Big Beautiful Bill Text: Deductions, SALT Cap, and Medicaid

The text of the One Big Beautiful Bill Act, formally H.R. 1 of the 119th Congress and now Public Law 119-21, is posted in full on Congress.gov.¹ Signed on July 4, 2025, the law runs more than a thousand pages and reshapes federal policy on taxes, Medicaid, ACA subsidies, immigration, energy, student loans, and defense. The sections below summarize what is actually in it.

Where To Read the Full Text

The official enrolled text lives on the bill page at Congress.gov, maintained by the Library of Congress.¹ That page lets you switch between the House-passed version, the Senate amendment, and the final enrolled law. For the tax provisions specifically, the IRS keeps a landing page with plain-language explanations and links to formal guidance.²

New Deductions for Tips, Overtime, and Car Loan Interest

Three above-the-line deductions run for tax years 2025 through 2028, available whether or not you itemize.³

Workers in occupations that customarily receive tips can deduct up to $25,000 in cash tips per year. Only tips reported to the employer for payroll tax purposes qualify, and the deduction phases out when prior-year compensation exceeds roughly $160,000, adjusted annually for inflation.

Overtime required under the Fair Labor Standards Act carries its own deduction covering the premium portion of the pay, meaning the “half” in time-and-a-half. The cap is $12,500 for single filers and $25,000 for joint filers, phasing out above $150,000 in modified adjusted gross income ($300,000 joint). Married workers must file jointly and have a Social Security number.³

Interest on a personal-use car loan is deductible up to $10,000 per year if the loan originated after December 31, 2024, and the vehicle underwent final assembly in the United States. Used vehicles and leases do not qualify. The deduction phases out above $100,000 in modified adjusted gross income ($200,000 joint), and you must list the vehicle identification number on your return.³

All three deductions expire after the 2028 tax year unless Congress extends them.

SALT Cap and Child Tax Credit

The state and local tax deduction cap rises from $10,000 to $40,000, starting in 2025, with a $20,000 cap for married couples filing separately. The cap grows 1 percent a year from 2026 through 2029. Above $500,000 in income, the $40,000 ceiling phases down at 30 cents per dollar until it hits a $10,000 floor, so top earners face the old limit.¹

The child tax credit increases to $2,500 per child. Both parents must have a Social Security number to claim it, and separate filers are ineligible.

Trump Accounts

The law creates a new savings vehicle for children and young people called Trump Accounts. Individuals can contribute up to $5,000 a year. Employers may add up to $2,500 per year toward an employee’s or dependent’s account without that amount counting as taxable wages. Funding cannot start before July 4, 2026.²

Medicaid Work Requirements

The largest single spending cut in the law comes from work requirements for adults enrolled in Medicaid through the Affordable Care Act’s expansion. Starting January 1, 2027, states covering expansion adults must require 80 hours per month of work or community engagement as a condition of eligibility. States may begin earlier. The Secretary of Health and Human Services must issue an interim final rule on implementation by June 1, 2026.¹

Compliance is checked at initial application and every six months at redetermination. States look back one to three consecutive months. If an applicant cannot demonstrate compliance and does not qualify for an exemption, the state issues a notice of noncompliance and the person has 30 days to prove they met the hours. After that, the application is denied or coverage is ended.

Exempt groups include parents and caretakers with children age 13 or younger, individuals who are pregnant or postpartum, and people classified as “medically frail,” a category that covers those who are blind or disabled, have substance use disorders, disabling mental health conditions, or serious medical conditions.

The Congressional Budget Office estimates the work requirement provisions alone will reduce federal Medicaid spending by $326 billion over ten years.⁴

ACA Marketplace Subsidy Changes

Premium tax credit eligibility narrows in several ways. Starting in 2027, a tighter “eligible aliens” definition cuts off premium tax credits for people with pending asylum applications, parole, temporary protected status, deferred action, or withholding of removal. The five-year Medicaid waiting period for certain immigrants extends into the marketplace, blocking premium tax credits during that window.¹

Beginning with plan year 2028, marketplaces must verify enrollment eligibility before advance premium tax credits can flow. The law also repeals the caps on repayment of excess advance premium tax credits, so a mid-year income increase can produce a bigger bill at tax time than under prior law.

Health Savings Account Expansions

Starting January 1, 2026, bronze and catastrophic marketplace plans count as HSA-compatible high-deductible plans even if they do not meet the traditional definition. The plans do not need to be purchased through an exchange to qualify.⁵

People in direct primary care arrangements can now contribute to an HSA and use HSA funds tax-free for their periodic membership fees. The law also permanently allows telehealth services before you meet your deductible without losing HSA eligibility, effective for plan years starting on or after January 1, 2025.⁵

SNAP Eligibility and Work Rules

Most adults on SNAP now receive only three months of benefits within any 36-month period unless they work at least 20 hours a week or participate in an approved work program. Exemptions cover people under 18 or over 65, those with disabilities, caregivers of children under 14, and pregnant individuals.

SNAP eligibility by immigration status narrows as of July 4, 2025, to U.S. citizens, U.S. nationals, lawful permanent residents, Cuban and Haitian entrants, and Compact of Free Association migrants. Most households must now document actual utility expenses rather than use a standard utility allowance, unless the household includes an elderly or disabled member.

Immigration and Border Funding

The law provides $46.5 billion for border wall construction and related infrastructure, including access roads, cameras, lighting, and sensors.⁶ More funding goes to Immigration and Customs Enforcement for staffing, enforcement operations, and removals, and to the Department of Justice to hire immigration judges and prosecute cartel and gang crimes.

A new BIDEN Reimbursement Fund (Bridging Immigration-related Deficits Experienced Nationwide) helps states recoup costs spent investigating, locating, apprehending, or temporarily detaining criminal undocumented immigrants between January 20, 2021, and September 30, 2028, and covers local court costs for prosecuting related crimes. State and local governments must comply with federal immigration laws to receive the additional funding in the package.⁶

Energy Provisions

Federal royalty rates for offshore oil and gas drop to a range of 12.5 to 16.67 percent. The Bureau of Ocean Energy Management must hold at least two Gulf of America lease sales a year through 2039, with the next sales set for March and August 2026. Cook Inlet in Alaska gets a minimum of six offshore lease sales between 2026 and 2032. Onshore, the minimum royalty rate returns to 12.5 percent, quarterly lease sales resume, and the Bureau of Land Management must lease nominated parcels within 18 months. Coal royalties drop from 12.5 to 7 percent, and at least 4 million acres of known coal reserves must be made available for leasing.⁷

The technology-neutral production and investment tax credits end for wind and solar facilities placed in service after December 31, 2027, unless construction began on or before July 4, 2026. Other eligible technologies including energy storage, hydropower, and geothermal begin phasing out in 2034. The clean hydrogen production credit ends for projects starting construction after 2027. The carbon capture credit increases from $60 to $85 per metric ton, and the clean fuel production credit runs through 2029.¹

Wind and solar projects on federal land lose their longstanding fee discounts on rights-of-way and capacity charges. The law puts $1 billion through 2034 into Bureau of Reclamation water infrastructure work and streamlines licensing for hydropower development on federal dams.⁷

Student Loan Changes

Several student loan changes take effect immediately or in the 2026–27 academic year.⁸

Borrowers no longer need to demonstrate a partial financial hardship to enroll in income-based repayment. Payments are set at 10 percent of discretionary income with forgiveness after 20 years.
Borrowers who consolidated a Parent PLUS loan can now enroll in IBR, which was previously off-limits for that loan type.
Annual loan limits for students enrolled less than full-time are cut in proportion to enrollment intensity, starting with the 2026–27 academic year.
Payments under the new Repayment Assistance Plan, which must be available by July 1, 2026, count toward Public Service Loan Forgiveness if the borrower meets all other eligibility criteria.
The Biden-era borrower defense to repayment rules are frozen, and the 2020 Trump-era rules apply for loans originated before July 1, 2035.⁸

Defense Spending and Debt Ceiling

The law includes $150 billion in mandatory defense funding directed to shipbuilding, integrated air and missile defense, munitions, and supply chain resiliency.⁹ The federal debt ceiling rises by $5 trillion to $41.1 trillion.

Smaller Provisions Worth Knowing

Starting January 1, 2026, remittance transfer providers must collect a 1 percent excise tax on transfers when the sender pays with cash, a money order, a cashier’s check, or a similar instrument.² Beginning in 2027, individual taxpayers may claim a Federal Scholarship Tax Credit of up to $1,700 for cash contributions to qualifying Scholarship Granting Organizations. Third-party network transaction reporting on Form 1099-K now triggers backup withholding only when payments to a person exceed $20,000 and 200 transactions in a calendar year.

Deficit Impact

The Congressional Budget Office estimates the law increases the federal deficit by $3.4 trillion over the 2025–2034 window.⁴ Tax provisions, which extend and expand large pieces of the 2017 Tax Cuts and Jobs Act and add the new deductions, account for roughly $4.3 trillion in reduced revenue. Spending cuts of about $1.4 trillion partially offset that cost, with the Medicaid work requirements the single largest category at $326 billion.

1
Congress.gov. H.R.1 – 119th Congress (2025-2026) – Text
2
Internal Revenue Service. One, Big, Beautiful Bill Provisions
3
Internal Revenue Service. One, Big, Beautiful Bill Act – Tax Deductions for Working Americans and Seniors
4
Congressional Budget Office. Estimated Budgetary Effects of Public Law 119-21
5
Internal Revenue Service. Treasury, IRS Provide Guidance on New Tax Benefits for Health Savings Account Participants Under the One Big Beautiful Bill
6
U.S. Senate Committee on the Judiciary. The One Big Beautiful Bill Makes America Safe Again
7
U.S. Department of the Interior. Interior Department Advances Energy Dominance Through the One Big Beautiful Bill Act
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U.S. Department of Education. Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
9
House Armed Services Committee. One Big, Beautiful Bill