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The '''One Big Beautiful Bill Act (OBBBA)''', formally signed into law by [[President Donald Trump]] on July 4, 2025 (Public Law 119-21), is a sweeping legislative package that restructured the American tax code, social safety net, and federal spending priorities. 

Often referred to as the "Big Beautiful Bill," it represents the core of the administration's second-term economic agenda, combining massive tax extensions with significant cuts to federal spending in health and nutrition programs.

=== Key Tax Provisions ===
The OBBBA focused on making the temporary provisions of the 2017 [[Tax Cuts and Jobs Act]] permanent while introducing new, targeted tax breaks.

* '''Permanent Tax Rates:''' The 2017 individual income tax rates, which were set to expire at the end of 2025, are now permanent. The top marginal rate remains at '''37%'''.
* '''No Tax on Overtime and Tips (Temporary):''' Effective through 2028, workers can deduct up to $12,500 ($25,000 for joint filers) in qualified overtime pay and up to $25,000 in tip income annually.
* '''The Senior Deduction:''' Individuals age 65 and older can claim an additional '''$6,000 deduction''' (phased out for incomes over $75,000).
* '''SALT Cap Increase:''' The deduction for State and Local Taxes (SALT) was increased from $10,000 to '''$40,000''' for households earning under $500,000, though this reverts to $10,000 in 2030.
* '''Child Tax Credit:''' The credit was increased to '''$2,200 per child''' through 2028 and becomes a permanent $2,000 credit thereafter.



=== Spending Reductions & Reforms ===
To offset the $4.5 trillion in tax revenue losses, the OBBBA implemented some of the largest spending cuts in U.S. history to social programs.

* '''Medicaid:''' Imposed a '''12% cut''' to federal Medicaid spending. States are no longer permitted to use "provider taxes" to fund their share of Medicaid, and co-payments for some expansion populations were raised to $35 per service.
* '''SNAP (Food Stamps):''' Work requirements were expanded to include adults up to age 64 (previously 54). Additionally, households with children over age 14 must now comply with standard work requirements to receive benefits.
* '''Education:''' Imposed new caps on federal student loans for graduate students and phased out various clean energy tax credits from the 2022 Inflation Reduction Act.

=== Defense and Border Security ===
While the bill cut social spending, it significantly increased funding for national security and immigration enforcement.
* '''The "Warrior Dividend":''' A one-time '''$1,776 payment''' to eligible active-duty military members, funded through repurposed housing allowance stipends.
* '''ICE Expansion:''' Funding for Immigration and Customs Enforcement (ICE) is set to increase to over '''$100 billion by 2029''', making it the most well-funded law enforcement agency in the federal government.
* '''The Border Wall:''' Allocated over $150 billion for continued border wall construction and mass deportation operations.



=== Economic Impact and Projections ===
The Congressional Budget Office (CBO) and other fiscal analysts have provided varying projections on the law's long-term effects:
* '''Deficit Increase:''' The OBBBA is projected to add roughly '''$3.4 trillion to $4.1 trillion''' to the national debt over the next decade.
* '''GDP Growth:''' Analysts expect a short-term boost to GDP growth (approx. +0.2% per year through 2027), though long-term growth may slow due to high interest rates driven by the increased national debt.
* '''Customs Duties:''' The act relies heavily on increased '''tariffs''' to replace lost income tax revenue, with customs duties revenue increasing by over 150% in late 2025.

=== See also ===
* [[Economy of the United States]]
* [[Trump Accounts Explained]]
* [[Tariffs]]
* [[Federal Government of the United States]]

[[Category:Economy of the United States]]
[[Category:Federal Government of the United States]]
[[Category:Foundational Topics]]