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From taxes to student-loan forgiveness, provisions in President Donald Trump’s “big beautiful bill” are one step closer to affecting Americans’ wallets.
The House passed Trump’s tax bill on Thursday morning — an expansive piece of legislation that extends the president’s 2017 tax cuts and makes other key changes to the tax system, along with implementing significant changes to Medicaid and SNAP.
The bill is now headed to the Senate, where it is still subject to change.
“Now, it’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE!” Trump wrote. “There is no time to waste.”
The nonpartisan Congressional Budget Office said that the tax bill in its current form would increase the US deficit. Moody’s Analytics downgraded the US’s credit rating last week, saying Trump’s tax bill could add $4 trillion to the federal deficit over the next decade. This is not a short-run hit to Americans’ wallets. Instead, it could lead to higher interest rates on mortgages, auto loans, and more down the road.
Here are four other key ways the tax bill could impact Americans’ wallets.
A slew of tax policies
Many of Trump’s campaign promises are included in the tax bill.
The legislation would allow workers who typically receive tips and overtime wages to claim a tax deduction on those amounts. The bill also calls for a $4,000 tax deduction for seniors making less than $75,000 a year. Those two provisions would extend until 2029.
The bill also extends the child tax credit from $2,000 to $2,500 through 2028. Additionally, the bill would eliminate electric vehicle tax credits and would establish a $250 annual registration fee for electric vehicle owners.
The bill also makes Trump’s 2017 tax cuts permanent and increases the state and local tax deduction, known as SALT, from $10,000 to $40,000.
Student-loan forgiveness repealed
Under Trump’s tax bill, millions of student-loan borrowers would see their repayment options change. The legislation proposes eliminating existing income-driven repayment plans and replacing them with two options: the Repayment Assistance Plan and a standard repayment plan.
The Repayment Assistance Plan would allow for loan forgiveness after 360 qualifying payments based on the borrowers’ income, while the standard repayment plan requires a fixed monthly payment over a period of time set by the servicer.
The bill also repeals former President Joe Biden’s SAVE plan, an income-driven repayment plan that promised cheaper monthly payments and a shorter timeline to debt relief. The plan is blocked in court pending a final legal decision.
‘Trump accounts’
If the bill passes, parents could get extra money for their kids down the line. The tax bill includes a “Trump account,” previously called a “money account for growth and advancement,” or MAGA account. The government would put $1,000 into accounts for babies born after December 31, 2024, and before January 1, 2029. The baby must be born in the US and have a Social Security number to receive the cash.
The accounts would have tax incentives; earnings would be tax-deferred, meaning taxes on the accounts would not need to be paid right away. Withdrawals from the accounts would also be taxed at the long-term capital-gains rate, which is dependent on income and typically lower than the regular income tax rate.
Work requirements for Medicaid and SNAP
Lower-income Americans may face bigger healthcare costs or lose federal assistance benefits. The tax bill would mean significant changes for the millions who rely on Medicaid and SNAP. The legislation would mandate that states implement an 80-hour-a-month work requirement by the end of 2026 for childless adults on Medicaid without a disability.
The Congressional Budget Office previously estimated that worked requirements on Medicaid could strip coverage from over 8 million Americans over the next decade.
Additionally, the bill would extend the age range of adults subject to work requirements to receive SNAP to include adults age 55 to 64. Currently, adults age 18 to 54 without children can only receive SNAP benefits if they work at least 20 hours a week.
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