President Donald Trump's sweeping tax and spending legislation passed the U.S. House of Representatives early Wednesday in a 215-214 vote, marking a major step forward for a bill expected to reshape Medicaid, food stamps, tax policy, and border security while adding $3.3 trillion to the federal deficit. All Democrats opposed the legislation, along with two Republicans-Reps. Thomas Massie of Kentucky and Warren Davidson of Ohio-underscoring the GOP's narrow margin of success.
The bill, which Trump has dubbed the "big, beautiful bill," would enact several of his second-term campaign pledges, including eliminating taxes on tips and overtime pay. "What we're going to do here this morning is truly historic, and it will make all the difference in the daily lives of hard working Americans," House Speaker Mike Johnson, R-La., stated before the final vote.
The legislation now advances to the Senate, where it faces hurdles. Some Republican senators have already said the bill will need significant revisions before earning their support. Under reconciliation rules, the Senate can pass the bill with a simple majority.
The legislation, totaling over 1,000 pages with 42 pages of last-minute amendments, follows weeks of tense negotiations. A key breakthrough came on May 20, when Trump told House Republicans to stop negotiating and back the bill. "Failure is simply not an option," Johnson said after that meeting.
The package includes:
- Tax Policy Changes:
- Permanently extends 2017 tax cuts, disproportionately benefiting high-income households.
- Eliminates federal income taxes on tips and overtime pay.
- Increases SALT deduction cap from $10,000 to $40,000 for earners under $500,000.
- Creates new deductions for seniors, interest on American-made car loans, and "Trump" savings accounts for children under 8.
- Social Programs Overhaul:
- Introduces Medicaid work requirements beginning in December 2026.
- Adds frequent eligibility checks and discourages coverage of undocumented migrant children.
- Estimated to cause 7.6 million Americans to lose Medicaid coverage over 10 years.
- SNAP reforms shift more financial burden to states and aim to save $300 billion.
Trump reportedly warned Republicans not to go further on health program cuts. "Don't f‒‒‒ around with Medicaid," he said during a May 20 closed-door meeting, according to lawmakers present.
- National Security Spending:
- Allocates $140 billion for border enforcement, including $50 billion for a wall and $14 billion for deportations.
- Authorizes $150 billion in defense spending, including $20 billion for a proposed "Golden Dome" missile defense initiative.
- Other Provisions:
- Repeals Biden-era green energy credits and accelerates fossil fuel permitting.
- Adds education vouchers for non-public schooling.
- Taxes large university endowments.
The Congressional Budget Office said the bill would decrease resources for households in the lowest decile, while increasing resources for households in the highest decile. The CBO also projected at least $625 billion in Medicaid savings due to coverage losses.
Markets reacted negatively to the bill's projected impact on long-term fiscal stability. On Wednesday, the 30-year Treasury yield rose to 5.09%, its highest level in over a decade.
The House passage comes with a deadline looming. Treasury Secretary Scott Bessent warned lawmakers that the U.S. could breach the debt ceiling by August if the $4 trillion increase embedded in the bill isn't enacted. Speaker Johnson reiterated his goal of delivering the bill to Trump's desk by July 4.
Rep. Mike Lawler, R-N.Y., one of the bill's last holdouts, said the increased SALT deduction was essential for his support. "I would never support a tax bill that didn't adequately lift the cap on SALT, and that's what we delivered here today," he told CNBC.
