In a narrow 218–214 vote, the U.S. House of Representatives passed a sweeping tax cut and spending bill, marking a significant legislative victory for President Donald Trump. The bill is expected to be signed into law by the President at 5 p.m. ET on Independence Day.
Key Provisions of the Legislation
The bill aims to make Trump’s 2017 tax cuts permanent, fund his immigration crackdown, and deliver new tax breaks promised during his 2024 campaign. It also includes deep cuts to health and food assistance programs and eliminates multiple green energy incentives.
According to the nonpartisan Congressional Budget Office, the bill could add $3.4 trillion to the national debt over the next decade.
Economic Impacts and Benefits
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Corporate and High-Income Earners:
Businesses will be allowed to save money on taxes when they buy new machines or spend money on research and development. They can deduct the full cost immediately, which means they won’t have to pay taxes on that amount. This rule will apply from January 19, 2025, and will last until the end of 2028. Manufacturing companies that build new factories in the United States will also get special tax benefits during this time. -
Semiconductor Industry:
Chip-making companies will receive extra tax support if they set up factories for making semiconductors in the country. This is to help increase chip production inside the US. -
Pass-through Entities:
Small business owners like doctors, lawyers, and people who run partnerships will continue to get tax deductions on a part of their income. The House version of the bill increased this deduction to 23 percent, while the Senate kept it at 20 percent. This means they will pay less tax on a portion of what they earn. -
High Earners:
Wealthy people will benefit the most. The top 20 percent of income earners may see an increase of about $13,000 in their income after paying taxes each year. The richest group, which is the top 0.1 percent, could get more than 290,000 extra per year. The bill also raises the limit for state and local tax deductions to $40,000 for households earning up to $500,000, which gives more tax relief to people in high-tax states. -
Tipped and Overtime Workers:
Tipped workers and people doing overtime will also get some benefits. Workers who earn tips, such as those in restaurants or hotels, will be allowed to deduct up to $25,000 of their tip income from taxes. People who work overtime can deduct up to $12,500 of their overtime pay. However, these benefits will only be available to people who meet certain income rules and will last until 2028.
Who Will Be Affected Negatively?
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Low-Income Americans:
The bill introduces work requirements for Medicaid and food stamp recipients, including parents of children aged 14 and above.
Millions may lose healthcare coverage, as many are not expected to have access to employer-provided insurance.According to Penn Wharton Budget Model:
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Those earning under $18,000 could lose $165 in annual income (−1.1%).
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Those earning $18,000–$53,000 would see a marginal gain of $30 (0.1%).
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Middle-income households earning $53,000–$96,000 could gain about $1,430 (1.8%).
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Health Coverage Risks:
Stricter eligibility checks for Affordable Care Act subsidies could affect middle-income families.
Overall, over 10 million people could become uninsured by 2034, as per CBO estimates cited by CNN. -
Unemployment Benefits:
A new clause bars millionaires from collecting unemployment benefits.
Political Reactions
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All Democratic lawmakers opposed the bill, calling it a handout to the wealthy at the expense of vulnerable communities.
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House Democratic Leader Hakeem Jeffries spoke for eight hours and 46 minutes, setting the longest speech record in House history.
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Republicans argue that the bill will reduce taxes, boost corporate earnings, and stimulate economic growth, though concerns about inflation remain among investors.
