House Passes “One Big, Beautiful Bill”

he first major hurdle in the quest for a comprehensive package of provisions that will advance the Trump agenda, commonly known as the “One Big, Beautiful Bill” passed the U.S. House of Representatives in an extremely close 215-214 vote on March 22nd.  The President had met with House Republicans two days in a row as they hashed out last-minute changes to win over members from high-tax blue states who wanted a larger state and local tax deductions, and fiscal hawks who demanded more spending cuts.  At this time, the Senate is working on its own version of the package. Both chambers will then need to resolve any differences in conference and pass matching versions before the final bill can be sent to the President for his signature.

Summary: The massive legislative bill, totaling more than 1,000 pages, encompasses provisions that include almost every area of federal policy and spending, ranging from tax cuts to Medicaid to the border.  Although the bill makes spending cuts across several sectors of the federal government, the Congressional Budget Office still projects it to add $3.8 trillion to the deficit over 10 years. Some of the premier matters consist of: Medicaid where eligibility and work requirements are being expanded (currently, the financial burden for the $914 billion entitlement program is shared between state and federal governments (the feds covering around two-thirds of that cost); states to pay a larger share of the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps; the bill includes about $150 billion in new military-related spending (including $25 billion for the “Golden Dome” missile defense system); and the legislation also includes policies related to border security and immigration (with $50 billion for continuation of building of the southern border wall); .Of special note to the A/E/C community, the bill seeks to phase out clean energy tax credits initially included in the 2022 Inflation Reduction Act by 2028. Non-carbon energy projects that commence construction within 60 days after the bill is enacted and are placed in service by 2028 can still qualify for the tax credits under the bill. Nuclear power plant projects, will be eligible for investment and production tax credits when they begin construction rather than when they enter production.

Major taxing provisions include:Taxes: Under the bill, the tax cuts included in the 2017 Tax Cuts and Jobs Act will be permanently extended. Tax rates for the lowest income bracket will remain at 10 percent, gradually increasing to a 37 percent rate on top marginal earners. Also included (a) a $2,000 increase to the standard deduction for joint filers, bringing it to $32,000 through 2028, (b) earnings from overtime wages and tips tax-free, (c) it allows for a temporary deduction of up to $10,000 in car loan interest payments for American-made automobiles, and (d) also makes the $2,000 child tax credit permanent while temporarily raising the limit to $2,500 per child through 2028.

SALT Deduction: After a grueling debate that may have derailed the bill, the State and Local Tax (SALT) deduction was raised to $40,000 for people making less than $500,000 per year, starting in 2025; up from the current $10,000 limit in the 2017 Tax Cuts and Jobs Act that is set to expire at the end of this year.

Tax on Endowments:  The legislation, vastly increases taxes on institutions with large endowments on a “student-adjusted” basis. Schools with more than $2 million in their endowment per student would be subject to a 21 percent tax rate, raised from 1.4 percent under current law.

Debt Limit: The House bill proposes a $4 trillion increase to the U.S. debt ceiling, contrasting with the Senate’s budget resolution, which calls for a $5 trillion increase.