WASHINGTON: House Republicans early on Thursday (May 22) took a major step forward on President Donald Trump's agenda, approving a legislative package that combines tax breaks, spending cuts, border security funding and other priorities.
House committees laboured for months on the Bill, which underwent late changes to win over holdouts in the Republican conference. It exceeds 1,000 pages and is titled the One Big Beautiful Bill Act, a nod to Trump himself.
Republicans made one last round of revisions before the Bill reached the House floor, boosting the state and local tax deduction to win over centrists and speeding up the work requirements in Medicaid to win over those who did not believe the Bill did enough to curb spending.
Here is a look at what is in the legislative package, which is expected to undergo more changes when it goes to the Senate.
Republicans look to make permanent the individual income and estate tax cuts passed in Trump's first term, in 2017, plus enact promises he made on the 2024 campaign trail to not tax tips, overtime and interest on some auto loans.
To partially offset the lost revenue, Republicans propose repealing or phasing out more quickly the clean energy tax credits passed during Joe Biden's presidency, helping to bring down the overall cost of the tax portion to about US$3.8 trillion.
The Bill includes a temporary boost in the standard deduction - a US$1,000 increase for individuals, bringing it to US$16,000 for individual filers, and a US$2,000 boost for joint filers, bringing it to US$32,000. The deduction reduces the amount of income that is actually subject to income tax.
There is also a temporary US$500 increase in the child tax credit, bringing it to US$2,500 for 2025 through 2028. It then returns to US$2,000 and will increase to account for inflation.
The estate tax exemption rises to US$15 million and is adjusted for inflation going forward.
One of the thorniest issues in negotiations had been how much to raise the state and local tax deduction, now capped at US$10,000. That has been a priority of New York lawmakers. The Bill increases the "SALT" cap to US$40,000 for incomes up to US$500,000, with the cap phasing downward for those with higher incomes. Also, the cap and income threshold will increase 1 per cent annually over 10 years.
Several of the provisions Trump promised in the campaign would be temporary, lasting roughly through his term in office. The tax breaks for tips, overtime and car loan interest expire at the end of 2028. That's also the case for a US$4,000 increase in the standard deduction for seniors.
Among the various business tax provisions, small businesses, including partnerships and S corporations, will be able to subtract 23 per cent of their qualified business income from their taxes. The deduction has been 20 per cent.
Businesses will temporarily be allowed to fully expense domestic research and development costs in the year they occur and the cost of machinery, equipment and other qualifying assets. This encourages businesses to invest in ways that enhance their productivity.
House Republicans would reduce spending on food aid, what is known as the Supplemental Nutrition Assistance Program, by about US$267 billion over 10 years.
States would shoulder 5 per cent of benefit costs, beginning in fiscal 2028, and 75 per cent of the administrative costs. Currently, states pay none of the benefit and half of the administration costs.
Republicans are also expanding the work requirements to receive food aid. Under current law, able-bodied adults without dependents must fulfil work requirements until they are 54, and that would change under the Bill to age 64.
Also, some parents are currently exempt from work requirements until their children are 18; that would change so only those caring for a dependent child under the age of 7 are exempt.
A focal point of the package is nearly US$700 billion in reduced spending in the Medicaid program, according to the Congressional Budget Office (CBO).
To be eligible for Medicaid, there would be new "community engagement requirements" of at least 80 hours per month of work, education or service for able-bodied adults without dependents. The new requirements would begin on Dec 31, 2026. People would also have to verify their eligibility for the programme twice a year, rather than just once.
Republicans are looking to generate savings with new work requirements. But Democrats warn that millions of Americans will lose coverage.
A preliminary estimate from the non-partisan CBO said the proposals would reduce the number of people with healthcare by 8.6 million over the decade.
Republicans are also using the package to reward allies and disadvantage political foes.
The package would eliminate a US$200 tax on gun silencers that has existed since Congress passed the National Firearms Act in 1934. The elimination of the tax is supported by the National Rifle Association.
The group Giffords, which works to reduce gun violence, said silencers make it more difficult to recognise the sound of gunfire and locate the source of gunshots, impairing the ability of law enforcement to respond to active shooters.
Republicans are also looking to prohibit Medicaid funds from going to Planned Parenthood, which provides abortion care. Democrats say defunding the organisation would make it harder for millions of patients to get cancer screenings, pap tests and birth control.
The Bill originally called for "MAGA" accounts, shorthand for Trump's signature line, "Make America Great Again". But in a last-minute revision, the Bill changed the name to "Trump" accounts.
For parents or guardians who open new Trump accounts for their children, the federal government will contribute US$1,000 for babies born between Jan 1, 2024 and Dec 31, 2028.
Families could add US$5,000 a year, with the account holders unable to take distributions before the age of 18. Then, they could access up to 50 per cent of the money to pay for higher education, training and first-time home purchases. At the age of 30, account holders have access to the full balance of the account for any purpose.
The legislation would provide US$46.5 billion to revive the construction of Trump's wall along the United States-Mexico border, and more money for the deportation agenda.
There is US$4 billion to hire an additional 3,000 new Border Patrol agents as well as 5,000 new customs officers, and US$2.1 billion for signing and retention bonuses. There are also funds for 10,000 more Immigration and Customs Enforcement officers and investigators.
It includes major changes to immigration policy, imposing a US$1,000 fee on migrants seeking asylum - something the nation has never done, putting it on par with few others, including Australia and Iran.
Overall, the plan is to remove 1 million immigrants annually and house 100,000 people in detention centres.
There is also nearly US$150 billion in new money for the Defense Department and national security.
It would provide US$25 billion for Trump's "Golden Dome for America", a long-envisioned missile defence shield, US$21 billion to restock the nation's ammunition arsenal, US$34 billion to expand the naval fleet with more shipbuilding and about US$5 billion for border security.
It also includes US$9 billion for service member quality-of-life-related issues, including housing, healthcare and special pay.
A wholesale revamping of the student loan program is key to the legislation, providing US$330 billion in budget cuts and savings.
The proposal would replace all existing student loan repayment plans with just two: a standard option with monthly payments spread out over 10 to 25 years and a "repayment assistance" plan that is generally less generous than those it would replace.
Among other changes, the Bill would repeal Biden-era regulations that made it easier for borrowers to get loans cancelled if their colleges defrauded them or closed suddenly.
There would be a tax increase, up to 21 per cent, on some university endowments.
To generate revenue, one section would allow increased leasing of public lands for drilling, mining and logging while clearing the path for more development by speeding up government approvals.
Royalty rates paid by companies to extract oil, gas and coal would be cut, reversing Biden's attempts to curb fossil fuels to help address climate change.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.