What’s in Trump and Senate Republicans’ Tax and Immigration Bill?

The Washington Post

12:10 JST, June 29, 2025

New tax breaks. Massive spending on border security. Cuts to social safety net programs. Pullbacks on investments to fight climate change. New limits on student loans.

If it becomes law, President Donald Trump and congressional Republicans’ massive bill will reshape much of the federal government – and the U.S. economy.

The House narrowly passed the legislation in May and sent it to the Senate, which is set to take up the One Big Beautiful Bill Act as soon as Saturday. Republicans are trying to move quickly to reverse many of President Joe Biden’s legislative accomplishments and cement Trump’s legacy in the tax code, on the U.S.-Mexico border, and in generations-old anti-poverty programs.

The legislation would devote hundreds of billions of dollars to finishing Trump’s border wall, fortifying maritime border crossings, outfitting the Defense Department and more. It would extend the tax cuts that were one of the signature legislative achievements of Trump’s first term, create new savings accounts for newborns and fulfill some, but not all, of the president’s campaign promises.

The Republican negotiations over the bill are far from over. The Senate overhauled the legislation in ways that some House lawmakers find unrecognizable. Trump and Senate leaders are banking on the House accepting those changes, even if lawmakers in the lower chamber have concerns over myriad issues, including the social safety net and national debt.

The GOP is using the budget reconciliation process to shepherd the measure, which allows them to dodge a Democratic filibuster in the Senate and pass it on party lines.

Here’s what’s in the Senate version of the proposal released overnight.

Extend the 2017 Trump tax cuts

Trump’s 2017 Tax Cuts and Jobs Act cut taxes for individuals of nearly all income levels, concentrating most of the benefits among the wealthiest earners and corporations. The business tax cuts are permanent, but the individual portions expire at the end of the year. So if Congress doesn’t act, tax rates will go up on most households. The Republican bill would permanently extend the lower rates for individuals.

Increase the standard deduction

The Tax Cuts and Jobs Act doubled the standard deduction, which is the baseline amount of income filers can collect tax-free. This legislation would preserve that policy and add to it, increasing the deduction by up to $2,000 for married couples filing jointly and $1,000 for single filers, to $32,000 for couples and $16,000 for individuals.

Cuts to Medicaid

To meet budget goals, Republicans are making deep cuts and instituting eligibility restrictions on Medicaid, the federal health insurance program for low-income individuals and people with disabilities.

The Senate implements work requirements and new cost-sharing structures and puts strict limits on Medicaid provider taxes, duties that states charge medical providers as a roundabout way of collecting more federal Medicaid dollars. Some in the GOP wish to use that policy to force states to jettison immigrants from benefits rolls.

Rural hospital bailout fund

To soften the blow of the provider tax limitations, the Senate created a $25 billion fund to stabilize rural hospitals and health clinics. The fund would begin in 2028 when the new provider tax policies begin, and sunset in 2032.

A little SALT

The bill quadruples the cap on the state and local tax deduction, or SALT, which lets filers write off the amount they paid in local taxes from their federal tax bill. But that increase would only last a little while. After five years, the SALT cap would snap back down to $10,000.

Making states pay for SNAP

The legislation would cap future expansion of SNAP, the Supplemental Nutrition Assistance Program formerly known as food stamps. It would also pass on more of the cost for administering the program to state governments, potentially forcing local officials to decide whether to cut benefits or dig into their state and municipal budgets. States with higher rates of improper payments would be required to shoulder up to 15 percent of benefits costs.

Today, states and the federal government split the costs of running SNAP’s operations evenly. Beginning in 2027, the federal government would only cover a quarter of the cost.

Increase the child tax credit – for some

The child tax credit is a tax break for filers with children. The Republican measure would increase the credit to $2,200 per child, from $2,000, then would link it to inflation. But not every family can qualify: The legislation limits eligibility to parents or guardians with Social Security numbers, essentially requiring claimants to be citizens or immigrants who have obtained valid Social Security numbers. That would mostly exclude noncitizen parents from claiming the credit on behalf of a child who is a citizen.

A border wall, other barriers and immigration restrictions

The Senate version designates nearly $85 billion for the Trump administration’s border and immigration crackdown. That is about half of what the House proposed for border and immigration funding.

The Senate would spend $6.5 billion to complete the wall along the U.S.-Mexico border and other fortifications, including at maritime crossings. More than $54 billion would go to building and maintaining detention centers to house and transport families of deportees.

New taxes on colleges and universities

The legislation aggressively taxes income generated by the endowments of colleges and universities. Current law imposes a 1.4 percent tax on those institutions.

This bill creates a new system that would set varying tax rates depending on the size of the endowment per enrolled student:

Savings accounts for newborns

The proposal would give newborn babies a $1,000 savings account that the legislation calls a “Trump account.” (A previous version dubbed them “money account for growth and advancement,” or a MAGA account.)

Parents or beneficiaries could contribute $5,000 each year to that account until the beneficiary is 31 years old. The idea mirrors a pitch from Democratic Sen. Cory Booker (New Jersey) for “baby bonds.”

No tax on tips

Trump campaigned heavily on ending taxes on tips, and now that policy is in the bill. The legislation would allow a tax deduction for the total amount of tipped income received.

It contains some guardrails to prevent “highly compensated employees” from claiming their earnings as tips and specifically identifies food service, hair care, nail care, aesthetics, and body and spa treatments as professions eligible to receive the deduction.

No tax on overtime

Another of Trump’s campaign promises, this provision would exempt overtime wages from taxes through a new deduction. The legislation wouldn’t allow deduction of overtime wages from tips or for “highly compensated employees,” and requires filers to use a Social Security number when claiming the deduction, deeming most undocumented immigrants ineligible.

No tax on car loan interest

The bill would allow purchasers of American-made cars to deduct up to $10,000 in car loan interest payments for four years – an idea Trump talked about on the campaign trail and then returned to as his tariffs began to bite the auto industry. For tax filers earning more than $100,000 (or $200,000 for married couples filing jointly), the loan interest deduction would phase out by $200 for every $1,000 of additional income.

A bonus deduction for seniors

Trump promised last year to end taxes on Social Security benefits. The bill doesn’t include that provision, but it would add an extra $6,000 to the standard deduction for people over 65 years old. The policy would taper off as a recipient’s income increased.

Billions for defense, including Trump’s ‘Golden Dome’

There is roughly $158 billion in the bill for the Defense Department, spread over several priorities: $25 billion for the munition and defense supply chain, $329 billion for shipbuilding, and $34 billion for missile defense and space capabilities – that’s partially for Trump’s “Golden Dome” continental missile defense system.

Sell federal land

The bill would require the Bureau of Land Management to sell between a quarter and half a percent of the agency’s land holdings to build new housing. It specifically exempts national parks, national monuments, national recreation areas, wilderness areas, other wildlands and contracted grazing areas.

Repeal Biden student loan forgiveness

The legislation would save $320 billion over 10 years by repealing the Biden administration’s student loan forgiveness program and making other changes to loan repayments.

Tax credits for home schooling or private school

The bill includes up to $4 billion per year in tax credits that benefit people who donate to organizations that help families pay for private-school tuition or home schooling. It would create a 100 percent tax credit for donations to scholarship-granting organizations, with taxpayers fully reimbursed for their donations when they file their taxes.

Rescind money to fight climate change

The proposal would gut elements of Biden’s signature 2022 climate law, the Inflation Reduction Act. It would eliminate a federal tax credit of up to $7,500 that consumers can receive for buying an electric vehicle. Republicans would also quickly phase out incentives for the production of clean energy, such as wind and solar power.

New oil, gas and coal production

The Natural Resources Committee would require the federal government to immediately begin selling leases for oil and gas drilling in the Gulf of Mexico and in protected Alaskan wildlands. It would also force the Interior Department to approve more coal production and reduce regulations to make it cheaper to extract.

Auction the spectrum

The electromagnetic spectrum is necessary for everything from wireless technologies to military communications and radars. The legislation would renew the Federal Communications Commission’s authority to auction off bands of spectrum that the Commerce, Science and Transportation says could raise $85 billion over 10 years.

Cut protections for federal workers

The legislation would require an audit of dependents of federal employees on government health insurance plans. Earlier editions of the measure would have forced new federal employees to choose between accepting an at-will classification that would make it easier to be fired or putting more of their salary toward retirement, and recalculated worker retirement benefits. Those provisions were removed.

Raise the debt ceiling

The debt ceiling sets the amount of money the federal government can borrow to pay for expenses already incurred. The government technically eclipsed the limit at the end of 2024, but the Treasury Department is taking “extraordinary measures” to put off the need to take on more debt. But those measures will expire sometime in August. Treasury Secretary Scott Bessent on Friday refused to answer questions on an exact date, a break from previous administrations. The Senate bill would raise the debt limit by $5 trillion.