Early on Thursday, May 22, House Republicans approved a legislative package that includes spending cuts, tax incentives, border security funds, and other goals, marking a significant advancement on President Donald Trump’s agenda.
The Bill underwent last-minute revisions to appease Republican conference stalwarts after months of labor by House committees. The One Big Beautiful Bill Act, a reference to Trump himself, is a more than 1,000-page document.
Before the bill made it to the House floor, Republicans made one more set of changes. They increased the state and local tax credit to appeal to centrists and accelerated the Medicaid work requirements to appeal to those who felt the bill did not go far enough in reducing spending.
Here is a glance at the legislation package, which is anticipated to evolve further once it reaches the Senate.
Individual and corporate tax breaks
Republicans seek to implement Trump’s pledges made during the 2024 campaign trail to not tax tips, overtime, or interest on some vehicle loans, as well as to permanently implement the estate and individual income tax cuts that were passed during his first term in 2017.
Republicans want to reduce the overall cost of the tax section to roughly US$3.8 trillion by removing or phasing out the clean energy tax credits that were implemented under Joe Biden’s presidency in order to partially offset the lost revenue.
The Bill offers a temporary increase in the standard deduction of US$2,000 for joint filers, increasing it to US$32,000, and US$1,000 for people, increasing it to US$16,000 for solo filers. The amount of income that is genuinely liable to income tax is decreased by the deduction.
Additionally, the child tax credit is temporarily increased by US$500, reaching US$2,500 for 2025–2028. After that, it goes back to US$2,000 and will rise to reflect inflation.
Going forward, the estate tax exemption is updated for inflation and increases to US$15 million.
How much to increase the state and local tax deduction, which is currently restricted at $10,000 USD, has been one of the most difficult problems in the negotiations. Legislators in New York have made that their top goal. For individuals with incomes up to US$500,000, the Bill raises the “SALT” maximum to US$40,000. For those with higher incomes, the cap gradually decreases. Additionally, over a ten-year period, the income level and ceiling will rise by 1% annually.
Trump made a number of campaign-related promises that would only be in place for as long as he was in government. By the end of 2028, the tax benefits for overtime, tips, and auto loan interest will have ended. That is also true if the standard deduction for seniors is raised by US$4,000.
Small firms, such as partnerships and S corporations, will be allowed to deduct 23% of their eligible company income from their taxes as part of the different business tax provisions. Twenty percent has been deducted.
For a limited time, companies will be able to completely deduct domestic R&D expenses in the year that they take place, as well as the cost of qualifying assets such machinery and equipment. This incentivizes companies to make investments that will increase their productivity.
