Tax cuts and mass deportations: what to know about Trump’s ‘big, beautiful’ spending bill

Extend tax cuts enacted during Trump’s first term

After taking office in 2017, Trump signed the Tax Cuts and Jobs Act, which lowered taxes and increased the standard deduction for all taxpayers, and generally benefited high earners more than most. Those provisions are set to expire after this year, but the Big Beautiful Bill makes them permanent, while increasing the standard deduction by $1,000 for individuals, $1,500 for heads of households and $2,000 for married couples, albeit only through 2028.

An array of new tax write-offs – but only while Trump is president

The bill creates many new tax exemptions, several of which stem from promises Trump made while campaigning last year. Taxpayers will be able to write off income from tips and overtime, and interest made on loans for cars assembled in the United States. People aged 65 and over are eligible for an additional deduction of $4,000, provided their adjusted gross income does not exceed $75,000 for single filers or $150,000 for married couples. But all of these incentives expire at the end of 2028, right before Trump’s term as president ends.

An expanded Salt deduction

In addition to paying federal taxes, residents of many states must also pay state and local taxes (Salt). Prior to 2017, they could deduct these payments on their federal returns, but the tax law Trump signed that year capped these deductions at $10,000, an amount taxpayers in states with high Salt burdens such as New York, New Jersey and California often exceed. House Republicans who represent districts in those states spent weeks demanding the Big Beautiful Bill increase that limit, and succeeded: the bill passed by the House raises the deduction to $40,000 per year.

Money for mass deportations and a border wall

As part of Trump’s plan to remove undocumented immigrants from the country, Immigration and Customs Enforcement (Ice) will receive $45bn for detention facilities, $14bn for deportation operations and billions of dollars more to hire an additional 10,000 new agents by 2029. More than $50bn is allocated for the construction of new border fortifications, which will probably include a wall along the border with Mexico. And immigrants hoping to claim asylum or otherwise seek relief through immigration courts will face a host of new fees that advocates say may keep them out of the country altogether.

A much higher budget deficit

All these tax breaks and other spending come with a major cost. Congress’s non-partisan fiscal scorekeeper, the Congressional Budget Office (CBO), estimates the bill’s tax policies alone will add nearly $3.8tn to the federal deficit.

A potentially potent restriction on federal courts

Trump’s supporters routinely attack judges who rule against him, and the bill includes a provision that prohibits federal courts from enforcing contempt citations related to temporary restraining orders or preliminary injunctions. At least one federal judge appears ready to issue such a citation in a high-profile immigration case involving the administration. Erwin Chemerinsky, the dean of the University of California, Berkeley’s school of law, wrote that judges could get around the provision for future cases, but hundreds of existing court orders covering all sorts of subjects – including the many lawsuits against Trump’s policies – would become unenforceable.

Republicans have attempted to cut down on the bill’s cost by slashing two major federal safety net programs: Medicaid, which provide healthcare to poor and disabled Americans, and the Supplemental Nutrition Assistance Program (Snap), which helps people afford groceries. Both are in for funding cuts in the bill, as well as new work requirements. The Urban Institute thinktank, based on an analysis of a similar policy, believes these could remove as many as 5.2 million people from Medicaid, while the left-leaning Center on Budget and Policy Priorities forecasts about a quarter of Snap recipients could leave the program, or nearly 11 million people.

More benefits for the rich than the poor

Wealthier taxpayers appear set to receive more benefits from this bill than poorer ones. Taxpayers with the highest incomes will see their household resources increase by 4% in 2027 and 2% in 2033, largely due to the extended tax cuts, the CBO estimated earlier this week. The poorest tax payers would see their resources drop by 4% in 2033, largely due to the downsized benefit programs, according to the office.

The end of Biden’s green energy incentives

The bill will phase out tax incentives created by Congress during Joe Biden’s presidency meant to encourage consumers and businesses to use electric cars and other clean energy technology. Credits for cleaner cars will end this year and incentives for wind and solar energy will only be available for projects that begin construction 60 days after the bill’s enactment and enter service by 2028. Clean energy manufacturing tax credits will be axed by 2031, while Americans seeking to upgrade their homes to cleaner or more energy efficient appliances will get no further subsidy after the end of this year.

An increased debt ceiling

The US government’s authority to borrow, known as the debt limit, will increase by $4tn. Earlier this month, the US treasury secretary, Scott Bessent, predicted the government would hit the limit by August, at which point it could default on its debt and spark a financial crisis.