump’s tax bill after last-minute changes mainly involving the SALT deduction and Medicaid provisions, marking a key legislative win for Trump and House GOP leadership while setting up a challenging Senate battle ahead.
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The main provisions of the Trump Tax Bill, officially called the “One Big Beautiful Bill,” include a comprehensive package of tax reductions, spending cuts, and policy changes. Key features are:
Tax Provisions :
Permanently extend the individual income and estate tax cuts enacted in 2017, including raising the estate tax exemption to $15 million, indexed for inflation.
Increase the state and local tax (SALT) deduction cap from $10,000 to $40,000 for incomes up to $500,000, with a gradual phase-down for higher earners and an annual 1% increase over 10 years.
Temporarily increase the standard deduction by $1,000 for individuals (to $16,000) and $2,000 for joint filers (to $32,000).
Temporarily raise the child tax credit by $500 to $2,500 for 2025 through 2028, then revert to $2,000 with inflation adjustments.
Exempt tips, overtime pay, and interest on auto loans (for American-made cars) from federal income tax through 2028, fulfilling Trump’s 2024 campaign promises.
Increase the qualified business income deduction for small businesses from 20% to 23%.
Expand 529 education savings accounts and enhance tax benefits for seniors and working families.
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Spending and Budget Provisions:
Significant cuts to Medicaid funding, estimated at nearly $700 billion, including stricter work requirements, more frequent eligibility checks, and reduced funding for states allowing undocumented immigrants access.
$290 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP), with expanded work requirements for recipients under 65.
Rollback of many clean energy tax credits and subsidies introduced under the Inflation Reduction Act, phasing out incentives for electric vehicles, renewable energy, and energy-efficient home products to reduce lost revenue.
Increased funding for border security and immigration enforcement, including $150 billion for barriers and Customs and Border Protection, plus higher fees for legal immigration.
A one-time $150 billion boost in military spending focused on shipbuilding, missile defense, nuclear capabilities, and cybersecurity, amid increased geopolitical tensions with China and war in Ukraine and in the Middle East.
Budget Impact:
The bill is projected to increase the U.S. federal deficit by approximately $3.8 trillion over ten years.
In FY 2024 total U.S. federal government spending was $6.75 trillion and total revenue was $4.92 trillion, resulting in a deficit of $1.83 trillion, an increase of $138 billion from the previous fiscal year.
In summary, the Trump Tax Bill combines permanent tax cuts for individuals and estates, temporary tax relief for workers and families, major spending cuts to social programs, rollbacks of clean energy incentives, and increased defense and border security funding.
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© Copyright 2025 – Eurasia Business News. Article no. 1526.
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