One of the central economic pursuits of President Donald Trump’s second term — you know, besides all those tariffs — has been the passage of the “One Big Beautiful Bill,” a measure that aims to encompass numerous goals in one piece of legislation, including the extension of the 2017 tax cuts and slashing funding for services like Medicaid and SNAP in order to offset those cuts.

After many back-and-forths, negotiations and failed votes, the bill passed in the House of Representatives by the thinnest margin possible, 215-214-1. All Democrats voted against it, joined by two Republicans, Rep. Thomas Massie of Kentucky and Rep. Warren Davidson of Ohio. An additional Republican, Rep. Andy Harris of Maryland, voted present. The bill now moves to the Senate, where it is expected to face more alterations before getting across the finish line.

While the GOP has been attempting to use the reconciliation process to avoid the bill being filibustered by Democrats, it is still expected to face intra-party dissent similar to what it faced in the House over its cuts either being too severe or not severe enough. Elon Musk, the Tesla CEO and one-time Trump advisor who led the “DOGE” government consolidation efforts, spoke out against the bill in unsparing fashion in a Tuesday post to X, decrying it as too heavy on spending.

“This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination,” Musk wrote. “Shame on those who voted for it: you know you did wrong. You know it.”

Despite the broad nature of the bill, one of its central goals remains the extension of the 2017 Trump tax cuts. Passed for the first time early in his first term, the Tax Cuts and Jobs Act, as it was officially known, was one of Trump’s signature legislative accomplishments and has generally become known as the “Trump tax cuts.” Given the nature of how that bill was passed initially, a lot of its provisions are set to expire next year if a new extension isn’t passed, so doing just that has unsurprisingly emerged as a major priority for Trump and the GOP-led houses of Congress.

The president and his allies have also tried to claim that his aggressive tariff agenda could help offset the extension of the tax cuts, although, as we’ve touched on before at CNET, that is just one of the often-contradictory stated goals for the tariffs.

Details about the budget bill Republicans have emerged in the past few weeks as it moved through the House Ways and Means Committee approval process. The Congressional Budget Office, an agency that provides estimates about the economic impacts of budgetary bills that is not affiliated with any party, estimated that the cuts called for in this bill would cost millions of people their health insurance and food benefits. The proposal initially failed to pass a vote in the House, leading to its cuts for Medicaid becoming even heavier.

All this comes in addition to the longstanding criticism from Democrats and other critics that Trump’s tax cuts disproportionately help the wealthiest Americans more than the working class. While there is truth to that argument, and to the Republican counter that the tax cuts would provide some help to taxpayers at all incomes, the new proposed cuts unveiled this week have given more weight to the notion that they will be more harmful for the least wealthy Americans.

For all the details about what extending the tax cuts will actually mean and what the current terms mean for things like Medicaid, keep reading. For more, find out if Trump could actually abolish the Department of Education.

How will the budget bill impact Medicaid?

According to the estimates from the Congressional Budget Office mentioned at the start of this piece, at least 7.6 million Americans would lose Medicaid health insurance under the provisions in the budget proposal. That’s nearly 11% of the 70 million Americans who are currently insured by Medicaid. The proposal would, among other things, require people without dependent children or a disability to meet an 80-hour-a-month work requirement to qualify for Medicaid and increase the frequency with which people will need to confirm their continued eligibility.

These new requirements were originally set to take effect in 2029 under the bill’s failed House version, but they were moved forward to 2026 in the bill’s passed version.

What would extending the Trump tax cuts mean?

While the phrase “Trump tax cuts” has become a common media shorthand for the Tax Cuts and Jobs Act, the current conversation around it might suggest that new cuts could be on the way. Although Trump has floated ideas for additional cuts, it’s important to note that extending the 2017 provisions would, for the most part, keep tax rates and programs at the levels they’ve been at since then.

So while it may be a better option than having the provisions expire — which would increase certain tax rates and decrease certain credits — extending the tax cuts most likely won’t change how you’ve been taxed the past eight years. However, some estimates have predicted that extending the cuts would boost income in 2026, with the conservative-leaning Tax Foundation in particular predicting a 2.9% rise on average, based on a combination of other economic predictions combined with tax rates staying where they are.

What would change if the Trump tax cuts expire?

Republicans contend that the tax cuts helped a wide swath of Americans, and the Tax Foundation predicted that 60% of tax filers would see higher rates in 2026 without an extension.

A big part of that has to do with tax bracket changes. The 2017 provisions lowered the income tax rates across the seven brackets, aside from the first (10%) and the sixth (35%). If the current law expires, those rates would go up by between 1% and 3%.

Income limits for each bracket would also revert to pre-2017 levels. Lending credence to the Democrats’ counterarguments, these shifts under the Trump tax cuts appeared to be more beneficial to individuals and couples at higher income levels than to those making closer to the average US income.

If you’re interested in the nitty-gritty numbers, you can check out the Tax Foundation’s full breakdown. Another point in Democrats’ favor? The Tax Cuts and Jobs Act also cut corporate tax rates from 35% to 21%, and unlike many of its other provisions, this one was permanent and won’t expire in 2026.

What would happen to the standard deduction?

This is another area in which a lot of people would be hit hard. The standard deduction lets taxpayers lower their taxable income, as long as they forgo itemizing any deductions.

For the 2025 tax year, the standard deduction is $15,000 for individual filers and $30,000 for joint filers. If the tax cuts expire, these numbers will drop by nearly half, down to $8,350 for individuals and $16,700 for joint filers.

Under the current reconciliation bill, the deduction would increase to $16,000 for individuals and $32,000 for joint filers, but only through 2028.

What would happen to the child tax credit?

The child tax credit is one of the most popular credits. Its current levels — $2,000 per qualifying child, which phases out starting at a gross income of $200,000 for single filers and $400,000 for joint filers — were actually set by the Tax Cuts and Jobs Act.

If an extension or new bill isn’t passed, next year the child tax credit would revert to its old levels: $1,000 per child, which starts phasing out at $75,000 for single filers and $110,000 for joint filers.

If the current budget bill is implemented, the credit will be upped to $2,500 per child through 2028, before dropping to $2,000 as its new permanent rate.

Do the Trump tax cuts really favor the wealthy?

Higher-income individuals and couples fared notably better with the changes the Trump tax cuts made to tax brackets. An estimate from the Institute on Taxation and Economic Policy, a left-leaning think tank, found that the poorest 20% of Americans would see only about 1% of the bill’s net tax cuts. Numerous similar estimates agree that these small benefits for the poorest taxpayers would be outweighed by rising costs caused by tariffs.

Conversely, ITEP’s estimate found that the richest 20% of US taxpayers would benefit from around 67% of the bill’s net tax cuts, with the richest 5% benefitting from half of them.

How much would extending the tax cuts cost?

Both the Congressional Budget Office and the Tax Foundation have estimated that the reconciliation bill’s tax cut extension would raise the US deficit by $4.5 trillion over the course of 10 years. The Tax Foundation also estimated that it could raise the country’s GDP to offset that number, but only by about $710 billion, or about 16% of the deficit increase.

For more, see how Trump’s tariffs might be affecting the prices of several key products in our daily tracker.