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By Kate Nalepinski
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President Donald Trump's sweeping legislative package, dubbed the "Big, Beautiful Bill," has passed a vote in the House of Representatives.
The vote sets the stage for weeks of debate in the Republican-led Senate, before the fiscal package can be signed into law.
The legislation will modify U.S. tax and spending policies while introducing some new reforms aimed at families and small businesses.
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The vote passed by a narrow margin of 215-214, with only two Republicans joining all members of the Democratic Party voting in opposition.
Reps. Thomas Massie of Kentucky and Warren Davidson of Ohio voted against the measure, while Rep. Andy Harris, R-Md. voted present.
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What Is the 'Big, Beautiful Bill'?
The 1,116-page legislation, which Trump described as "the most beautiful piece of policy ever written," bundles tax reforms, budget cuts and immigration enforcement funding.
Key provisions include permanent individual tax rate reductions, expanded deductions for small-business owners and an enhanced child tax credit.
The legislation also mandates stricter requirements for Medicaid recipients and introduces new rules that affect immigrants who complete remittance transfers, or money transfers sent to family or friends in their home country.
According to a summary from the U.S. House Committee on Ways and Means, the bill expands "tax relief for middle class and low-income Americans."
Tax Reform
The bill extends Trump's 2017 tax cuts, which were due to expire in 2026, and introduces several new tax code adjustments. The bill prevents a 22 percent tax hike for average taxpayers, as previously reported by Newsweek.
New Tax Deductions
Under the bill, overtime wages, as well as tips for service workers, will not be taxed.
Per the Associated Press, the bill includes a temporary boost in the standard deduction: a $1,000 increase for individuals, or bringing it to $16,000 for individual filers, and $2,000 for joint filers, bringing it up to $32,000. The deduction reduces the amount of income that is actually subject to income tax.
Further, people purchasing a car can temporarily deduct up to $10,000 in car loan interest payments if they buy an American-made vehicle, under the provision.
Small businesses are also eligible to subtract 23 percent of qualifying income from taxes.
Child Tax Credit
The child tax credit will increase to $2,500 per child and indexes it to inflation. The change is functional through 2028, then reverts to $2,000.
Further, children under 8 are eligible for $1,000 in federal contributions for parents to open "Money Accounts for Growth and Investment," or a "MAGA" savings account.
What Is the SALT Deduction Cap?
The state and local tax (SALT) deduction cap permits taxpayers to write off a portion of state and local taxes on their federal returns, per Jackson Hewitt Tax Services.
The bill sets the cap on the state and local tax deduction at $40,000. It's a step up from the previously set $10,000 cap. An earlier version of the fiscal bill only raised it to $30,000.
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