The ONE BIG BEAUTIFUL BILL Explained

A PSA

So, you know. You slept right through the OBBB debates and voting last night. What’s in those 1100 or so pages? I bet you won’t find out until it hits you. So, I spent some time sorting things out and have it all laid out for you. No hype!

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The One Big Beautiful Bill (OBBB) narrowly passed the U.S. House of Representatives on May 22, 2025, with a 215–214 vote, advancing Trump and the GOP’s comprehensive tax and spending agenda. Here’s what’s in it that will likely affect you and/or someone close to you and your family – from taxes and Medicaid to education and the environment.

1. Tax Reforms

a. Individual Tax Cuts (TCJA Extensions)

• Maintains the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanently.

• Top individual tax rate remains at 37%.

• Doubling of the standard deduction made permanent.

b. Permanent Extension and Increase of QBI Deduction

• The bill makes the Qualified Business Income (QBI) deduction, originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA), permanent.

• The deduction rate is increased from 20% to 23% for qualifying pass-through entities, effective from 2026.

c. SALT Deduction Cap Increase

• Raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for married couples with income at or below $500,000 under the proposed legislation, gradually phasing down to $10,000 for higher income levels.

• Phases out entirely for filers earning over $400,000.

d. Child Tax Credit

• Increases from $2,000 to $2,500 per child through 2028.

• After 2028, reverts back to $2,000.

• Indexed to inflation beginning in 2026.

• Must have a valid SSN for both the child and taxpayer.

e. Deductions for Working People

• Tips and overtime pay are deductible "above the line." The deduction is not available to "highly compensated employees," defined as those earning $160,000 or more in 2025. The deduction is capped at $25,000 per year. The overtime deduction is capped at $10,000 per year. Effective for tax years 2025 through 2028. Both qualified tips and overtime pay remain subject to FICA (Social Security and Medicare) taxes and self-employment taxes.
  

• Car loan interest is deductible up to $10,000 annually on qualified vehicle loans. The deduction applies to personal-use vehicles assembled in the USA. The deduction is available for tax years 2025 through 2028.

f. Senior Tax Deduction

• New $4,000 deduction for seniors age 65+.

• Income limit: $75,000 (single), $150,000 (joint).

• Available 2025–2028, applies to all filers whether or not they itemize.

While the bill does not eliminate taxes on Social Security benefits, the increased deduction may reduce taxable income for eligible seniors, potentially lowering the portion of Social Security benefits subject to taxation.

2. Provisions for Children and Families

a. "Trump Accounts" / MAGA Baby Bonds

• Applies to U.S. children born between January 1, 2024, and December 31, 2028.

• The government deposits $1,000 at birth.

• Parents, relatives, and other entities can contribute up to $5,000 annually in after-tax dollars. Indexed for inflation.

• Accessible at age 18 for education, home purchase, or starting a business.

• After age 30, funds can be used for any purpose.

• Qualified Withdrawals: Taxed at long-term capital gains rates.

• Non-Qualified Withdrawals: Taxed as ordinary income.

b. Medicaid & SNAP Impacts on Families

• Work requirements for Medicaid recipients above the poverty line starting in 2026. The work requirements apply to able-bodied adults aged 19 to 64 without dependents.

• Affected individuals must engage in at least 80 hours per month of: employment, job training programs, educational activities, and community service. Starts December 31, 2026.

• The Congressional Budget Office estimates that these changes could lead to approximately 8.6 million individuals losing Medicaid coverage over the next decade.

• SNAP: States must cover 5% of benefits and 75% of admin costs by 2028. Previously, able-bodied adults without dependents (ABAWDs) aged 18–49 were required to work at least 20 hours per week to receive SNAP benefits. The OBBB extends this requirement to individuals up to age 64.

• The bill narrows exemptions for parents. Currently, parents with children under 18 are exempt from work requirements. The OBBB lowers this threshold, requiring parents with children aged 7 and above to meet work requirements. Notably, married mothers can retain SNAP benefits if their spouse meets the work requirement, but single mothers do not receive the same consideration.

• Semi-Annual Checks: States are mandated to conduct eligibility checks every six months, replacing the annual verification process. This includes rigorous income and residency verifications, which could lead to eligible individuals losing benefits due to administrative complexities.

• The bill imposes stricter eligibility criteria, effectively barring undocumented immigrants from receiving SNAP benefits. States that use SNAP funds to provide services to undocumented individuals may face reductions in federal matching funds. Changes may result in 3 million beneficiaries losing access.

c. Coverage Restrictions

• Medicaid cannot cover gender-affirming care.

• Blocks federal funding to nonprofits that provide abortion services.

d. Co-pay Increases & Eligibility Verification

• Higher out-of-pocket costs for Medicaid recipients.

• Enhanced fraud prevention and citizenship checks.

4. Education and Student Loan Provisions

a. Student Loan Changes

• Ends current income-driven repayment plans, including SAVE.

• New plans include:

  • A standard fixed payment plan.

  • A Repayment Assistance Plan: forgiveness after 360 monthly payments (30 years).

b. Pell Grants Overhaul

• Introduces "Workforce Pell Grants" for trade and technical schools.

• Tightens eligibility for traditional Pell Grants (income and institution type restrictions).

5. Immigration and Border Security

a. Border Wall and Staffing

• Allocates $46.5 billion for physical border infrastructure. (More Wall stuff)

• Funds:

  • 10,000 new ICE agents

  • 5,000 customs officers

  • 3,000 Border Patrol agents

b. Mass Deportation Capacity

• Infrastructure built to enable 1 million deportations/year.

• Detention Facilities: Plans include expanding detention capacity to accommodate up to 100,000 individuals, including families and children.

Cost Estimates: The American Immigration Council estimates that such an operation could cost approximately $88 billion annually, totaling nearly $1 trillion over a decade. ($88 billion / 1 million deported people = $810 million/deported individual. Wouldn't it be cheaper just to leave them alone and let them work, make money, and buy stuff??? )

• Asylum Application Fee: Introduces a $1,000 fee for asylum seekers, marking a first in U.S. policy.

• Sponsorship Penalties: Imposes a $3,500 fee on sponsors of unaccompanied children and a $2,500 penalty if sponsors fail to ensure court appearances.

• Expedited Removals: Expands the use of expedited removal procedures, allowing for quicker deportations without lengthy court processes.

c. Remittance Excise Tax

• 5% tax on certain cross-border financial transfers.

• Exemptions for verified U.S. citizens.

6. Defense and National Security

a. Military Spending Increase

• Adds $150 billion to the defense budget.

• $25 billion earmarked for "Golden Dome" missile defense system.

• Boosts investments in drone warfare and next-gen technology.

7. Judiciary and Rule of Law

a. Judicial Authority Restrictions

• Limits federal courts' ability to enforce contempt orders against officials unless the plaintiff has posted a security bond —a practice uncommon in lawsuits against the government.

Critics argue that this measure undermines the judiciary's ability to hold government officials accountable, potentially allowing them to disregard court orders without consequence. Legal experts, such as Erwin Chemerinsky, dean of UC Berkeley School of Law, have expressed concern that this could render judicial orders ineffective, as courts would lack the means to enforce compliance.

8. Technology and AI Regulation

a. AI Legislation Preemption

• Places a 10-year moratorium on state-level laws regulating AI.

• The intention is to create uniform national rules, avoiding a patchwork of regulations.

9. Low-Income Housing Tax Credit (LIHTC) Enhancements

• Increased Credit Ceiling: The bill raises the state housing credit ceiling for the years 2026 through 2029, allowing for more credits to be allocated to affordable housing projects

• Expanded Eligibility: Modifications to tax-exempt bond financing requirements enable additional buildings financed with such bonds to qualify for housing credits without needing a separate credit allocation from the states.

• Inclusion of Rural and Tribal Areas: The definition of "difficult development areas" is expanded to include rural and Indian areas, providing a temporary increase in credits for projects in these regions.

10. Nonprofit Regulations

• The bill replaces the flat 1.39% excise tax on net investment income for private foundations with a tiered structure reaching up to 10% excise tax depending on their asset size.

• Nonprofits will now be required to pay taxes on income derived from the sale or licensing of their names or logos, categorizing such income as unrelated business taxable income. This provision particularly affects organizations that generate significant revenue through branding, such as universities with sports programs.

• The existing 21% excise tax on compensation exceeding $1 million, previously applicable to the top five highest-paid employees, is expanded to include all current and former employees earning above this threshold. This measure targets excessive compensation within nonprofit organizations.

• Nonprofits, excluding churches and certain church-affiliated organizations, will be subject to a 21% tax on expenses related to parking facilities and transportation fringe benefits provided to employees. This provision reinstates a tax that was previously repealed in 2019.

• The Treasury Secretary is granted authority to revoke the tax-exempt status of nonprofits designated as supporting terrorism, with limited due process. (This measure raises concerns about potential overreach and the criteria used for such designations.)

11. Educational Institutions

• Private colleges and universities with substantial endowments will face a tiered excise tax on net investment income, replacing the current 1.4% rate. The tax rate scales up to 21% for institutions with the largest endowments.

• Ends Federal Direct Subsidized Loans starting July 1, 2026, for undergraduate students, which previously allowed students to avoid accruing interest while enrolled. This change may increase the financial burden on students from low-income backgrounds.

• Caps on un-subsidized loans: Annual and aggregate loan limits would be set based on the median cost of the student's program of study, with caps of $50,000 for undergraduates, $100,000 for graduate students, and $150,000 for professional programs.

• A new category of Pell Grants is established, targeting students enrolled in trade schools and vocational programs. This initiative aims to support workforce development and address skill shortages in various industries.

12. Energy Policies, Transportation, and the Environment

• Expansion of Oil and Gas Leasing: The bill proposes increasing the leasing of public lands for drilling, mining, and logging, aiming to boost domestic energy production. This includes reducing royalty rates for companies extracting oil, gas, and coal, reversing previous efforts to limit fossil fuel production.

• Repeal of Methane Emissions Tax

• Federal Aviation Administration (FAA) Modernization: The bill allocates $12.5 billion to modernize the FAA's air traffic facilities, systems, and infrastructure. This investment aims to address staffing shortages and outdated equipment, enhancing the efficiency and safety of air travel.

• Accelerated Infrastructure Development: The bill includes provisions to expedite government approvals for infrastructure projects, potentially facilitating faster development of transportation systems.

💰 FISCAL IMPACT

• Adds $3.1 trillion to national debt over 10 years (CBO estimate).

• If temporary provisions (like Trump Accounts and tax credits) are extended without offsets, the cost could rise to $5.1 trillion.

• GOP argues this will be offset by economic growth and higher tax compliance.

Most economists agree that tax cuts may stimulate short-term growth, but long-term GDP boosts are usually modest and rarely offset revenue losses fully. For example, the 2017 TCJA boosted growth slightly but added ~$1.9 trillion to the deficit, according to the CBO.

Critics argue the GOP is repeating the trickle-down narrative—expecting that growth will pay for tax cuts, despite decades of contrary evidence.

There is limited evidence that tax cuts meaningfully improve compliance. The IRS and CBO say enforcement, not just tax code changes, improves compliance. Without significant funding for IRS audits and tech (which the bill cuts in some areas), this outcome is questionable.

• Middle-income households (earning between $51,000 and $92,999) would receive an average tax cut of $815, equating to a 1.2% increase in after-tax income.

• Lower-income households would see minimal benefits, with the lowest 20% experiencing an average tax cut of $90, or a 0.6% increase in after-tax income.

• According to the Congressional Budget Office (CBO), by 2033, the lowest-income households would see their financial resources decline by 4%, primarily due to reduced access to healthcare and food assistance.

• Households in the top 1% income bracket could receive an average tax cut of $44,000, while the top 0.1% might see reductions exceeding $390,000.

• The CBO projects that the top 10% of households would see their financial resources increase by 2% by 2033, mainly due to tax reductions.

There’s a lot more. Seriously, 1100 pages! But this is a good start to get you oriented and figure out how your life might change. Sorry, I couldn’t resist some commentary.

Stay informed! The OBBB still must pass Congress, and in order to do so, things might change.

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Val