The One Big Beautiful Bill Act passed the U.S. Senate on July 1, 2025, in a narrow 51–50 vote, with Vice President J.D. Vance casting the tie-breaking vote. Though Democratic lawmakers removed the bill’s original name, its core provisions remained intact.
The bill permanently extends individual and business tax cuts from the 2017 Tax Cuts and Jobs Act, which were previously set to expire at the end of 2025. It also introduces a range of new tax benefits, including an increase in the Child Tax Credit to $2,200, new deductions for seniors, and temporary exemptions for tips and overtime pay from federal income taxes. Businesses will see the return of full expensing for equipment and domestic R&D, along with adjustments to international tax rules and interest deduction limits.
To offset these tax benefits, the bill includes deep spending cuts, most notably to Medicaid and the Supplemental Nutrition Assistance Program (SNAP). Over a 10-year period, Medicaid funding is expected to shrink by nearly $1 trillion, with added work requirements and tighter eligibility standards. While social safety net programs are reduced, the bill boosts funding for rural hospitals, national defense, and border security, with significant allocations toward missile defense and naval expansion.
The legislation also rolls back many clean-energy tax credits enacted under the Biden administration. These changes could hinder renewable energy projects, especially those involving components sourced from China. Simultaneously, funding for federal R&D and environmental programs has been scaled back, signaling a shift in national priorities.
With Senate approval secured, the legislation now moves to the House of Representatives, where its fate is less certain. While House Speaker Mike Johnson has expressed support, divisions within the Republican caucus, especially among fiscal conservatives and moderates, may complicate efforts to pass it before the July 4 deadline. As it stands, the One Big Beautiful Bill Act is one of the most consequential fiscal packages in recent history, with far-reaching implications for tax policy, government spending, and the broader U.S. economy.
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