Overview:
President Donald Trump’s legislation, “One Big, Beautiful Bill Act” proposes to cut funding to social programs, such as SNAP, Medicare, Medicaid, and Social Security, hold universities accountable for graduates’ progress and amend student loans while delivering tax returns to businesses through accelerated depreciation and corporate tax realignment.
Funding Cuts to Social Programs
Trump’s bill will decrease funding to major entitlement and social programs, which could threaten long-term budget sustainability. Among the biggest cuts are the Supplement Nutrition Assistance Program (SNAP), Medicare, Medicaid, and Social Security. There will be a 30% decrease in federal funding to SNAP, which accumulates in approximately 300 billion dollars cut over the period of ten years. According to Congressional Budget Office, the deepest cut to SNAP will come from funding for basic food necessities by 5% to 25%. These cuts could lead to some states cutting their SNAP programs if there isn’t enough funding to sustain them.
It is anticipated that there will be an estimated $490 billion cut to Medicare from 2027 to 2034. The bill prevents the implementation of finalizing two rules until October 1, 2034. These rules will enable very low-income Medicare recipients to have access to Medicare Savings Programs. Disproportionally, disabled people have lower earnings than non-disabled people. Those with legal immigration status that paid into the system wouldn’t be eligible for Medicare coverage. Without any intervention from Congress, the bill will initiate cuts to Medicare for the elderly and needy.
Medicaid
There will be new requirements necessary for enrollment in Medicaid and addition cuts to the program. Starting in December 2026, Medicaid recipients will have to show proof of 80 hours per month of community service, which ranges from volunteer service, employment, and educational activities to maintain enrollment. Those that care for children under age 13, medically “disabled”, and disabled veterans are exempt from these requirements. In October 2028, there will be a cost-effective sharing requirement for medical expansion enrollees just above the federal poverty line to $35 and up to 5% of their income. Along with this, there will be a 1 trillion dollar cut to Medicaid as caps and provisions are put in place to limit its funding.
The bill’s repercussions on Social Security are a bit more nuanced. According to the White House website, 88% of seniors that receive Social Security wouldn’t be taxed on their benefits. A new tax deduction of $6000 per year for Americans $65 and older. Mainly middle to upper-middle class Americans, whose incomes range from $80,000-$130,000, will benefit. These individuals will receive a $1,100 tax decrease on their benefits. Those with lower incomes wouldn’t benefit because they already pay little to no taxes on their Social Security benefits. Cutting the taxes on Social Security could lead to the funds being insolvent. As a result, Social Security will be cut by 19%-23% if changes aren’t made.
Student Loan Debt Realignment
The bill implements new rules for universities to be held accountable for the postgraduation earnings of their graduates. Undergraduate programs must obtain graduates’ whose postgraduation earnings surpass the minimum earnings of workers with a high school diploma. Graduates of graduate-level programs should attain earnings comparable to those of individuals with bachelor’s degrees in the same field of study. If these graduates’ salaries fail to measure up to their predecessors with less education, universities will lost money.
Pell Grants, which is a program that gives aid to lower income borrowers, will be applied to workforce training programs. There are new requirements like maintaining 24 credit hours per year, but one will lose eligibility if their scholarships and grants covers all tuition expenses. In addition to this change, undergraduate access to federal loans will continue to be modified, and GRAD PLUS loans are scheduled to be discontinued in July 2026. Parent PLUS loans will be capped at $20,000 with a lifetime limit of 65,000 per student. Graduate loans are capped at $20,500 per year and a lifetime limit of $100,000. Professional loans are capped at $50,000 with a lifetime limit of $200,000.
Public Loan Forgiveness
Student Loan Forgiveness will be replaced with Public Loan Forgiveness, where one is required to make 120 monthly payments to qualify for it. There will be repayment plans issued. Repayment Assistance Plan that allows borrowers to pay 1%-10% of their incomes starting at $10 up to 30 years. Income-Based Repayment allows one to pay 10% of their come, with a 20-year repayment plan. The Standard Repayment plan allows borrowers to make payments within a 10-year span. However, the bill eliminates forbearance and deferments due to economic hardship and unemployment. Loan rehabilitation is provided as an alternate for loan borrowers to pay their loans back on a low monthly payment. These changes could impact the way Americans pay for their student loan debt and seek financial help.
Depreciation of Business Equipment Purchases
Modifications will be implemented for Bonus Depreciation in businesses. The Act allows businesses to elect 100% bonus depreciation for qualified property (certain machinery, equipment, and shared assets) acquired and in service after January 19, 2025. This provision allows businesses deduct the cost of materials in the year they are used, rather than depreciating them over time. Furthermore, there will be temporary 100% expensing for newly created property used in “qualified production activities,” which includes manufacturing, production, and refinement of tangible personal property. To qualify, the product must be manufactured between January 19, 2025, but before January 1, 2019; the product should be in service before January 31, 2031.
Business depreciation is influenced by the taxpayer’s discretion and projections regarding the after-tax costs associated with capital expenditures. Corporate taxpayers have restrictions on deducting net worth losses from taxable income. Options such as electing bonus depreciation or expensing may be considered depending on anticipated benefits.
Previously, bonus depreciation was implemented to encourage economic activity. With bonus depreciation now being permanent, it may no longer serve as a policy option during a recession.
Changes to Taxable Income System
The bill does not alter the tax treatment of private equity fund managers, corporate or capital gains taxes, nor does it introduce a new “millionaire” income tax. However, it establishes a state and local tax deduction of $40,000 for both single and married filers, which phases down to $10,000 for taxpayers with a net worth of $500,000 or more. One could claim it on federal tax returns. The income threshold will increase by 1% annually by 2029. It will revert to 10,000 in 2030.
Child tax credit will increase to $2,200 in the 2025 tax return year and leave $1,700 refundable portion of it. Senior citizens, ages 65 and up, will be able to “bonus” depreciation of $6,000 for tax years 2025-2028. Individual making up to $100,000 to $200,000 could deduct up to $10,000 of annual interest in auto loans from 2025-2028.
Workers that earn their income from tips will be able to deduct $25,000 of their income tax between 2025-2028. Those single filers that make more than $150,000 and joint filers that make $300,000.
The bill proposes a tax credit for private school scholarship donations.
With these changes, the American tax system could be transformed in a way that hasn’t been seen before.
Impact by the Legislation
Most Americans are left scrambling to understand the impact that this legislation will have on their lives. Many Americans believe that the bill was created to further disenfranchise the poor while benefitting more affluent Americans. Others would disagree. There are similar opinions held between lawmakers from both political aisles in Washington.
For instance, Tanja, a Virginia resident and SNAP recipient who lives with her dog, led an ordinary life. Her life was alternated when she had two strokes that left her disabled. She did not typically follow political developments until she learned about the bill. She told ABC News:
“I went to a normal life to nothing,” Tanja told the news anchor. “Being a bother in someone’s family room and I didn’t know what to do.”
She described herself as a “workaholic” prior to her strokes. She lives off disability and SNAP. The bill’s cuts to SNAP and other social problems could be detrimental to the livelihoods of those that depend on them.
When asked if she followed the bill. Tanja said:
“So very close, at the beginning. Then, I stopped ‘cause it was so scary.”
On the other hand, Ed Zebrowski, a fire lieutenant from New Jersey, anticipates the provisions in the One Big, Beautiful Bill Act. The bill doesn’t tax overtime or income made from tips. Zebrowski works overtime at the local fire department in his state.
“Last year, I put in about 500 hours of overtime,” Zebrowski said.
When asked by the ABC News anchor if that overtime wasn’t taxed, Zebrowski said, “Certainly lightens the burden for your family, pays for things like childcare, some rest, some vacations.”
Democratic senator from Virginia, Senator Mark Warner was interviewed on MSNBC.
“This bill is so god-awful. Sixteen million Americans off of health insurance, millions of Americans losing food efficiency, food banks, frankly for tax registration. If you want to take one big takeaway, this bill will take us back to pre-Obamacare days in terms of the percentage of those Americans uninsured. It will double the number of Americans uninsured in my state,” Senator Warner said.
Then, you have Republican Tennessee senator, Andy Ogles, who voted for the passage of “One Big, Beautiful Bill Act.” He was interviewed by CBS chief Washington correspondent, Major Garrettto voice his opinions.
“The Senate’s version of the Big Beautiful Bill guts key Trump provisions. The penalty with the Medicaid reimbursement was taken out, but we worked with the administration. Again, there are mechanisms that we worked with that we will work on to ensure those types of provisions are upheld,” Senator Ogles said.
Senator Ogles went on.
“At the end of the day. The tax cuts are permanent. The border is secure. No taxes on tips. Win after win after win. The only thing hotter by the temperature of the nation is the winning by the president,” Senator Ogles said.
Conclusion: Consequences to Come
The passage of the bill will cause a ripple effect that could permanently alter the tax codes, education system, healthcare system, social safety nets, and infrastructure of this country. Every American will be affected by the content in the bill-for better or worse. It is up to everybody to be informed and make decisions about their future that could be beneficial for the rest of the country.
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