Five Things To Know About The Big Beautiful Bill

President Trump signed the Big Beautiful Bill into law on July 4th.

Most people probably understand that the major focus of the bill was to extend the tax cuts that were passed in Trump's first term that were scheduled to expire at the end of the year.

What are some other items in the bill that are worth knowing about?

It is important to understand that the BBB had to be developed and pass as a so-called reconciliation bill.

Reconciliation legislation is used to implement changes to federal spending, taxes or the debt limit to reconcile these with the fiscal priorities set forth in a budget resolution passed previously by both the House and Senate.

It can be only be used to reduce deficits, alter tax policies or modify mandatory spending programs (e.g., Medicare, Medicaid etc).

Non-budgetary issues or policy provisions that are unrelated to the budget cannot by included in the legislation due to what is referred to as the "Byrd rule" which establishes that reconciliation bills need only a majority vote (rather than 60 votes) to overcome a filibuster in the Senate.

In that the Republicans only had a 53-47 majority in the Senate and it was expected that not one Democrat would ever vote for anything President Trump wanted, it was necessary to use the reconciliation process to accomplish Trump's agenda.

Source: https://x.com/i/grok?conversation=1941805603795484973

What are five things to know about the Big Beautiful Bill?

1. All of the major tax reform in the Trump tax cuts passed in 2017 were extended permanently. These included the increase in the standard deduction (which was nearly doubled in 2018), reduction in tax rates, continuation of the child tax credit and increase in the estate tax exemption.

The BBB also increases the standard deduction by another $1,000 single/$2,000 married bringing the total standard deduction to $15,750 for single filers and $31,500 for joint filers. In a continuation of current law, seniors get an extra $2,000 if single and $3,200 if filing jointly.

In addition, seniors 65 and over will receive an extra $6,000 bonus standard deduction ($12,000 joint) for the years 2025-2028. This was to fulfill Trump's campaign promise to not tax social security benefits but which could not be done directly in the reconciliation bill due to the Byrd rule.

This chart summarizes the standard deduction amounts for seniors.

The new senior bonus deduction begins phasing out at incomes above $75,000 single/$150,000 for joint filers and is completely phased out above $250,000 joint, $175,000 single.

It is estimated that this provision will eliminate taxation of Social Security benefits for 90% of beneficiaries.

The child tax credit also increases from a $2,000 maximum credit to $2,200. 

The other big changes are No Tax on Tips (up to $25,000 for taxpayers making up to $150,000 of income single) and No Tax on Overtime (up to $12,500 for taxpayers making up to $150,000 single income) and an increase in the limit on deducting state and local incomes taxes from $10,000 to $40,000 phasing out on incomes above $250,000 single/$500,000 joint.

Despite what Democrats have claimed, you can see that the tax benefits in the bill are heavily skewed to higher middle and middle incomes rather than the rich.

2. I have stated many times in these pages that Donald Trump would never have been elected President in 2016 (or re-elected in 2024) without his strong positions on illegal immigration.

Despite attempts by the mainstream media and Democrats to attempt to demonize the mass deportation of illegal immigrants the Trump policy enjoys strong popular support in almost every poll.

It should come as no surprise that the Big Beautiful Bill contains major increases in federal funding for completion of a border wall as well as for Immigration and Customs Enforcement (ICE).

Annual funding for ICE is going to be tripled along with funding for the border wall and expanded detention center capacity.

3. The new law establishes special "Trump Savings Accounts" for any U.S. citizen born in 2025 through 2028. The federal government would deposit $1,000 into these accounts. The money would be invested in a tax-advantaged savings account that would be invested in diversified fund that tracks the U.S. stock index.

Parents and other can contribute up to an additional $5,000 per year and employers could deposit up to an $2,500 per year (included in the $5,000 annual limit) without it being considered income to the recipient.

No withdrawals would be permitted until the age of 18 when 50% could be withdrawn. Unlimited full withdrawals would be restricted until age 30.

4. Colleges and universities are going to have to adopt to a new environment in which they will not get the same benefits from the federal government they have in the past.

Student loans for graduate students (who account for more than half of the total outstanding amount of student loan debt) will be limited in the future.

There will now be a $100,000 lifetime limit for graduate school student loan debt and $200,000 for law and medical student debt.

There is also a new $65,000 lifetime limit for Parent Plus loans that parents can use to support their dependent undergraduate students.

The new law also levies a tax on university endowments based on a tiered schedule depending on the size of the endowment per student. Endowments will not be able to grow and compound tax-free as they have in the past.

Universities with endowments of $2 million or more per student will pay an annual tax of 8 percent on their investment income.

Nine U.S. universities qualify for the highest tax rate; Harvard, Yale, Princeton, MIT, Stanford, Cal Tech, Juilliard, Amherst and Pomona.

This new tax will cost Harvard alone an estimated $200 million per year based on endowment income of $2.5 billion on its $53 billion endowment fund. 

Universities with endowments of between $750,000 and $2 million per student will pay a tax on investment income of 4 percent.

This tier includes schools such as Duke, Notre Dame, Columbia and Northwestern.

The tax on endowments will phase down to 1.4% for schools for all other schools with at least 500 students.

 

5. Medicaid funding is being restricted to those who have a demonstrated need (disabled, aged, women with dependent children) and disallowing those who are able-bodied to be in the program for long term periods. This was also the rule established during the Clinton era that was later rescinded during Covid. 

The BBB also will deny matching funds and reimbursements for states like California which allow illegal immigrants to enroll for Medicaid. Medicaid is principally administered by the states. Those states that want to continue covering illegals will need to fund those dollars themselves.

The Democrats have attempted to develop a narrative about how "unfair" the Medicaid cuts are. However, Medicaid and other health programs have become the second largest item in the federal budget consuming almost $1 trillion per year as the chart below shows. Continued funding of those who are able-bodied and covering illegals threatens the benefits of those who the program was originally designed for.

Planned Parenthood will face a one year cut to all its Medicaid funding. This was originally set to be a 10-year funding cut but the Byrd rule determined that after the first year funding cut this amounted to a policy change requiring a 60 vote margin to pass.

As it is, Planned Parenthood is scheduled to lose about half of its funding (almost $800 million) over the next year.. As a result, Planned Parenthood claims it may have to close up to 200 of its locations.

Of course, Planned Parenthood could instead ask the considerable number of uber-wealthy pro-choice liberals to put their money where there mouth is and and make up the funding shortfall. 

This legislation comes on the heels of the U.S. Supreme Court deciding the week before that states had the right to not make any Medicaid payments to Planned Parenthood.

It has been a bad couple of weeks for Planned Parenthood and the abortion industry.

It has been several great weeks for President Trump.

The passage and signing of the BBB into law almost completely satisfies the major promises that Trump made in his 2024 campaign for President.

He also accomplished all of it in less than six months in office.

What is most remarkable is that he did it with such slim majorities in both the House and Senate.

What is even more remarkable is that Trump has completely reshaped the Republican party in the decade since he entered politics.

Eight years ago he struggled to get half of Republican officeholders to support his agenda.

Trump's power with Republican voters is now so strong that only those who are willing to retire from politics or those who are willing to face a vicious and expensive  GOP primary have the courage to vote against him.

A recent poll also showed that Trump would defeat Kamala Harris by a larger margin today than he did last November.

Take into account that this survey was also done before the passage of the BBB. Trump might actually poll better in the after-glow of his BBB success. 

Than again, perhaps it is because of polls like this that Trump was able to keep almost all the Republicans together to get this legislative victory.