The nitty gritty of the Big Beautiful Bill Act

The Big Beautiful Bill Act, which passed out of the House of Representatives last week, looks to accomplish a slew of longstanding conservative aims, with changes ranging from national security policy to programs in the Department of Agriculture. Through a legislative process called reconciliation, the 1,116-page bill can become law without a single Democratic vote in the Senate, where Republicans can pass it with a simple majority. Republicans hold 53 seats in the chamber.

The bill’s contents are subject to change as the Senate reviews the version passed by the House. Already some senators have signaled a desire to rework some of the bill’s most controversial parts—especially on Medicaid.

Here are some of the bill’s most significant proposed changes:

Renewing tax cuts

Tax breaks created by the Tax Cuts and Jobs Act of 2017 are set to expire at the end of this year. Republicans aim to make some, but not all, of those cuts permanent.

• Bonus depreciation: A key business incentive of the Tax Cuts and Jobs Act will return for a limited time. A 100% bonus depreciation allows businesses to deduct a chunk of the costs of things like equipment or vehicles they buy for work right away instead of spreading the deduction over many years. That provision will apply to purchases or construction projects that begin before Jan. 1, 2029.

• Depreciation deduction for production property: The value of property used for a “qualified production activity” may be used as a tax deduction in the year it is put to use. That will apply for development or construction before Jan. 1, 2029. The property cannot be residential.

• Domestic research and development: If implemented, the bill would continue tax breaks for U.S.-based research and development through Jan. 1, 2030.

• Interest deduction limit: The bill would allow businesses to count up to 30% of their payments on interest against their taxes until January 1, 2030. Smaller businesses can deduct more.

• Termination of clean-vehicle tax credits: The bill also proposes slashing tax credits for previously owned, renewable energy commercial vehicles, alternative fuel, residential clean energy, clean electricity production, and more. These tax cuts are components passed under the Inflation Reduction Act of 2022.

New tax breaks

Unlike the provisions from the Tax Cuts and Jobs Act that could become permanent, these new tax breaks would expire after 2028.

• Standard deduction increase: A $1,500 addition to the standard deduction will apply from 2024 to Jan. 1, 2029.

• SALT: The bill proposes raising the cap on how much of their state and local taxes (commonly referred to as SALT) taxpayers can deduct for federal tax purposes. The deduction cap for state and local taxes would rise from $10,000 to $40,000 for earners making less than $400,000 annually.

• No tax on tips: Until Dec. 31, 2028, tips may be deducted from taxable income. The provision excludes “highly compensated employees” who own more than 5% of the company they work for or employees who make $120,000 or more. The tip cannot be the product of a negotiation.

• No tax on overtime: Overtime pay may also be deducted from taxable income. It also does not apply to highly compensated workers. The provision extends until Dec. 31, 2028.

• Enhanced deduction for seniors: The bill proposes an additional $4,000 deduction for seniors 65 or older until Jan. 1, 2029. The deduction scales down for those making over $75,000 annually.

• No tax on car loan interest: The interest paid on a car loan would qualify for a deduction of up to $10,000 if the final assembly of the vehicle took place in the United States. The deduction would scale down for those earning more than $100,000 per year. The provision would extend until Jan. 1, 2029.

National security and the southern border

The package attempts to make long-term investments in the U.S. southern border, particularly through the development of new infrastructure, technology, and funding.

• The Golden Dome: The bill provides $24.3 billion for “next generation missile defense technologies” and “layered homeland defense” in 2025. Trump has touted the developing missile technology as a Golden Dome, mimicking the name of Israel’s famous “Iron Dome” missile defense system. The bill details that those funds would go toward creating ground-based missile defense radars, advanced hypersonic defense systems, space-based intercept capabilities, and more.

• Naval improvements: The bill requires the provision of $34 billion for shipbuilding and improvements in the maritime industry. It also develops autonomous surface and subsurface technology.

• Border infrastructure: U.S. Customs and Border Protection would receive $46.5 billion for the construction and installation of barriers, access roads, sensors, and more.

• Border personnel: The proposal allocates $4.1 billion to remain available through 2029 to hire and train additional Border Patrol agents, field operations officers, and U.S. Customs support personnel.

• Surveillance: If passed, the bill would secure $4.5 billion for the development of new non-intrusive inspection equipment that makes use of artificial intelligence, biometric entry data, and machine learning.

The social issues

Although the bill primarily focuses on fiscal policy, it addresses a few social issues. Conservatives might have liked to include more, but only polices that affect government spending can be included under the rules of reconciliation.

• Defunding Planned Parenthood: The text of the bill forbids federal funds from being directed to entities that are primarily engaged in family planning services, reproductive health, and related medical care that also provide abortions. While the bill doesn’t mention Planned Parenthood by name, the text takes aim at it and other similar organizations.

• Restricting court funds: A provision in the bill prevents courts from using funds to enforce a contempt citation for failure to comply with an injunction or temporary restraining order. The provision comes as courts have clashed with the Trump administration over court order compliance.

• AI and states — If passed, no state would be allowed to enforce laws or regulations on artificial intelligence during the 10-year lifespan of the Big Beautiful Bill Act except in cases of providing for government efficiency. That restriction would include campaign-related AI regulations that several states have already taken steps toward implementing.

Medicaid

A large part of how Republicans hope to pay for the Big Beautiful Bill Act focuses on attempts to trim down government programs, most notably Medicaid. The joint federal-state partnership that provides healthcare for low-income Americans, seniors, and individuals with disabilities accounted for 13% of everything the government spent in 2024. Republicans hope to lower that number by tweaking eligibility requirements and eliminating spending on ineligible participants. The Congressional Budget Office estimates these changes could save $715 billion over 10 years.

• Address required: The bill would require states to develop systems to collect recipient addresses by 2027. By Oct. 1, 2029, the state must begin checking that data once a month to prevent beneficiaries from being enrolled in two states at once.

• Checking for dead recipients: Beginning Jan. 1, 2028, states must check the status of their enrolled recipients quarterly by using the government’s “death master file.”

• Immigration status confirmation: Applicants to Medicaid would be given a “reasonable opportunity period” of 90 days to present documentary proof of nationality or citizenship. States can—but are not obligated to—provide medical assistance during that reasonable opportunity period.

• Work requirements: Beginning on Jan. 1, 2029, able-bodied recipients ages 19-64 would have to work for at least 80 hours per month, perform 80 hours of community service, or be enrolled in at least part-time education to maintain eligibility. Applicants would also be able to qualify if they made less than $580 a month. The requirement does not apply to pregnant women or those with disabilities. There are also exceptions for what the bill calls “short-term hardship events” such as disasters or medical emergencies.

• Freezing FMAP provider tax — Currently, the government matches funds that individual states raise for Medicaid with something called the Federal Medical Assistance Percentage. The more states raise, the more funding they can secure. The bill doesn’t scale back the level of federal support but would freeze the amount states can tax their own medical service providers—a strategy states have used to drive up their Medicaid contributions, secure more federal funding, and send the tax dollars back to their medical providers.

• Lowering medical percentages for states providing services to ineligible aliens: After Oct. 1, 2027, the bill threatens to lower federal Medicaid contributions to states that provide any kind of financial assistance through a state plan to illegal immigrants.

SNAP benefits

The bill looks to save money by putting more of the cost of the Supplemental Nutrition Assistance Program, or food stamps, back onto states. Approximately 40 million Americans use the program to purchase food and other items.

• Scaling down federal contributions: The proposed text looks to reduce the federal burden for financing SNAP starting in 2028. Until then, the government will continue to cover 100% of the costs of the program (states are only responsible for part of SNAP’s administrative costs) but will scale that contribution down to 95% in 2028. The bill would continue lowering federal assistance by 5% per year after that.

• SNAP eligibility: The bill clarifies that no illegal immigrants would be eligible to receive SNAP benefits.

The debt ceiling

$4 trillion more: The bill proposes raising the debt ceiling by four trillion dollars. If maxed out, that would take the national debt to $40 trillion dollars—roughly eight times the government’s revenue in 2024.