⏱️ 6 min read
By the PILLARS team. Updated November 6, 2026.
The One Big Beautiful Bill Act is H.R. 1, the budget law President Trump signed on July 4, 2025. It is now Public Law 119-21. This guide explains what it does in plain English, who it affects, what it costs, and what each side said about it, with a source for every number.
What is the One Big Beautiful Bill?
It is one large law that changes taxes, health care, food assistance, student loans, energy, defense and immigration at the same time. Congress passed it through budget reconciliation, which lets the Senate pass a budget bill with a simple majority. The Senate passed it 51 to 50, with Vice President JD Vance breaking the tie, and the House passed the final version 218 to 214.
In short, it makes most of the 2017 income tax cuts permanent, adds new tax breaks through 2028, reduces federal spending on Medicaid and SNAP through new work rules and costs shifted to states, adds money for the military and immigration enforcement, and raises the federal debt limit by $5 trillion.
The 10 biggest changes
Makes the 2017 income tax rates and the larger standard deduction permanent, and raises the Child Tax Credit to $2,200 per child, rising with inflation.
Adds deductions for 2025 through 2028 for tips (up to $25,000), overtime pay (up to $12,500, or $25,000 for couples), people 65 and older ($6,000), and interest on loans for new U.S.-assembled cars (up to $10,000).
Raises the cap on deducting state and local taxes from $10,000 to $40,000 through 2029, smaller for incomes above $500,000.
Requires most adults 19 to 64 covered by the Medicaid expansion to work, volunteer or go to school 80 hours a month by January 2027 (some states may get until the end of 2028), and to renew coverage every 6 months.
Applies SNAP work rules to adults up to age 64 and parents of teens 14 and older, ends exemptions for veterans, homeless people and former foster youth, and has states pay part of benefit costs starting October 2027.
Ends Grad PLUS loans for new borrowers from July 1, 2026, caps federal student borrowing at $257,500, and gives new loans a new income-based plan whose payments count toward Public Service Loan Forgiveness.
Ended tax credits for electric vehicles bought after September 30, 2025 and for home energy upgrades after 2025, and ends wind and solar credits for projects that are not running by the end of 2027 unless they started by July 4, 2026.
Adds about $156 billion for the military and, for immigration enforcement, over $46 billion for the border wall, $45 billion for immigrant detention and over $29 billion for ICE hiring and operations.
Creates Trump Accounts, savings accounts for children, with a one-time $1,000 federal deposit for U.S.-citizen babies born 2025 through 2028.
Raises the federal debt limit by $5 trillion.
Taxes
Most of the tax changes apply starting with 2025 tax returns.
Tax rates and the standard deduction: the 2017 rates (10% to 37%) and the larger standard deduction no longer expire. For 2025 the standard deduction is $15,750 for single filers and $31,500 for married couples, and it rises with inflation.
Child Tax Credit: $2,200 per child, rising with inflation. Up to $1,700 of it can come back as a refund. The child needs a Social Security number valid for work, and so does the parent claiming it (on a joint return, at least one spouse).
Tips: deduct up to $25,000 a year of tip income for 2025 through 2028. The deduction shrinks above $150,000 of income ($300,000 for couples). Social Security and Medicare taxes still apply to tips.
Overtime: deduct up to $12,500 a year ($25,000 for couples) of the extra pay above your regular rate, for 2025 through 2028, with the same income limits.
People 65 and older: an extra $6,000 deduction each for 2025 through 2028, smaller above $75,000 of income ($150,000 for couples).
Car loans: deduct up to $10,000 a year of interest on a loan for a new car assembled in the U.S., for loans taken out 2025 through 2028, smaller above $100,000 of income ($200,000 for couples).
State and local taxes (SALT): the deduction cap rises from $10,000 to $40,000 for 2025, then 1% a year through 2029, and is smaller for incomes above $500,000. It goes back to $10,000 in 2030.
Charity: starting with 2026, people who take the standard deduction can also deduct up to $1,000 of gifts to charity ($2,000 for couples).
Medicaid and health care
Work rule: most adults 19 to 64 covered by the Medicaid expansion must work, volunteer, join a work program or go to school at least 80 hours a month. States must start by January 1, 2027; some can get until December 31, 2028. Parents of children 13 or younger, pregnant women and people who are medically frail are among those exempt.
Renewals: starting in January 2027, those adults must renew their coverage every 6 months instead of every year.
Copays: from October 2028, those adults with incomes above the poverty line pay copays of up to $35 a service, capped at 5% of family income. Primary care and mental health care are exempt.
Immigrants: from October 2026, federal Medicaid money covers only citizens, green card holders and a few other groups; refugees and people granted asylum lose eligibility. Similar limits apply to Medicare and to marketplace premium tax credits.
Rural hospitals: $50 billion from 2026 through 2030 goes to states for rural health care.
The Congressional Budget Office (CBO) estimates the law reduces federal Medicaid spending by about $911 billion over 2025 to 2034, and that its health provisions will leave 10 million more people without health insurance in 2034.
SNAP (food stamps)
Work rule: adults without young children must work, volunteer or train 80 hours a month to get SNAP for more than 3 months in 3 years. That rule now covers people up to age 64 (it used to stop in the mid-50s) and parents whose youngest child is 14 or older. Veterans, homeless people and young adults who aged out of foster care are no longer exempt; American Indians are newly exempt.
States pay more: states pay 75% of SNAP’s running costs from October 2026, up from 50%. From October 2027, states also pay 0% to 15% of benefit costs, depending on their rate of payment errors.
Benefits: future benefit increases are limited to inflation, and internet bills no longer count when benefits are figured.
CBO estimates federal SNAP spending falls about $187 billion over 2025 to 2034, and that about 2.4 million fewer people get SNAP in an average month.
Student loans
Borrowing limits: Grad PLUS loans ended for new borrowers on July 1, 2026. New limits are $100,000 for graduate school, $200,000 for professional school such as law or medicine, Parent PLUS loans of $20,000 a year and $65,000 per student, and $257,500 over a lifetime for most federal loans. Current students keep the old limits for up to 3 years.
Repayment: loans made since July 1, 2026 have two plans: a standard plan and the income-based Repayment Assistance Plan, whose payments count toward Public Service Loan Forgiveness. Borrowers on the SAVE, PAYE or ICR plans must switch by July 1, 2028.
Pell Grants: Workforce Pell Grants for short job-training programs started July 1, 2026.
Energy
Tax credits for new, used and commercial electric vehicles ended for vehicles bought after September 30, 2025. Credits for home energy upgrades and home solar ended after 2025.
Wind and solar projects get the clean electricity credits only if they started construction by July 4, 2026, or are running by December 31, 2027. Other clean power, such as nuclear and geothermal, keeps its credits longer.
More federal land and water opens to oil, gas and coal leasing at lower royalty rates.
Defense, border and immigration
About $156 billion more for the military, including $29.2 billion for shipbuilding, $25.4 billion for munitions and $24.4 billion for missile defense.
Over $46 billion for the border wall and barriers, $45 billion for immigrant detention and over $29 billion for ICE hiring and removals.
New immigration fees, such as at least $100 to apply for asylum and $550 for a first work permit for asylees, parolees and people with Temporary Protected Status.
Trump Accounts and other changes
Trump Accounts: savings accounts for children under 18. Families can add up to $5,000 a year. The government deposits $1,000 for U.S.-citizen children born 2025 through 2028 if a parent signs up.
529 plans: starting in 2026, they can pay up to $20,000 a year of K-12 costs and the cost of job credential programs.
Money sent abroad: from January 2026, a 1% tax applies when the sender pays in cash, by money order or by cashier’s check. Transfers paid from a bank account or a U.S. debit or credit card are exempt.
Payment apps: apps and card processors report your earnings to the IRS only above $20,000 and 200 payments in a year.
Imports: the duty-free rule for imports worth under $800 ends July 1, 2027.
How much does it cost?
CBO estimates the law adds $3.4 trillion to federal deficits over 2025 to 2034, from $4.5 trillion less revenue and $1.1 trillion less spending. Counting the extra interest on the debt, the total is $4.1 trillion.
CBO also estimated who gains and who loses. From 2026 to 2034, households in the lowest-income tenth lose about $1,200 a year on average (3.1% of their income), mostly from the Medicaid and SNAP changes. Households in the highest-income tenth gain about $13,600 a year (2.7%).
What supporters and critics said
Both quotes are from the final House debate on July 2, 2025, as printed in the Congressional Record.
The case for. Rep. Steve Scalise (R-LA), the House Majority Leader, voted yes: “We do it, number one, by locking in rates for everybody. Nobody’s taxes go up, Mr. Speaker, nobody’s. … For the waiter and waitress who are working maybe two, three shifts at a restaurant, at a diner, barely getting by, that is the new tax cut that we are putting in this bill.”
The case against. Rep. Hakeem Jeffries (D-NY), the House Democratic Leader, voted no: “This bill represents the largest cut to healthcare in American history. … We have almost $1 trillion in cuts to Medicaid. … Hospitals will close, including all throughout rural America, Mr. Speaker. Nursing homes will shut down.”
Key dates
July 4, 2025: signed into law. The debt limit went up and the new SNAP work rules began.
September 30, 2025: last day to buy an electric vehicle and get the federal tax credit.
January 1, 2026: the 1% tax on cash-funded transfers abroad and the $15 million estate tax exemption start.
July 1, 2026: Grad PLUS loans end for new borrowers and Workforce Pell Grants start.
October 2026: states start paying 75% of SNAP running costs, and Medicaid limits for some immigrants begin.
January 1, 2027: deadline for states to start the Medicaid work rule and 6-month renewals.
October 2027: states start paying part of SNAP benefit costs.
2028 tax year: the last year of the tips, overtime, senior and car loan deductions.
See how your representatives voted
PILLARS has the full section-by-section summary of the law, both sides of the debate, and how every member of Congress voted: One Big Beautiful Bill Act (H.R. 1) on PILLARS.
Sources
Library of Congress: official summary of H.R. 1 (Public Law 119-21)
CBO: Estimated Budgetary Effects of Public Law 119-21 (July 21, 2025)
CBO: Effects on Deficits and the Debt of Public Law 119-21 (August 4, 2025)
CBO: Distributional Effects of Public Law 119-21 (August 11, 2025)
CBO: Estimated Effects of Public Law 119-21 on Participation in SNAP (August 2025)
Congressional Research Service: R48633, Medicaid and health provisions
KFF: Projected Medicaid spending since the 2025 reconciliation law
