What's the One Big Beautiful Bill and How Will It Impact You?

The One Big Beautiful Bill Act is a massive piece of legislation, with over 850 pages full of tax breaks, spending cuts, and other changes that can have a massive impact on all American families for decades to come. As of this writing, the bill still needs to pass through the House before it can be signed into law by the President. In the meantime, let's take a quick look at the contents of the bill and how it may impact you and your family.

What's in the bill?

You saw the part where the bill is over 850 pages long, right? There's a lot in there, but the major points are:

Extending tax cuts

The Tax Cuts and Jobs Act, signed in 2017, made some major changes to income taxes, including:

• Doubling the standard deduction
• Eliminating personal exemptions and most itemized deductions
• Increasing the income level for each tax bracket 

Many of the provisions of the bill are set to expire at the end of 2025. This new bill would make them permanent.

Cutting tax on tips

As part of the bill, taxpayers would be able to write-off income from tips and overtime. You can also write-off interest charges on auto loans, but only for cars assembled in the United States.

Lots of money for immigration enforcement

The bill includes $50 billion for border fortifications, $45 billion for Immigration and Customs Enforcement (ICE), $14 billion for deportation operations, and billions more to hire additional immigration agents.

Removal of tax incentives for green energy

In recent years, multiple tax incentives and subsidies were rolled out in an effort to encourage Americans to use more clean, renewable energy. That included credits and incentives for buying and owning an electric vehicle and subsidies for upgrading homes to include more energy-efficient appliances. 

The bill will phase out those incentives and credits within the next couple years.

Big cuts to Medicaid and food stamps

In order to balance out the cost of these tax cuts and increased immigration enforcement expenses, the bill includes major cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP).

How will this impact you?

Well, if you're already wealthy, good news: the tax cuts included in the bill will likely make you even more wealthy. According to a study by the Tax Policy Center, the tax cuts are estimated to reduce the annual tax bill for the lowest earners by ~$150, while reducing the tax bill for the highest earners by ~$12,500. (Even better news if you're in the top 0.1%: your tax bill is projected to go down by ~$285,220.)

For the rest of us, the bill is likely to have some tougher outcomes.

Lots of people will lose Medicaid coverage

Many people who rely on Medicaid are going to have to do a lot more work to keep their coverage, thanks to new work requirements that will require "able-bodied" recipients to work, complete job training, volunteer, or attend school for at least 80 hours a month to qualify for coverage. This new requirement also means more paperwork and more frequent verification, which is likely to put a strain on recipients.

Additionally, the bill reduces the amount of federal funding for Medicaid, putting the burden on individual states.

People will have a harder time getting food stamps

Like Medicaid, the work requirements for SNAP will become a lot more restrictive. The work mandate would be expanded to include enrollees ages 55 to 64 and parents with children 14 and older, and exemptions would be removed for veterans, former foster youth, and those who are presently homeless.

Also, just like Medicaid, states would have to take on more of the costs associated with the program, which may result in entire states withdrawing from the program.

You may see an impact even if you don't use Medicaid or SNAP

Critics of the bill are warning of potential downstream effects of the bill to people who don't use those programs, especially in rural and underserved areas. 

Cuts to Medicaid, for example, can have a massive impact on hospitals and medical service providers, especially in areas where a large number of their clients rely on Medicaid. Without the funding provided by Medicaid, these hospitals and medical care providers may need to reduce their services or close altogether. 

It's the same story for SNAP: losing access to those funds will hurt both the individuals who need help buying groceries, as well as the grocery stores where they shop.

Accessing and repaying student loans would get harder

The bill includes new caps on federal student loans for graduate students and parents of students. It also restricts access to deferments and forbearance, and limits the variety of available repayment plans. Certain student loan forgiveness plans, particularly public service loan forgiveness (PSLF), may become harder to access.

Parents and babies get some perks

As part of the bill, every American baby born between 2025 and 2028 will receive $1,000, invested directly into an index fund. Parents would be able to add up to $5,000 per year to the account, which isn't accessible until the child turns 18. It's a three year pilot program that would need to be renewed after 2028 to continue.

Meanwhile, the child tax credit would increase from $2,000 per child to $2,200 per child.

The national debt will go up

Ultimately, experts agree that the bill will add significantly to the national debt. An analysis from the Congressional Budget Office estimates that the bill will add over $3 trillion to the deficit. 

A big national debt can feel like an abstract problem, but it does have real world implications. We've touched on how the national debt impacts individual consumers, but the short version is: it will probably make your life more expensive.

What can you do about any of this?

Leaving aside any kind of political actions you may want to take (and by the time you read this, we're probably well past the "call your representative" stage of things), your best bet is to understand what may change in your life and start making changes to prepare yourself.

Some things are easier. If you were planning on installing energy-efficient appliances because you're eligible for a subsidy, you probably want to start that process immediately. 

Some things are a lot harder. If you rely on Medicaid, make sure you have the ability to fulfill the new requirements when they arrive, and if you don't, look for local resources to help make sure you can keep your coverage. 

Ultimately, for the people who may be on the verge of losing access to important safety nets, their options may be limited. It may be up to the rest of us to make sure people aren't left behind. If you're able, support your local food banks to ensure that your neighbors get the food they need even if their SNAP benefits disappear. Volunteer. Give whatever time and resources you can afford to give.

If you're interested in proactively addressing personal debt before these changes come into effect, MMI offers a variety of personalized debt relief solutions to help you save money and get out of debt quickly: as much as 7x faster than doing it alone.