One Big Beautiful Bill Act

The "One Big Beautiful Bill Act" (OBBBA), also referred to as the Big Beautiful Bill (P.L. 119-21), is a significant U.S. federal statute passed by the 119th United States Congress. It forms the core of President Donald Trump's second-term agenda and includes a wide range of tax and spending policies, aiming to align with his administration's priorities.

It was signed into law on July 4, 2025, and generally takes effect in 2025 or later years.

📝** Key Provisions and Impacts** The OBBBA includes both major tax cuts and substantial spending changes, leading to significant debate over its overall effect on the economy and social programs.

Taxes and Deductions

Extension of 2017 Tax Cuts: It permanently extends the individual income tax rates from the 2017 Tax Cuts and Jobs Act (TCJA) which were set to expire.

New Deductions: It creates new, temporary tax deductions for:

Qualified Overtime Pay (up to $12,500/year for single filers)

Qualified Tip Income (up to $25,000/year)

Interest paid on qualified auto loans.

SALT Cap: It raises the cap on the State and Local Tax (SALT) deduction to $40,000 for taxpayers earning under $500,000, before reverting to $10,000 in 2030.

Savings: It introduces Trump Accounts, a new tax-deferred savings vehicle for children, which includes a government-provided $1,000 "baby bonus" for children born in the first four years of the program.

Spending and Social Programs

Medicaid: The law makes significant cuts to Medicaid funding and includes a new work requirement (80 hours per month) for most able-bodied recipients ages 19-64, with certain exemptions. It also limits states' ability to use provider taxes to fund the program.

SNAP (Food Assistance): It enacts the largest-ever cuts to the Supplemental Nutrition Assistance Program (SNAP), estimated at $187 billion, and expands work requirements for recipients. It also removes exemptions for groups like veterans and young people aging out of foster care.

Student Loans: It places new federal loan caps for graduate students who do not need to demonstrate financial need.

Defense and Border Enforcement: It includes substantial increases in spending for the military and for Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) to support immigration enforcement and deportations.

💰 Cost and Funding The law is projected to cost $3.4 trillion over the next 10 years, primarily by extending the 2017 tax cuts and introducing new ones. According to some analyses, the funding for these tax cuts comes in part from over $1 trillion in cuts to social safety net programs like Medicaid and SNAP, a point of significant controversy.

Leano & Cruz, CPAs

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