House GOP pushes sweeping tax and spending overhaul

[UNITED STATES] On Thursday, House Republicans moved ahead with a sweeping tax and spending package that could significantly reshape Americans’ finances. Dubbed the “One Big Beautiful Bill Act,” the legislation seeks to make permanent the tax cuts introduced under President Donald Trump in 2017. It also introduces major reforms that would affect student loans, health savings accounts, car ownership, and more.

The measure, passed amid mounting partisan tensions, has drawn sharp criticism from Democrats, who argue it favors wealthier Americans while gutting essential safety-net programs. Preliminary estimates from the Congressional Budget Office project the bill could add roughly $3.5 trillion to the federal deficit over the next decade.

With control of Congress, Republicans plan to utilize the budget reconciliation process, allowing them to bypass the Senate filibuster and pass the legislation with a simple majority. Still, the more than 1,000-page bill is expected to undergo revisions in the Senate before potentially reaching Trump’s desk for signature.

Key Provisions That Could Affect Your Finances

Higher State and Local Tax Deduction Cap

The bill proposes raising the cap on state and local tax (SALT) deductions—originally limited to $10,000 by the 2017 Tax Cuts and Jobs Act—to $40,000 starting in 2025. However, the deduction would phase out for individuals earning over $500,000. Both the cap and the income threshold would increase annually by 1% through 2033.

Lawmakers from high-tax states like New York and California have pushed for a full repeal of the SALT cap, while critics argue that even an expanded cap disproportionately benefits higher-income households.

Additionally, the bill reduces itemized deductions for taxpayers in the 37% income bracket, potentially curbing the benefit of the higher SALT threshold. "Any changes to lift the cap would primarily benefit higher earners,” Garrett Watson, policy analysis director at the Tax Foundation, noted in a Tuesday report.

Expansion of the Child Tax Credit

The 2017 tax law temporarily raised the child tax credit from $1,000 to $2,000 per child. That increase is set to expire in 2025, but the new House bill would make the $2,000 credit permanent and increase it to $2,500 from 2025 through 2028. Afterward, the maximum would revert to $2,000, adjusted annually for inflation.

However, the plan does not bring back the pandemic-era monthly child payments that significantly reduced child poverty. Critics argue the proposal leaves out the poorest children, as families without earned income typically can’t claim the full credit.

Major Cuts to Medicaid and SNAP

To offset the bill’s tax reductions, Republicans propose cutting roughly $1 trillion from Medicaid and the Supplemental Nutrition Assistance Program (SNAP)—the largest cuts in either program’s history.

The proposed changes, including stricter work requirements, could result in 14 million people losing health coverage and another 3 million households losing access to food assistance, according to the nonpartisan group Accountable.US.

While earlier versions of the bill delayed Medicaid work requirements until 2029, the latest House version accelerates that timeline to December 2026.

New ‘Bonus’ Tax Deduction for Seniors

The bill also introduces a new tax deduction of $4,000 for low- and middle-income individuals aged 65 and over. This “bonus” deduction would apply to single filers with up to $75,000 in modified adjusted gross income and joint filers earning up to $150,000.

The provision aims to provide relief for older adults facing rising living costs, though some advocacy groups argue it falls short of addressing broader issues like Social Security solvency or high drug prices.

Unlike earlier campaign proposals to eliminate taxes on Social Security benefits, the deduction serves as a substitute—since changes to Social Security cannot be made through reconciliation.

According to Richard Johnson, a senior fellow at the Urban Institute, the average senior taxpayer would save about $480 per year from the new deduction. By contrast, eliminating federal income taxes on Social Security could save the average taxpayer around $1,440 annually.