The One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA) stands as the most expensive legislation passed by Congress since the 2012 American Taxpayer Relief Act. Signed into law by President Donald Trump on Independence Day 2025, this sweeping measure permanently extends the 2017 Tax Cuts and Jobs Act while implementing the largest cuts to Medicaid and food assistance programs in American history.

How the Bill Became Law

The OBBBA traveled a contentious path through Congress. Initially passed by the House on May 22, 2025, by a razor-thin 215-214 vote, the bill moved to the Senate where it passed 51-50 with an amendment. The amended version returned to the House for final approval on July 3, passing 218-214, before President Trump's signature the following day.

The legislation was enacted through budget reconciliation, a procedural mechanism allowing certain budget-related measures to clear the Senate with a simple majority rather than the 60-vote supermajority typically required to overcome a filibuster.

Major Tax Provisions

Permanent Tax Rate Structure

The seven tax brackets established by the TCJA are now permanent: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Without this legislation, rates would have reverted to pre-2017 levels on January 1, 2026, with the top rate returning to 39.6%.

New Tax Deductions (2025-2028)

Provision	Maximum Deduction	Income Phase-Out
No Tax on Tips	$25,000/year	$150,000 (single)
No Tax on Overtime	$12,500 ($25,000 joint)	$150,000 ($300,000 joint)
Senior Bonus Deduction	$6,000 ($12,000 joint)	$75,000 ($150,000 joint)
Auto Loan Interest	$10,000/year	$100,000 ($200,000 joint)
SALT Cap Increase	$40,000 (up from $10,000)	Reduced above $500,000

Additional Tax Changes

• Child Tax Credit: Permanently increased to $2,200 per child with annual inflation adjustments
• Adoption Credit: Increased to $17,670 with up to $5,120 refundable
• Trump Accounts: $1,000 federal contribution for children born 2025-2028
• 100% Business Expensing: Full first-year depreciation restored for equipment purchases

Healthcare and Medicaid Impact

The Congressional Budget Office estimates the OBBBA's health provisions will result in 10.9 million Americans losing health insurance coverage, with the bill implementing the largest cuts to Medicaid in the program's 60-year history. An additional 5.1 million people may lose coverage due to related policy changes.

Key Medicaid Changes

• Work Requirements: New work requirements for able-bodied adults in Medicaid expansion states
• Eligibility Verification: More frequent eligibility checks increasing administrative burden
• Expansion Incentive Ended: Additional federal funding for new expansion states eliminated January 1, 2026
• Rural Health Program: $50 billion over five years allocated to address anticipated rural hospital closures

Food Assistance (SNAP) Changes

The Supplemental Nutrition Assistance Program faces significant restructuring:

• Work Requirements Expanded: New requirements for able-bodied adults without dependents, with the age of dependent children raised from under 14
• Thrifty Food Plan Frozen: Benefit calculations tied to a specific family composition with cost-neutral reevaluations starting October 2028
• Standard Utility Allowance: Internet costs excluded from calculations, reducing benefits by approximately $10/month
• SNAP-Ed Defunded: Nutrition education program effectively eliminated

Fiscal Impact Analysis

Fiscal Component	10-Year Impact
Tax Revenue Reduction	-$4.5 trillion
Medicaid/SNAP Savings	+$1.4 trillion
Defense/Border Security Spending	-$0.3 trillion
Net Deficit Impact (Primary)	-$3.4 trillion
Total With Interest	-$4.1 trillion

Source: Congressional Budget Office, Joint Committee on Taxation, Bipartisan Policy Center

Who Benefits and Who Loses

The Work Requirements Debate

According to the U.S. Government Accountability Office, approximately 70% of adults enrolled in Medicaid and SNAP already work at least 35 hours per week. They qualify for assistance due to low wages rather than unemployment. The New York Times analysis found only about 3% of Medicaid recipients are both able to work and long-term unemployed.

Implementation Timeline

• September 30, 2025: EV and clean vehicle tax credits expire
• November 1, 2025: ACA enrollees face premium increases as enhanced credits expire
• January 1, 2026: Most tax provisions take permanent effect; Medicaid expansion incentive ends
• 2026-2030: Rural Health Transformation Program distributes $50 billion to states
• December 31, 2028: Temporary provisions (tips, overtime, senior deductions) expire

Looking Ahead

The One Big Beautiful Bill Act represents a fundamental shift in American fiscal policy, making permanent the 2017 tax structure while restructuring the social safety net. The Bipartisan Policy Center notes that if temporary provisions are extended without offsets, the total cost could reach $5 trillion with interest.

Whether viewed as necessary tax relief and fiscal reform or as a regressive redistribution of resources, the OBBBA will shape American economic policy for a generation.

Sources: Congressional Budget Office; Joint Committee on Taxation; Bipartisan Policy Center; Yale Budget Lab; IRS.gov; Kaiser Family Foundation; ASTHO; Center for American Progress