HR 1 Explained: Taxes, Medicaid, SNAP, Student Loans, and More

The One Big Beautiful Bill Act, known as HR 1, is the sweeping federal law President Donald Trump signed on July 4, 2025, that permanently extends the 2017 tax cuts, adds new deductions for tips and overtime, imposes work requirements on Medicaid and expands them for SNAP, cuts food assistance by roughly $300 billion, pours $170.7 billion into immigration enforcement, overhauls federal student loans, and phases out most clean energy tax credits. Enacted as Public Law 119-21 through the budget reconciliation process, the law is projected by the Congressional Budget Office to add $3.4 trillion to the federal deficit from 2025 through 2034, the net result of $4.5 trillion in tax cuts against $1.1 trillion in spending reductions.¹ Here is what it changes, area by area.

What Changes for Your Taxes

The core move is permanence. The individual rate brackets, expanded standard deduction, repeal of personal exemptions, and $2,000 child tax credit from the 2017 Tax Cuts and Jobs Act were all set to expire; HR 1 makes them permanent. The child credit is temporarily bumped to $2,500 through 2028, then indexed for inflation.²

Several new deductions run through 2028. Tip income and the overtime-premium portion of wages become deductible from taxable income. Interest on loans for U.S.-assembled vehicles is deductible up to $10,000. Seniors get an extra $4,000 added to the standard deduction.²

The estate tax exemption is permanently raised to $15 million, indexed for inflation, starting in 2026.² A new savings vehicle called a Trump Account becomes available on July 4, 2026. Parents can open one for a child, the government contributes a one-time $1,000, and annual contributions are capped at $5,000. No withdrawals are allowed before the child turns 18.³

The state and local tax deduction cap, the flashpoint between the House and Senate, was raised from $10,000 to $40,000 starting in 2025 ($20,000 for married couples filing separately). The cap grows 1% annually through 2029. Above $500,000 in income, the deduction phases down at a 30% rate until it hits the old $10,000 floor. In 2030, the cap reverts to $10,000.⁴

Health savings accounts get more room too. HSA contributions are permanently allowed for people who use pre-deductible telehealth, and starting January 1, 2026, bronze and catastrophic marketplace plans become HSA-compatible.³

For businesses, 100% bonus depreciation and immediate expensing for domestic R&D return through 2029. The Section 199A pass-through deduction is made permanent and lifted from 20% to 23%. International rates shift as well: the GILTI inclusion rate falls, the foreign-derived intangible income deduction rises, and the base erosion and anti-abuse tax rate drops.²

A new 1% excise tax on certain physical-instrument remittance transfers takes effect January 1, 2026.³

What Changes for Medicaid Coverage

CBO projects 11.8 million people will lose Medicaid coverage over ten years under HR 1, with 4.8 million of those losses tied specifically to new work requirements.⁵

States that expanded Medicaid under the Affordable Care Act must require non-exempt adults ages 19 through 64 to report at least 80 hours per month of work, job training, education, or community service. Caregivers and people with serious medical conditions are exempt. States must first check payroll and other existing data before asking enrollees to submit documentation, and anyone flagged as non-compliant gets a 30-day notice before losing coverage.⁵ The federal implementation deadline is January 1, 2027, with possible extensions through December 31, 2028, for states showing good-faith effort. Nebraska started early, on May 1, 2026, with the first coverage terminations scheduled for August 1, 2026.⁶

Renewals get more frequent. Beginning January 1, 2027, states must redetermine eligibility for the expansion population every six months instead of every 12.⁶ Retroactive coverage tightens: one month for expansion enrollees and two months for others, down from 90 days.⁷ As of October 1, 2026, federal Medicaid dollars can no longer be used to cover people outside a narrow group defined by the statute based on immigration status.

To help states stand up the new work-reporting systems, the law appropriates a one-time $200 million for fiscal year 2026, half divided equally among all states and half distributed to expansion states based on how many residents fall under the requirement.⁸

Section 71113 also blocked federal Medicaid reimbursements for one year, through July 3, 2026, to 501(c)(3) reproductive health providers that perform abortions outside the Hyde Amendment exceptions and received more than $800,000 in Medicaid payments in 2023. The provision effectively targeted Planned Parenthood. A federal district court initially enjoined it, but the First Circuit reversed in December 2025, holding the provision a lawful use of Congress’s taxing and spending power. Twenty affiliated clinics had closed by late 2025.⁹¹⁰

What Changes for SNAP

HR 1 delivers the deepest SNAP cut in the program’s history, reducing federal food-assistance spending by roughly $300 billion through 2034.¹¹

For the first time, states pay a share of the food benefits themselves. The share starts at 5% in fiscal year 2028 and rises to 15%, 20%, or 25% depending on the state’s payment error rate. Federal funding for program administration is cut in half.¹¹

Existing time limits on benefits for able-bodied adults without dependents are expanded to cover adults ages 55 through 64 and parents whose youngest child is 7 or older. State waiver authority is sharply restricted, limited to counties where unemployment exceeds 10%. CBPP estimates the expanded work rules will cut food assistance for 3.2 million adults in an average month, with about 1 million children and 250,000 elderly or disabled household members losing benefits as a knock-on effect. The Thrifty Food Plan’s data-driven adjustments are permanently frozen, projected to lower benefits for everyone by about $7 per month in the near term and $15 per month by 2032 to 2034. SNAP eligibility ends for an estimated 120,000 to 250,000 lawful residents, including refugees, asylees, and trafficking survivors.¹¹

Student Loans and Pell

If you take out a new federal student loan on or after July 1, 2026, only two repayment structures exist. One is a tiered standard plan with fixed payments where the term runs from 10 to 25 years based on the amount owed. The other is a new income-driven option called the Repayment Assistance Plan, which sets payments based on adjusted gross income, waives monthly interest that exceeds the payment, includes a principal match for lower-income borrowers, and forgives any remaining balance after 30 years of payments.¹²

Existing borrowers keep access to their current plans through June 30, 2028. After that, their choices narrow to the two older income-based plans and the new RAP. The SAVE plan is being ended, and PAYE and ICR are phased out by mid-2028.¹³¹²

Loan availability shrinks. Effective July 1, 2026, Graduate PLUS loans are eliminated. Graduate and professional students face new caps: $50,000 per year and $200,000 total for select professional degrees like medicine, law, and pharmacy; $20,500 annually and $100,000 in aggregate for other graduate programs. Parent PLUS is capped at $20,000 per year per child, with a $65,000 aggregate per dependent undergraduate. Undergraduate limits themselves are unchanged, though part-time students see proportional reductions.¹³

Pell Grants are expanded to cover short-term workforce training programs lasting 8 to 15 weeks, also starting July 1, 2026. Programs participating in the Direct Loan program must pass a new earnings test comparing graduates’ earnings to those of people without a credential at the same level.¹³ The Biden-era Borrower Defense to Repayment and closed-school discharge regulations are shelved for a decade, with the 2020 rules restored for loans originated before July 1, 2035.¹⁴

Immigration Enforcement and New Fees

HR 1 provides $170.7 billion in additional immigration and border enforcement funding, all to be spent by September 30, 2029. The largest pieces are $51.6 billion for border wall construction and maintenance, another $5 billion for Customs and Border Protection facility upgrades, $45 billion for new detention centers (a 308% annual increase in the detention budget, expanding capacity to an estimated 116,000 to 125,000 beds), $29.9 billion for ICE operations including 10,000 new officers over five years, $7.8 billion for 3,000 new Border Patrol agents, and $14 billion for state and local support that includes a new $10 billion State Border Security Reinforcement Fund.¹⁵

New fees hit nearly every immigration benefit. Asylum applicants owe a $100 filing fee plus $100 annually while their application is pending. Work permits for asylum seekers cost $550. A new $250 visa bond applies to all nonimmigrant visas and is refundable only on proof of compliance after the visa expires. Noncitizens apprehended between ports of entry face a $5,000 fee, as do those removed in absentia.¹⁵ USCIS implemented the fees through an interim final rule effective May 29, 2026.¹⁶

The number of immigration judges is capped at 800 effective November 1, 2028, and employment authorization for Temporary Protected Status recipients is limited to one year.¹⁵

Energy Credits Ending Soon

Several Inflation Reduction Act clean energy tax credits are being cut short. Electric vehicle credits under Sections 30D and 45W end as early as September 30, 2025. The residential solar credit expires after December 31, 2025. The clean hydrogen production credit is limited to projects that begin construction before the end of 2027. Technology-neutral clean electricity credits begin phasing out in 2032, but projects that do not start construction within 12 months of enactment must be placed in service by December 31, 2027, to receive full value.¹⁷ FTI Consulting estimated more than 100 gigawatts of planned utility-scale wind and solar projects could be jeopardized by the accelerated phase-outs.¹⁸

On the other side of the ledger, HR 1 reverts onshore oil and gas royalty rates to pre-IRA levels, reinstates noncompetitive leasing, mandates at least 30 offshore lease sales in the Gulf of Mexico over 15 years and at least six in Alaska’s Cook Inlet, requires four lease sales in the Arctic National Wildlife Refuge within a decade, and resumes leasing in the National Petroleum Reserve-Alaska. Over $5 billion in unobligated IRA funds for Department of Energy programs are rescinded and replaced with a new $1 billion Energy Dominance Financing Program for loan guarantees. Project sponsors can now pay a fee equal to 125% of anticipated agency costs to lock in a one-year deadline for Environmental Impact Statements and a 180-day deadline for Environmental Assessments.¹⁷

New Vehicle Fees

Owners of electric vehicles pay a new $250 annual Highway Trust Fund fee, and hybrid owners pay $100.¹⁹ CBO projects the fees will bring in about $64 billion over the budget window.²⁰ Unlike prior HTF revenue measures, the law does not direct 20% of new revenues to mass transit.²¹

Rural Health Transformation Program

To partly cushion the Medicaid cuts for rural providers, the Senate added a Rural Health Transformation Program, doubling it from $25 billion to $50 billion in the final version. CMS distributes $10 billion per year from fiscal 2026 through 2030. The first $25 billion is split equally among states with approved applications; the second $25 billion is allocated by rural population, number of rural health facilities, and needs of hospitals serving many low-income patients.²² States must use funds for at least three of ten authorized purposes, including chronic disease management, provider payments, clinical workforce recruitment with five-year service commitments, IT and cybersecurity, and substance use treatment. The District of Columbia and U.S. territories are excluded, and CMS decisions on applications cannot be reviewed administratively or judicially.²³

Defense Spending

HR 1 adds $156.2 billion in mandatory defense funding for fiscal year 2025, distributed across broad categories rather than named weapons programs. Major allocations include $29.2 billion for shipbuilding, $25.4 billion for munitions and supply chain resiliency, $24.4 billion for integrated air and missile defense, $16.3 billion for military readiness, $16 billion for scaling low-cost weapons into production, $14.7 billion for nuclear forces, $12.7 billion for Indo-Pacific Command capabilities, $8.6 billion for air superiority, and $7.5 billion for quality-of-life spending for military personnel. The money is available for obligation through September 30, 2029, and may be spent through fiscal 2034.²⁴

How It Passed

HR 1 moved through reconciliation, which meant the Senate could pass it with a simple majority. The House cleared its version 215–214 on May 22, 2025, with one member voting present.¹⁸ The Senate passed an amended version 50–50 on July 1, 2025, with Vice President JD Vance casting the tie-breaking vote after a vote-a-rama that ran more than 24 hours.²⁵ The House accepted the Senate’s changes 218–214 on July 3, 2025, and the president signed the bill the next day.²⁶

One provision that did not make it into the final law is worth flagging because it drew wide attention. The House-passed bill contained a 10-year moratorium blocking state laws that restrict or regulate AI systems in interstate commerce. During the Senate vote-a-rama, a bipartisan amendment from Senators Marsha Blackburn and Maria Cantwell stripped the provision by a 99–1 vote, so states retain their authority to regulate AI.²⁷ The final law also raises the debt ceiling by $4 trillion under Title XI.²⁸

1
Congressional Budget Office. Budgetary Effects of Public Law 119-21
2
Tax Foundation. Big Beautiful Bill House GOP Tax Plan
3
Internal Revenue Service. One Big Beautiful Bill Provisions
4
Bipartisan Policy Center. SALT Deduction Changes in the One Big Beautiful Bill Act
5
Center for Health Care Strategies. A Summary of National Medicaid Work Requirements
6
Center on Budget and Policy Priorities. How States Will Implement HR 1’s Medicaid Policies
7
Brownstein Hyatt Farber Schreck. Summary of Health Care Provisions in the One Big Beautiful Bill Act
8
Georgetown University Center for Children and Families. Implementing Costly Medicaid Work Reporting Requirements
9
KFF. Litigation Challenging the 2025 Budget Reconciliation Law’s Provision Blocking Federal Medicaid Payments to Planned Parenthood
10
PBS NewsHour. Appeals Court to Hear Arguments on Law Cutting Medicaid Reimbursements for Planned Parenthood
11
Center on Budget and Policy Priorities. House Reconciliation Bill Proposes Deepest SNAP Cut in History
12
NPR. Student Loans Guide: Education Changes and Repayment Plan
13
Congressional Research Service. Student Loan Provisions in P.L. 119-21
14
Federal Student Aid. Federal Student Loan Program Provisions Under the One Big Beautiful Bill Act
15
American Immigration Council. Big Beautiful Bill Immigration and Border Security
16
Federal Register. USCIS Immigration Fees and Related Procedures Required by HR1 Reconciliation Bill
17
Bipartisan Policy Center. One Big Beautiful Bill Act Energy Provisions
18
FTI Consulting. H.R. 1 Energy Transition
19
ARTBA. House Republicans Advance New Highway Trust Fund Revenue Measure
20
Committee for a Responsible Federal Budget. Breaking Down the One Big Beautiful Bill
21
National League of Cities. 10 Things for City Leaders to Know About H.R. 1
22
KFF. A Closer Look at the $50 Billion Rural Health Fund
23
Centers for Medicare and Medicaid Services. Rural Health Transformation Program Overview
24
Congressional Research Service. Defense Provisions in P.L. 119-21
25
U.S. Senate. Roll Call Vote 119-1-00372
26
Committee for a Responsible Federal Budget. 2025 Reconciliation Tracker
27
MWC Law. President Signs the One Big Beautiful Bill
28
New York State Association of Counties. House Budget Cuts Billions in Funding to New York