President Donald Trump’s much-hyped tax reform, his so-called “big, beautiful bill” has cleared the House and is now moving to the Senate. Clocking in at more than 1,000 pages, the legislation has already ignited fierce debate over its economic impact.
Critics warn the bill could add trillions to the federal debt, which currently sits north of a staggering $36 trillion. But Treasury Secretary Scott Bessent insists the country can shoulder the burden, so long as the economy keeps growing.
“We think that we can both grow the economy and control the debt. What’s important, Bill, is that we grow the economy faster than the debt. What I would tell your viewers to focus on, what I am focused on, what Secretary Yellen was focused on is what is the total debt to GDP because we can grow our way out of this,” Bessent said
No More Tax on Tips? Service Workers Score a Win
One of the bill’s most headline-grabbing provisions: tips will no longer be taxed. That’s welcome news for millions of servers, baristas, and hospitality workers who rely on gratuities to make ends meet.
While the move could create a shortfall in government revenue, it signals a rare shift in favor of wage earners at the ground level. Whether it becomes permanent law remains to be seen but for now, it’s a clear benefit for workers in the service sector.
401(k) for Newborns? A Future-Focused Twist
Another eyebrow-raising change: the proposed creation of 401(k)-style accounts for babies. Instead of waiting until adulthood to begin investing, parents may soon be able to jump-start their child’s retirement savings from birth.
Coupled with an increase in the child tax credit to $2,500 per child, this provision aims to ease the long-term financial burdens of parenting. It’s also an attempt to instill investment habits and wealth-building tools, early in life.
SALT Cap Loosened: High-Tax States Get a Break
Residents of high-tax states like New York and California could see relief through changes to the State and Local Tax (SALT) deduction.
Previously capped at $10,000, the deduction may now expand, helping middle- and upper-income earners in “blue states” reclaim more of their state taxes on their federal returns.
That adjustment comes after years of bipartisan lobbying especially from lawmakers in states with steep local levies.
Buying American? Your Auto Loan Could Cost Less
In a nod to American manufacturing, the bill introduces a potential deduction for interest on auto loans but only for vehicles made in the U.S.
This measure not only supports domestic automakers but also creates a new financial incentive for consumers to buy American. The exact savings will vary by borrower, but it could translate into hundreds or even thousands, of dollars over time.
Medicaid Stays… for Now
Health care has always been a political lightning rod, and Trump didn’t avoid it in his new bill. He made clear that Medicaid will not be gutted, aiming to reassure the millions who depend on it.
“Basically, free health insurance,” he emphasized, will continue to be available for Americans meeting income thresholds.
Still, skepticism lingers. Critics question whether long-term funding will remain stable, especially as other programs face restructuring.
Food Stamps Face Revisions
The bill also contains modifications to SNAP, formerly known as food stamps. While exact changes haven’t been publicly detailed yet, the legislation suggests tighter eligibility rules and stricter work requirements may be on the horizon.
This could affect millions of low-income households, especially as food prices continue to rise.
Benefits with Baggage
Trump’s bill includes a wide range of middle-class perks from tax-free tips and child credits to deductions for American-made auto loans. But it comes with a price tag—and questions remain about how sustainable the plan truly is.
Supporters say it’s bold policy with long-term vision. Critics argue it’s reckless spending in disguise. Either way, if passed, this legislation could reshape how Americans save, spend, and plan for the future.
And for now, the Senate showdown looms.
