What does the One Big Beautiful Bill actually change?
Public Law 119-21 cuts taxes by about $4.3 trillion over ten years, cuts Medicaid and food aid by about $1 trillion, and borrows the difference. President Trump signed it on July 4, 2025. This page covers the law as signed, not an earlier draft.
The short version
It makes the 2017 tax cuts permanent and adds new ones. Some are aimed at workers and expire after 2028. Others, for businesses and large estates, have no end date.
It pays for part of that by tightening Medicaid and SNAP: work requirements, more frequent paperwork, and costs shifted to states. The Congressional Budget Office expects 10 million more people to be uninsured by 2034 as a result.
The cuts cover less than a third of the cost. CBO’s February 2026 estimate is $4.7 trillion added to deficits over 2026–2035, interest included.
Penn Wharton Budget Model · CBO, February 2026 · CBO, uninsured estimates
Six sentences worth reading
Passing on wealth
Section 70106
Passing on wealth
Section 70106“by striking “$5,000,000” and inserting “$15,000,000””
In 2026, a person can give away or leave behind up to $15 million before federal gift or estate tax applies. The limit rises with inflation and no longer has an expiration date. It is a tax-free limit, not a payment.
A smaller inheritance
Nothing changes. Estates below about $7 million a person were not going to owe estate tax with or without this law.
A very large inheritance
More passes on untaxed. The limit was $13.99 million in 2025 and was scheduled to drop by about half in 2026; instead it rose and became permanent.
Takes effect: Deaths and gifts after December 31, 2025. · Find this sentence in the law · IRS explanation
Health coverage
Section 71119
Health coverage
Section 71119“The individual works not less than 80 hours.”
Adults covered through Medicaid expansion must meet a monthly requirement to keep coverage. Working 80 hours is one way; school, community service, work programs or enough earnings can also count. Some caregivers and people with certain medical conditions are exempt.
Someone on Medicaid
You may have to show you meet the rule or qualify for an exemption, at application and at each six-month renewal. If the paperwork fails, coverage can end even if you were eligible.
Someone not on Medicaid
No test applies to you. The rule gives you no tax break.
Takes effect: By January 1, 2027. States could start earlier; some may get permission to start later. · Find this sentence in the law · CMS fact sheet
Money for groceries
Section 10104
Money for groceries
Section 10104“Any service fee associated with internet connection shall not be used in computing the excess shelter expense deduction under this paragraph.”
SNAP counts some household bills when it sets a benefit. Under this sentence, the internet bill no longer counts. The Congressional Budget Office expects about $10 less a month for roughly 65% of SNAP households on average over 2026 to 2034.
A household on SNAP
Fewer of your bills count, so your benefit can shrink while the bill stays the same.
A household not on SNAP
Nothing changes directly.
Takes effect: July 4, 2025. Felt as states recalculate each case. · Find this sentence in the law · CBO on SNAP
Overtime pay
Section 70202
Overtime pay
Section 70202“No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028.”
A deduction for the premium part of overtime pay, up to $12,500 a year ($25,000 for a couple filing jointly), shrinking at higher incomes. It lowers income tax only. Social Security and Medicare taxes still apply. And as the quoted sentence says, it ends.
An hourly worker with overtime
A lower income-tax bill for four tax years. If you owe little income tax already, the saving is small.
A salaried worker
Usually nothing. Most salaried jobs are not covered by federal overtime law.
Takes effect: Income earned 2025 through 2028. · Find this sentence in the law · IRS rules and limits
State and local taxes
Section 70120
State and local taxes
Section 70120“in the case of any taxable year beginning in calendar year 2026, $40,400”
People who itemize can deduct up to $40,400 of state and local taxes in 2026, up from $10,000. The larger cap phases down above roughly $505,000 of income and expires after 2029.
If you take the standard deduction
No change. About nine in ten filers take it.
If you itemize
A bigger deduction, mostly for higher-income households in higher-tax states.
Takes effect: Tax years 2025 through 2029. · Find this sentence in the law · The law, section 70120
The child tax credit
Section 70104
The child tax credit
Section 70104“by striking “$2,000” and inserting “$2,200””
The maximum child tax credit rises by $200 to $2,200 and is indexed to inflation afterward. Families must earn enough, and meet new Social Security number rules, to get the full amount.
A lower-income family
The full credit is not automatic. How much you get depends on earnings and how much of the credit is refundable.
A middle-income family
Up to $200 more per child.
Takes effect: Starts with 2025 income. · Find this sentence in the law · IRS guidance for families
What ends and what doesn’t
Ends after 2028
- No tax on tips
- No tax on overtime
- The $6,000 deduction for people 65 and older
- The car-loan interest deduction
Has no end date
- Full, immediate write-offs for business equipment and research
- The 20% deduction for pass-through business income
- The $15 million estate-tax exemption
- The lower individual tax rates first passed in 2017
- The Medicaid and food-aid cuts