President Donald Trump’s sweeping tax cut bill advanced in the U.S. Congress after passing a key House committee late Sunday, moving closer to a full House vote later this week. The legislation, a centerpiece of Trump’s 2025 economic agenda, aims to extend and expand the 2017 tax cuts while introducing new benefits for individuals, families, and businesses, offset in part by deep reductions to Medicaid and other federal programs.
Key Provisions of the Tax Bill:
Extension of 2017 Tax Cuts: The bill would make permanent the individual and estate tax rate reductions from the 2017 Tax Cuts and Jobs Act, preventing scheduled tax increases for most Americans in 2026.
Temporary New Tax Breaks:
$1,000 increase to the standard deduction and a $500 boost to the child tax credit, raising it to $2,500 per child through 2028.
A new $4,000 deduction for individuals over 65, phased out at higher incomes.
Elimination of federal income tax on tips and overtime pay for 2025–2028.
Deduction of car loan interest for vehicles manufactured in the U.S..
Business Incentives: Enhanced deductions for research and investment, a new tax break for factory construction, and a permanent increase in the pass-through deduction for small businesses from 20% to 23%.
"MAGA Accounts" for Newborns: Each newborn would receive a $1,000 deposit into a government-backed investment account.
Increased Taxes on Universities and Noncitizens: The tax on university endowment investment income would rise from 1.4% to as much as 21%. Noncitizens would lose eligibility for certain health insurance tax credits, and stricter rules would disqualify about two million children from the child tax credit.
Elimination of the $600 1099-K Reporting Rule: The bill would scrap the requirement for payment platforms to report transactions over $600 to the IRS.
Spending Cuts and Offsets:
Medicaid Reductions: At least $880 billion in cuts, mainly to Medicaid, are proposed to help finance $4.5 trillion in tax incentives. These include new work and eligibility requirements and the rollback of a 5% federal funding boost that many states use to support expanded coverage.
Other Cuts: The bill slashes funding for health, nutrition, education, and clean energy programs.
Projected Impact:
National Debt: Nonpartisan analysts estimate the bill would add $3 trillion to $5 trillion to the national debt over the next decade, on top of the current $36.2 trillion.
Healthcare Coverage: The Congressional Budget Office projects that 8.6 million Americans could lose health insurance over ten years due to Medicaid changes.
Distribution of Benefits: The largest tax reductions would go to the top 5% of earners, but most filers would see an average annual tax cut of $1,300 if the bill passes.
Political Outlook: The bill passed the House committee by a narrow 17-16 margin, with all Democrats opposed and several Republican hardliners allowing it to advance by voting "present." Debate is expected to intensify as the bill moves to the House floor, with further changes possible before a final vote.
House Speaker Mike Johnson aims to bring the bill to a full House vote before Memorial Day, while Democrats and some moderate Republicans continue to raise concerns about the impact on healthcare and the federal deficit.
Citation:
https://www.whitehouse.gov/articles/2025/04/heres-what-happens-if-trump-tax-cuts-arent-extended/
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