The Big Beautiful Bill

This provision makes permanent the modified federal income tax bracket schedule and lower tax rates created by the Tax Cuts and Jobs Act, which were set to expire after December 31, 2025. It also adds an additional year of inflation adjustment to all brackets except the top (37 percent).

The standard deduction is also permanently increased, with an additional $1,000 for single filers, $1,500 for head of household, and $2,000 for married filing jointly for tax years 2025-2028.

The bill includes significant reductions and restrictions to Medicaid. It introduces new work requirements for childless adults without disabilities and shifts re-enrollment from once a year to every six months, with added income and residency verifications. These changes are estimated to cause 1.3 million Medicare enrollees to lose or forgo their Medicaid coverage.

It also mandates states to charge Medicaid enrollees with family incomes between 100% and 138% of the FPL up to $35 per healthcare service, with potential for providers to turn away patients unable to pay. The bill codifies Individual Coverage HRAs as "Custom Health Option and Individual Care Expense (CHOICE) arrangements" and allows working seniors to contribute to HSAs even if eligible for Medicare Part A.

This provision creates an above-the-line deduction for qualified tips received by individuals in occupations that traditionally receive tips. It also expands the FICA tip tax credit to include beauty service establishments. This deduction is allowed for tax years 2025 through 2028.

Similarly, an above-the-line deduction for overtime premium pay is introduced for tax years 2025 through 2028. Highly compensated employees are ineligible for both deductions. These provisions aim to increase take-home pay for working Americans.

The bill permanently increases the Child Tax Credit to $2,000 per child, maintaining increased income phase-out thresholds and a nonrefundable credit for non-child dependents. It further increases the credit to $2,500 per child for tax years 2025-2028 and indexes it for inflation after 2026. A work-eligible SSN is required for the taxpayer and spouse to claim the credit.

It also introduces "Money Accounts for Growth and Advancement" (MAGA accounts), a new savings account for children under eight, designed to incentivize education, entrepreneurship, and homeownership. A pilot program contributes $1,000 per child for U.S. citizens born between January 1, 2024, and December 31, 2028.

The bill allocates significant funding to bolster border security, including finishing the border wall and hiring thousands of new ICE officers and Border Patrol agents. It provides nearly $30 billion to expand ICE's enforcement and deportation operations, tripling its 2024 annual budget, and significantly increasing migrant detention capacity.

Additionally, the US military receives a $150 billion budget increase, allocated to weapons acquisition, shipbuilding, and the development of the "Golden Dome" missile defense system. Roughly $9 billion is set aside for military family quality of life initiatives, including BAH supplements, Impact Aid for schools, and child care fee assistance.

The bill introduces a phase-out and restrictions on various clean energy tax credits, including those for clean vehicles, energy-efficient home improvements, residential clean energy, and new energy-efficient homes. Most of these credits will see an accelerated expiration to December 31, 2025.

Clean electricity production and investment credits are phased out with reductions starting in 2029 and disappearing after 2031. Restrictions are also placed on access to these credits for facilities or components with ties to "prohibited foreign entities," such as China, aiming to secure domestic supply chains.

The "Big Beautiful Bill" is a comprehensive piece of legislation signed into law by President Trump on July 4, 2025. It encompasses wide-ranging reforms including tax cuts, changes to healthcare programs like Medicaid, increased border security and defense spending, and adjustments to clean energy incentives.

The bill makes permanent the 2017 Tax Cuts and Jobs Act reforms, including lower income tax rates and increased standard deductions. It also introduces "no tax on tips" and "no tax on overtime" provisions for many workers for a temporary period (2025-2028). The Child Tax Credit is also permanently increased and temporarily enhanced.

The bill introduces stricter eligibility requirements for Medicaid, including work requirements for childless adults without disabilities and more frequent re-enrollment processes. It also allows states to impose co-payments for certain enrollees and restricts eligibility for illegal immigrants. Critics estimate these changes could lead to millions losing coverage.

The bill significantly boosts funding for border security, including completing the border wall and hiring more ICE and Border Patrol agents. It also allocates $150 billion to the US military for modernization, shipbuilding, and the "Golden Dome" missile defense system, with some funds directed towards military family quality of life initiatives.