By Jasmine Li

The House passed the GOP tax-and-spending megabill on Thursday, two days after the Senate approved it, sending the measure to President Trump's desk in time to make his July 4 deadline. Here are the key items in the bill.

Extending tax cuts

The bill would extend most of Trump's 2017 tax cuts, which are set to expire Dec. 31, for all income groups. It continues current tax rates, with a top rate of 37%. The proposal would also extend deductions for closely held businesses and expand the estate-tax exemption to $15 million per person. For corporations, immediate deductions for certain research expenses and equipment purchases would be made permanent.

Boosting defense funding

The bill would appropriate about $157 billion in military spending, including $29 billion for shipbuilding and maritime capabilities, $25 billion for the Golden Dome missile defense project and $25 billion for munitions.

More funding for immigration enforcement

The proposal allocates more than $150 billion for immigration enforcement, including a $29.85 billion appropriation for Immigration and Customs Enforcement, and $46.5 billion for Customs and Border Protection to build a border wall. It also adds $45 billion for the detention of migrants and $13.5 billion in grants to pay state and local governments for immigration enforcement efforts.

Ending clean-energy credits

Under the final proposal, which was crafted in the Senate, tax credits for purchasing electric vehicles would end Sept. 30. Wind and solar projects would qualify for current tax incentives only if they go online by Dec. 31, 2027, while hydrogen projects qualify if construction begins by Jan. 1, 2028. The bill would also impose new taxes on wind and solar projects completed after 2027 if they use certain foreign components, while adding a tax credit for metallurgical coal suitable for steelmaking.

Tax deductions for tips, overtime and car loans

Some of the tax changes Trump proposed on the campaign trail are in the bill -- with income limits. That includes a "no tax on tips" deduction of up to $25,000 per person, and a "no tax on overtime" deduction capped at $12,500 for individuals or $25,000 for married couples. The bill also proposes a $10,000 deduction for auto-loan interest on new U.S.-made cars.

An alternative to 'no tax on Social Security'

The bill proposes a new $6,000 per-person tax deduction for seniors. The maximum deduction starts phasing down once income surpasses $75,000 per person, or $150,000 for joint filers. Then it phases out completely once income crosses $175,000 per person or $250,000 per couple.

Cutting Medicaid spending

The bill proposed a new work requirement of 80 hours a month for adults and limits on Medicaid "provider taxes," a maneuver that allows states to secure more federal funds. The maximum rate that states charge hospitals would gradually decline to 3.5% from 6% in states that expanded Medicaid under the 2010 Affordable Care Act, starting in 2028. For the 10 states that didn't expand Medicaid, provider taxes would be frozen in place. The final proposal would also create a $25 billion fund for rural hospitals.

Raising the debt ceiling

The bill proposes increasing the debt limit by $5 trillion. Lifting the borrowing cap allows the U.S. to borrow money to cover its expenses.

Lifting the SALT cap

The bill would raise the state-and-local-tax deduction cap to $40,000 with a 1% increase every year through 2029, then revert it back to $10,000 in 2030.

Having states pay more for food-aid programs

The measure proposes having states chip in for SNAP payments for the first time, beginning in fiscal 2028. States with a payment error rate of 6% or higher would be required to contribute, and they will pay between 5% and 15% depending on the error rate. Starting fiscal 2027, states will also be required to pay 75% of administrative costs for SNAP, up from 50%. The bill has a work requirement exemption for people caring for children under 14 years old.

Raising the child tax credit

The proposal would raise the child tax credit to $2,200 from $2,000 starting in 2026, index it for inflation and extend it permanently. The credit would be denied to households with U.S. citizen children if their parents don't have Social Security numbers.

Transforming the student-loan repayment program

The Senate proposed terminating income-contingent repayment plans, including President Joe Biden's stalled SAVE plan, and creating two new plans for loans paid out after July 1, 2026. The two options: a standard repayment plan, where borrowers pay a fixed amount each month over 10 to 25 years, or the Repayment Assistance Plan, which would tie payments to the borrower's adjusted gross income. The bill would also end the Grad Plus loan program for graduate students and impose a $65,000-per-student cap on Parent Plus loans.

New limits on Pell Grant eligibility

The plan will provide $10.5 billion in additional Pell Grant funding to prevent a shortfall, while adding new eligibility restrictions for students. The new plan would no longer award Pell Grants to students from higher-income families, as well as those receiving full-ride grants and scholarships, while expanding eligibility to students in short-term workforce programs.

Hiking taxes on college endowments

The bill proposes taxing private colleges' endowments at 8% for the wealthiest schools, then at tiers of 4% and 1.4% at other applicable schools. The highest rate in current law is 1.4%. Schools with fewer than 3,000 students would be exempt.

Regulating artificial intelligence

The House earlier proposed a 10-year moratorium on state-level AI regulation. The final Senate bill tweaked the provision, making the moratorium a condition for states to access a new $500 million federal broadband fund -- with some exceptions.

High-profile provisions that were left out

A "revenge tax" proposal was removed from the bill after the Trump administration said the Group of Seven economies had reached an agreement to exempt U.S.-based multinational companies from certain corporate taxes. A provision to sell off federal lands was also dropped by Sen. Mike Lee (R., Utah) amid opposition from colleagues.

More than three dozen provisions were found to be in violation of budget reconciliation rules by the Senate parliamentarian. These include proposals that would have limited the use of Medicaid and Medicare funds for transgender care; restricted courts' ability to issue preliminary injunctions or temporary restraining orders against the government; and deregulated gun suppressors.

Write to Jasmine Li at jasmine.li@wsj.com

(END) Dow Jones Newswires

July 03, 2025 16:09 ET (20:09 GMT)

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