President Donald Trump signed the “One Big Beautiful Bill” into law on July 4, 2026, choosing America’s 250th birthday as the moment to enact the most sweeping tax and spending legislation since the Reagan era. The bill — which passed the House in May and cleared the Senate in late June after a months-long legislative battle — makes the 2017 Tax Cuts and Jobs Act permanent, eliminates federal taxes on tips and overtime pay, significantly raises the SALT deduction cap, cuts Medicaid by approximately $800 billion over ten years, reduces the Supplemental Nutrition Assistance Programme by roughly $300 billion, and adds an estimated $3.3 trillion to the national debt over the next decade, according to the Congressional Budget Office. Its effects on households, businesses and federal programmes are already becoming evident.
What the Bill Does — Tax Side
The centrepiece of the Big Beautiful Bill on the revenue side is making permanent the individual and corporate tax reductions enacted in the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025. Without extension, most American households would have faced a tax increase. The bill locks in current rates and brackets indefinitely.
Beyond permanence, the bill introduces several new provisions. It eliminates federal income tax on tip income — fulfilling a campaign promise Trump made prominently to service industry workers. It eliminates federal income tax on overtime pay — a significant benefit for hourly workers in manufacturing, healthcare, transportation and other sectors where overtime is common. Both provisions have immediate, visible effects on take-home pay for millions of workers.
The bill also raises the cap on the State and Local Tax deduction — known as SALT — to $40,000 for households earning less than $500,000. The 2017 TCJA had capped SALT deductions at $10,000, a provision that had been deeply unpopular in high-tax states like New York, New Jersey and California. The $40,000 cap is a significant concession to Republican members from those states whose votes were needed to pass the bill.
For corporations, the bill maintains the 21% corporate tax rate established in 2017 and extends and expands bonus depreciation provisions that allow businesses to immediately deduct the full cost of capital investments.
What the Bill Does — Spending Side
The bill’s spending reductions are concentrated in two major areas: Medicaid and the Supplemental Nutrition Assistance Programme, commonly known as SNAP or food stamps.
On Medicaid, the bill introduces new work requirements for able-bodied adults without dependents, changes the federal matching rate formula in ways that reduce federal contributions to state Medicaid programmes, and tightens eligibility verification requirements. The Congressional Budget Office estimated these changes will result in approximately 11.8 million people losing Medicaid coverage over ten years — and reduce federal Medicaid spending by approximately $800 billion over the same period.
On SNAP, the bill shifts a greater share of programme costs to states — which currently bear none of the benefit costs under the existing federal structure — and introduces more stringent work requirements and eligibility rules. The CBO estimated these changes will reduce SNAP spending by approximately $300 billion over ten years.
A year after the bill was signed, its effects on households, businesses and federal programs are increasingly evident, CBS News reported. The tax reductions are flowing to households and businesses as designed. The Medicaid and SNAP changes are producing the coverage losses and benefit reductions that critics warned about and proponents said were necessary to control spending growth.
What the Bill Does to the National Debt
The Congressional Budget Office’s assessment of the bill’s fiscal impact is clear: it adds approximately $3.3 trillion to the national debt over ten years. The tax reductions — particularly the permanent extension of the 2017 cuts, the tips and overtime exemptions, and the expanded SALT cap — cost significantly more than the Medicaid and SNAP reductions save.
The US national debt was approximately $36 trillion at the time the bill was signed. Adding $3.3 trillion over a decade would push it toward $40 trillion, at a time when interest payments on the existing debt already represent one of the federal government’s largest expenditure categories — consuming more than $1 trillion annually.
Republicans who supported the bill argued that economic growth generated by the tax cuts would partially offset the revenue losses through expanded taxable economic activity — a supply-side argument that the CBO’s scoring methodology does not credit, and which has been disputed extensively in the economic literature.
Who Wins and Who Loses
The distribution of the bill’s benefits and costs follows a pattern that is well-documented in the analyses published since passage.
The permanent 2017 tax cuts, the tips exemption and the overtime exemption primarily benefit working- and middle-class households in the near term — particularly hourly workers in service industries who receive tips and workers in manufacturing and healthcare who regularly work overtime. The SALT cap increase benefits upper-middle-income households in high-tax states who previously could not fully deduct their state and local taxes.
The Medicaid cuts primarily affect low-income adults in expansion states who gained coverage under the Affordable Care Act and who will lose eligibility under the new work requirements and eligibility changes. The SNAP cuts primarily affect low-income families, elderly individuals and people with disabilities who depend on food assistance to meet basic nutritional needs.
The national debt increase will ultimately be borne by future taxpayers — a cost that does not appear in current household budgets but that constrains the fiscal space available for future government responses to economic downturns, public health emergencies and other contingencies.
The Political Context
Trump chose to sign the bill on July 4 — America’s 250th birthday — making the signing itself a political act, linking the legislation to the nation’s founding ideals of liberty and prosperity. The ceremony at the White House was followed by the largest fireworks display in American history over Washington DC, a spectacle that was simultaneously an Independence Day celebration and a celebration of what the administration described as its most significant legislative achievement.
The bill’s passage was not without controversy. Several Senate Republicans expressed reservations about the debt increase and the Medicaid cuts. Democrats uniformly opposed the bill, arguing that it transferred wealth from the poor and middle class to the wealthy while adding trillions to the debt. Protests took place outside the Capitol and in cities across the country on the day of the Senate’s final vote.
Whether the bill’s long-term economic effects vindicate its supporters or confirm its critics’ warnings will only be knowable over the decade ahead. What is clear now is that the fiscal and policy landscape of the United States has been fundamentally altered — and that the consequences, for better or worse, will be felt by hundreds of millions of Americans for a generation.
