What is President Trump’s One Big Beautiful Bill all about? | Explained-OxBig News Network

The story so far: U.S. President Donald Trump signed into law the ‘One Big Beautiful Bill’ on U.S.’ Independence Day on July 4, 2025. This happened a day after the House of Representatives cleared the passage of the legislation proposing sweeping tax cuts, altering access to social security programs and doing away with provisioning incentives for clean energy production, among other things.

While the Opposing Democrats argue the bill effectively introduces tax breaks for the wealthiest populace offset by cuts in healthcare and food security, the Republicans contend it would unleash “massive economic growth” and avert “waste, fraud and abuse” of federal spending. The proposed legislation albeit with some alterations from Senate now returns to the House of Representatives for the final passage.

Why are tax cuts being opposed?

At the centre of the contention is the bill proposing to make permanent President Trump’s 2017 cuts across several income brackets. This also includes rates for the highest income bracket from the present 39.6% to 37% as per the version of the bill presented to the House of Representatives. Thus, when assessing tax liability for incremental income across successive brackets (say, up to $11,600 and then from $11,601-$47,500, and so forth), reducing rates across the board would translate to lowered tax liability. Conversely, this would also imply that higher earners also benefit with their liability from income across all brackets being reduced.

However, the proposed legislation also enhances the standard deduction by $1,000 for individual taxpayers, $1,500 for heads of households and $2,000 for married couples until 2028, that is, until the expiry of President Trump’s tenure. Additionally, OBBB seeks individual taxpayer be allowed to forego up to $25,000 in taxes they earn in tips, and $12,500 in overtime pay. This is provided the individual income does not exceed $150,000. The two provisions combined have been suggested to particularly benefit the working class. 

Broadly, concerns in the realm exist on two fronts, namely, loss of taxable income – especially the wealthier quartile and the potential impact on income, especially the working class. According to the U.S.-based Yale School of Management’s recent analysis, the budget passed on July 1 would add $3 trillion in debt between 2025 and 2034. This would be about 0.84% of the GDP. Furthermore, analysing the bill proposed to the Senate, the lab estimated the lowest quartile’s income would decrease by 2.5% in contrast to the higher quartile witnessing a 2.4% growth.

What happens to social security schemes for food and medical needs?

Concerns here relate to the introduction of stricter eligibility requirements potentially leading to exclusion from health and food security programmes.

U.S.’ Medicaid is a joint federal and state health insurance program to help people with limited income and resources cover their medical costs. The OBBB introduces an eighty-hour work requirement to be eligible for the programme. Additionally, re-enrolments, which would now also entail establishing eligibility, would now have to be done every six months and not annually. Thus, as observed by U.S.-based health news publication KFF, it would translate enrolees to filing the additional paperwork more often.

The White House argues the eligibility requirement would strengthen Medicaid for those who rely on it, such as pregnant women, children, seniors, people with disabilities, and low-income families. Enforcing work requirements, it held, would only eliminate “waste, fraud and abuse”. However, a KFF study from 2023 observed that 64% of adults below 65 years enrolled in Medicaid were either working full or part-time. 8% were either retired or unable to find work, whilst the remainder were not working due to caregiving responsibilities, illness or disability, or school attendance. The eligibility requirement thus would be of direct consequence to the latter segment. Furthermore, the bipartisan Congressional Budgetary Office (CBO) estimated the amendment would leave 11.8 million people without insurance in 2034.

A similar paradigm extends to the food security programme, the Supplemental Nutrition Assistance Program (SNAP), which helps low-income families to supplement their grocery budgets. At present, the federal government bears the entire cost of facilitating the benefits and splits the cost of administering the program with states, which operate it. Herein, OBBB envisages continued support to states based subject to error rates, or the measure of accuracy of each state’s eligibility and benefit determinations, being below 6%. Anything beyond would call for states to bear 5-15% of their costs.

Think tank Center for Budget and Policy Priorities’ research note (June 30) observes that most of the errors are “unintentional mistakes by state agencies or families”. It added, “Error rates fluctuate, sometimes significantly, from year to year. There is also a substantial lag between the end of a fiscal year and when error rates for that year are finalised.” The amendment thus has prompted fears about cut in spending in the realm as well.

What does it do to clean energy?

OBBB seeks a sharp reduction in accessing former President Joe Biden era’s 30% tax credit for building wind and solar projects, among other clean energy projects, that were projected to run until 2032. The bill requires that the projects be ready to operate before 2028 to avail of any subsidy. Lena Moffitt, Executive Director at the advocacy group Evergreen Action held the proposed legislation could culminate in the collapse of planned clean energy projects. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA) further observed, “Now many of the brand-new factories will be forced to shut down and lay off thousands of workers, gutting communities that were finally seeing the kind of industrial revival rural America needs and handing an untimely and strategic victory to China.” 

Refuting the assertions, the White House holds the proposed legislation “unleashes American energy, refills the Strategic Petroleum Reserve, and repeals the Green New Scam policies” to reduce the cost of living for Americans.

The proposed legislation would also put an end to taxpayers availing breaks of up to $7,500 on clean energy vehicles. Essential to recall, President Trump and Tesla CEO Elon Musk, also a vocal Republican supporter, had voiced their disagreement on ending the subsidies. 

Is that the only reason why the two sparred recently?

The other point of contention concerns the proposed legislation’s debt ceiling. OBBB seeks to increase the government’s borrowing limit of $36.1 trillion, which it was projected to touch later this year by another $5 trillion. It is imperative to note that the Congressional Budget Office’s (CBO) latest estimates, based on January 2025 baseline budget projections, hold that the bill would increase deficits by $3.4 trillion between 2025 and 2034. All in all, this prompts concerns about a potential fall in receipts and, therefore, an increase in the maximum amount that can be borrowed. “What’s the point of a debt ceiling if we keep raising it?” he posted on social media platform ‘X’. Furthermore, responding to a separate post, the Tesla CEO held that all he was seeking is to not “bankrupt America”.

In fact, Mr. Musk vowed to form a new ‘America Party’ if the bill was passed.

President Trump has maintained that the billionaire industrialist’s opposition primarily stemmed from the termination of the EV mandate. “Elon would probably have to close up shop and head back home to South Africa,” he posted on social media. Furthermore, he sought if his Dept of Government Efficiency, which he once co-headed, should investigate Mr. Musk. “Big Money to be saved,” he wrote.

Is there anything India should keep an eye out for?

The bill passed by the Senate seeks to impose 1% excise tax on all remittance transfers. 

The U.S.’ share in overall remittances reaching India stood at 27.7% in 2023-24. However, it is poignant to note that an analysis of the RBI’s sixth round of remittance surveys for the same period had pointed to the UAE being the biggest employer of migrant workers from India. However, as enumerated in the analysis, Indian migrants in the U.S. being primarily employed in white-collar jobs explained their higher remittances notwithstanding the smaller diaspora.

OBBB’s initial version sought to impose a 5% tax on such remittances, which was brought down to 3.5% before the latest bill sought to keep it at 1%.

Ajay Srivastava, founder of the India-based Global Trade Research Initiative told The Hindu that at the erstwhile 3.5% rate, there might have been a tendency to find a workaround but not with the latest 1% rate. He explained that most people may eventually think of it as an inevitable tax and move on. However, assessing the broader paradigm, Mr. Srivastava stated, “The U.S. is trying to scrap the last dollar from everywhere it can, maybe by increase in the base rate or via import duty, to make a small dent in their deficit, debt.”

Mr. Srivastava further apprehended the rationale for imposing the tax in the first place. “Indian diaspora pay all taxes like U.S. citizens pay so this tax is morally reprehensible,” he argued. The GTRI founder held the recurrent revision in rates aalso made the overall paradigm “questionable”.