Late last week during early morning hours, the U.S. House of Representatives passed the hotly debated budget reconciliation bill, H.R. 1 – One Big Beautiful Bill Act, with a narrow vote of 215-214. Representatives Baumgartner and Newhouse from Washington State voted in favor of the bill, while DelBene, Jayapal, Larsen, Perez, Randall, Schrier, Smith and Strickland all voted against it. The bill now moves to the Senate for consideration.
The bill includes $715 billion in cuts to Medicaid and $300 billion to food assistance programs over the next 10 years. Individuals earning $1 million or more per year would receive nearly $90,000 annually in tax cuts, while families earning under $50,000 per year would get less than $1 a day in relief. The budget reconciliation bill falls short of what is needed to reduce annual federal deficits that are projected to grow from $2.2 trillion a year in 2025 to more than $2.5 trillion in 2035. It also includes a provision to raise the debt ceiling by another $4 trillion to allow the federal government to keep borrowing through the 2026 midterm election.
Medicaid – Within the budget bill are new work requirements for childless adults without disabilities. To qualify, the bill says, they would be required to work at least 80 hours per month beginning December 2026.
Medicaid is particularly important to seniors, serving some of the most vulnerable Americans including 860,000 who rely on it to pay for nursing home care and another 5.6 million who receive home care services and support. Some 11.5 million Medicare beneficiaries also rely on Medicaid to help pay for prescription drugs, medical co-pays, and other medical services.
The nonpartisan Congressional Budget Office (CBO) analysis found it would strip health coverage from nearly 9 million people with Medicaid and Affordable Care Act plans. The bill also fails to extend the premium tax credits set to expire this year that help more than 22 million people buy marketplace plans.
Increased Cap on SALT Tax – The bill increases the deduction limit for state and local taxes (SALT) from $10,000 cap to $40,000 for married couples with incomes up to $500,000.
SNAP Benefits – Reforms have also been added to the Supplemental Nutrition Assistance Program (SNAP), the government program used by over 40 million low-income Americans. The new bill requires states to contribute more to the program, which is also partially funded by the federal government, and adds work requirements for able-bodied SNAP enrollees.
No Tax on Overtime or Tips – The bill makes good on one a campaign promise of ending taxes on tips and overtime pay. Both were included in the bill. The bill would also allow Americans to deduct interest on car loans for US-made cars only.
No Taxes on Social Security – Although campaign promises leading up to the presidential election were “No taxes on Social Security”, the bill fell short in delivery. It did increase the IRS standard deduction to $4000 for those 65 and older.