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How Big Beautiful Bill changes Medicaid, car loan interest, healthcare SALT deduction
The Big Beautiful Bill Act, once signed into law by President Donald Trump, will bring in several changes to Medicaid, healthcare, tax policy
The One Big Beautiful Bill Act, once signed into law by President Donald Trump, will bring in several changes to Medicaid, healthcare, tax policy, SALT deductions, and introduce car loan interest provisions. The legislation was passed by the House in a 218-214 vote after a tie-breaking vote by VP JD Vance pushed it through the Senate.
The bill is centered around $4.5 trillion in tax breaks enacted in 2017 during Trump's first term. It also includes allowing workers to deduct tips and overtime pay, and a $6,000 deduction for most older adults earning less than $75,000 a year. Two Republicans on Thursday joined Democrats to vote against the bill.
Read More: What's in Trump's ‘Big Beautiful’ bill that cleared Congress today
What changes will Big Beautiful Bill bring?
Medicaid changes
The bill reduces Medicaid funding by $698 billion over 10 years, introducing work requirements (80 hours/month for able-bodied adults aged 19–55) and stricter eligibility verification, effective December 31, 2026. The Congressional Budget Office (CBO) estimates 8.6–11.8 million will lose coverage by 2034, with 12,000–15,000 impacted in swing districts.
Car loan interest provisions
The bill allows taxpayers to deduct car loan interest for vehicles purchased after December 31, 2024, up to $2,500 annually for incomes under $150,000, effective for taxable years starting January 1, 2025. This targets middle-class families but excludes commercial or luxury vehicles (over $75,000).
Healthcare changes
A $50 billion fund supports rural hospitals, effective 2026, to offset Medicaid cuts, a concession secured by Sen Lisa Murkowski.
Read More: Big Beautiful Bill passed: When will Trump's tax bill go into effect?
Clean energy subsidy cuts
Tax credits for electric vehicles and renewable energy (solar, wind) end 60 days after enactment (September 2, 2025), except for nuclear plants under construction by 2028.
Tax changes
The bill permanently extends the 2017 Tax Cuts and Jobs Act’s individual and estate tax cuts, effective December 31, 2024, costing $4.5 trillion over 10 years.
No tax on tips and overtime: Tips (up to $25,000) and overtime pay (up to $160,000) for incomes under $150,000 are tax-exempt, effective January 1, 2025.
Child tax credit: Increases to $2,500 per child, starting 2025, expiring 2028.
Trump Accounts: Provides $1,000 deposits for newborns, effective 2025, expiring 2028.
SALT Deduction changes
The State and Local Tax (SALT) deduction cap rises from $10,000 to $40,000 for incomes up to $500,000, effective upon signing but reverts to $10,000 after five years (2030).
