WASHINGTON — The massive domestic policy bill that House Republicans passed Thursday by one vote would reshape the federal budget to the tune of trillions of dollars, affecting millions of Americans.
The legislation for President Donald Trump’s agenda was backed by nearly every Republican in the House and unanimously opposed by Democrats, who were cut out of the negotiations. It now heads to the GOP-led Senate, where it is likely to change before it reaches Trump’s desk.
Here are the major provisions in the sprawling package.
Extending Trump’s tax cuts, with some tweaks
The centerpiece of the bill is an extension of the 2017 Trump tax cuts, which would otherwise expire at the end of this year. That means the current lower rates, expanded standard deduction, business tax breaks and various other provisions would continue. The move affects Americans in all income tax brackets, but the largest benefits are projected to go to the highest earners.
The legislation also makes an important change to the state and local tax deduction — known as SALT — by boosting the current $10,000 cap to $40,000. The deduction only applies to taxpayers earning less than $500,000 per year.
The bill preserves the carried interest tax loophole, despite the White House saying Trump wants to end it.
No tax on tips or overtime
The bill also seeks to fulfill two of Trump’s campaign promises: exempting tips and overtime pay from federal income taxes.
Ending taxes on earnings that workers make from tips would cost $40 billion. The policy applies to workers making cash tips in occupations that “traditionally and customarily received tips” as of the end of 2024, as certified by the administration. But experts have questioned the breadth of the impact, given that many tipped workers don’t earn enough to pay federal income taxes to begin with.
It also halts taxes on overtime pay at a cost of $124 billion, according to the nonpartisan Congressional Budget Office.
The package also includes a tax break for auto-loan interest payments. And it calls for temporarily increasing the child tax credit to $2,500 and boosting tax deductions for seniors.
All of these tax breaks would run through the end of 2028.
Medicaid cuts and new requirements
The legislation contains one of the largest Medicaid funding cuts in modern history, projected to be nearly $700 billion by the CBO.
That includes stricter work requirements for able-bodied adults under 65, which will begin on the last day of 2026, creating new rules and paperwork for those on Medicaid. It also adds more frequent eligibility checks, address verifications and provisions to verify legal status of beneficiaries.
The bill also cuts Medicaid funding to states if they allow people in the U.S. illegally to access Medicaid.
It increases funding to the 10 states — nearly all of them dominated by Republicans — that have declined to expand Medicaid under the Affordable Care Act, as an incentive for them to continue to decline the additional program.
Overall, the legislation is expected to rescind health coverage for 8.6 million people, according to CBO, although the number could change given that the revised bill triggers some changes earlier.
Cuts to SNAP
The package hits another federal safety-net program: food stamps. To achieve savings, the legislation cuts $290 billion from the Supplemental Nutrition Assistance Program, or SNAP, the food aid program for low-income Americans.
It includes stricter work requirements for SNAP participants. Currently, able-bodied adults under 55, without children, can get limited SNAP benefits unless they show they are complying with work requirements. But a provision in the bill expands those work requirements to able-bodied adults under age 65.
Rolling back clean energy funds and tax credits
The bill terminates several hundred billion dollars in clean cuts. It ends energy tax breaks for consumers, including on clean vehicles and energy-efficient items for homes. It ends or phases out production or investment tax credits for clean fuels, clean electricity and hydrogen production.
A cash infusion for immigration enforcement
The bill contains about $150 billion in new funds to beef up border security and carry out Trump’s mass deportation plans. That includes money to finish building the barrier system at the U.S.-Mexico border and a funding boost for U.S. Customs and Border Protection.
There are also new fees and higher costs for prospective immigrants to apply for legal status.
A huge boost in military spending
The legislation includes a one-time boost of $150 billion in new military spending on matters like shipbuilding, air and missile defense, nuclear forces and cybersecurity, among others.
‘Trump accounts’
The measure creates new tax-preferred savings accounts for children that the federal government seeds with a $1,000 deposit. Parents could then contribute an additional $5,000 annually until the child is 18. The money can be used for educational purposes, for a down payment for a home or to start a small business.
The original version of House Republicans’ legislation called them “MAGA” accounts, but after an eleventh-hour amendment, they were renamed ‘Trump” accounts.
A debt limit hike
The bill is projected by the CBO to add $2.3 trillion to the federal deficit over 10 years, with the tax breaks and new expenditures far outweighing the savings.
It also raises the debt ceiling by $4 trillion ahead of a summer deadline announced by the Treasury Department for Congress to act or risk a catastrophic default. Treasury Secretary Scott Bessent has urged Congress to act by mid-July in order to prevent an economic meltdown if the U.S. government is unable to meet its obligations.
