Republican lawmakers have released more details on their long-awaited reconciliation tax bill, which features proposed cuts to Medicaid and clean energy projects, and lower taxes for high income Americans. Titled “THE ONE, BIG, BEAUTIFUL BILL” in a nod to President Donald Trump, the measures set out by the House Ways and Means Committee on Monday reflect some of Trump’s campaign promises such as lower taxes on tips and overtime.
A preliminary analysis from the Urban Institute’s Tax Policy Center finds it would cut taxes by about $2,800 in 2026 on average, compared to what households would pay if the 2017 tax breaks expired. Nearly 70% of the cuts would go to those making $217,000 or more. That said, it is still in flux and the numbers will likely change over the next few weeks.
Republicans have very little wiggle room to pass the bill—they need support from virtually every member, and fractions have already arisen, related to Medicaid cuts, clean energy cuts, and the proposed increased limit on the state and local tax deduction. As written, the bill would result in an estimated $4.9 trillion increase in the federal deficit over the next decade, though Republicans are counting on revenue from Trump’s tariffs to offset some of that.
The Ways and Means Committee will meet Tuesday to consider the plan. Here’s what’s currently included for individuals.
Medicaid cuts of $880 billion
To pay for some of the sweeping tax breaks they are proposing, Republicans have included $880 billion in cuts to Medicaid, the federal health care program for the poorest Americans. This has already been one of the most controversial parts of the bills, with Democratic lawmakers and even some Republicans, including Missouri Sen. Josh Hawley, blasting the cuts.
A recent report from the nonpartisan Congressional Budget Office estimated that millions of Americans would lose their health care coverage under recent Republican proposals.
Cuts taxes on tips and overtime through 2029
The bill would cut taxes on tips and overtime for some workers starting in 2025 through the end of 2028. Under the tips section, the bill attempts to limit who can qualify for the tax break so that higher-wage workers aren’t taking advantage of the break. It specifies only those working jobs that typically receive tips qualify, and it is subject to a $160,000 income limit.
Increases standard deduction
The bill temporarily increases the standard deduction, by $1,000 through 2029.
Rather than erase taxes on Social Security—a campaign trail promise from Trump—it also gives seniors aged 65 and older an additional $4,000 for the standard deduction from 2025 through 2028. This additional deduction starts phasing out for individuals who earn $75,000 ($150,000 for married couples).
Increases SALT deduction
The state and local tax deduction, also known as SALT, would triple from $10,000 to $30,000 for married couples. This is a boon to high-tax states like New York and California, and lawmakers from those states would like the deduction to reach even higher. The SALT cap was reduced to $10,000 in Trump’s first term.
Increases child tax credit
The bill also temporarily increases the child tax credit, from $2,000 to $2,500, through 2029.
Increases estate tax exemption
The estate tax exemption, how much wealth is excluded from the federal estate tax when an individual passes away, would be increased to $15 million.
Creates car loan interest deduction
Those with a car made in the U.S. would be able to deduct some car loan interest, though this measure begins to phase out for those earning $100,000 a year or more.
Allows more people to deduct charitable donations
While taxpayers are usually allowed to deduct charitable donations only if they itemize their taxes, the bill would allow some to deduct up to $150 per year ($300 for married couples) when taking the standard deduction.
Creates tax-preferred child savings account
The bill creates a new tax-preferred savings account for children called a “money account for growth and advancement,” or MAGA account. Parents would be able to invest $5,000 per year, and earnings on the investments could be used to pay for school or job training expenses, buy a home, or start a small business. Those born in 2025 to 2028 would receive $1,000.
Sen. Ted Cruz, R-Tx., told Semafor that the accounts would help children in the U.S. “begin the journey of savings and benefit from the wonders of compound interest.”
Eliminates EV tax credits
Starting next year, the $7,500 credit for purchasing new electric vehicles created under President Joe Biden would be eliminated. Renewable energy tax credits would also be phased out.
New taxes on remittances
Non-citizens in the U.S. could pay a new 5% tax on money sent overseas, with American citizens being exempt.
Tax on university endowments
Private universities would see a new tax on their endowments, as Trump continues his battle against top schools like Harvard. The biggest endowments could see their investment income taxed up to 21%.
Eliminates tax-exempt status for ‘terrorist’ supporters
Another provision would allow the State Department to eliminate the tax-exempt status for “terrorist supporting” non-profit organizations as designated by the agency.
