The One Big Beautiful Bill: What it actually does to your taxes and healthcare
Welcome to the Tax the Rich series, where we explain tax policy in plain English because the people writing the laws are counting on you to ignore them.
We've spent the last four emails building a foundation. If you missed those, you can view them all here. We covered a NYC tax on empty luxury apartments, the difference between progressive and regressive taxes, the Fair Tax Act (a proposed 30% national sales tax sitting in Congress), and tariffs as a consumption tax already in effect and already hitting your grocery bill.
Today we're talking about something that's actually law, the One Big Beautiful Bill Act. It was signed July 4, 2025. It touches almost everything we've covered in this series. And I bet you can guess who named it. He loves adjectives, especially those that can be understood at a 1st grade reading level.
What Is It
The One Big Beautiful Bill Act (OBBBA) is a budget reconciliation package that passed the House 218-214 and the Senate 51-50. It primarily does three things: cuts taxes, cuts spending on social programs, and increases spending on border security and defense.
It passed along party lines. Not a single Democrat voted for it.
The Tax Cuts and Who Benefits
The OBBBA makes permanent most of the 2017 Tax Cuts and Jobs Act, which was set to expire at the end of 2025. It also adds some new provisions:
The standard deduction bumped to $15,750 for single filers and $31,500 for married filing jointly
No tax on tips, which allows tipped workers to deduct their tip income, though this phases out at higher incomes (and doesn’t actually do a whole lot). We may need a full post on this later.
No tax on overtime. Up to $12,500 ($25,000 for joint filers) in overtime pay can be deducted.
State and Local Sales Tax (SALT) deduction cap raised from $10,000 to $40,000 for households earning under $500,000. This is a big deal for people in high-tax states like California and New York
Child Tax Credit increased from $2,000 to $2,200 per child, indexed for inflation going forward
Estate tax exemption raised to $15 million per individual ($30 million for married couples). This one is specifically for the wealthy, since the average American will never have an estate anywhere close to this
In short, middle-income households are estimated to see tax cuts of $500–$1,500 per year while the wealthiest households benefit the most, and the lowest-income households, the ones who don't owe much federal income tax to begin with, see the least benefit from income tax cuts, and in some cases end up worse off overall when you factor in what else this bill does.
The Spending Cuts & Who Gets Hit
Those tax cuts cost money. To partially offset them, the OBBBA cuts about $1 trillion from Medicaid and ACA marketplace coverage over ten years.
Medicaid is the government health insurance program for low-income Americans, along with children, pregnant women, people with disabilities, and seniors who need long-term care. It is not Medicare, which covers people 65 and older regardless of income. Medicaid is specifically for people who can't afford private coverage.
The OBBBA cuts Medicaid by adding:
Work requirements — adults on Medicaid expansion must document that they're working, volunteering, or in school at least 80 hours per month or lose coverage
More frequent eligibility checks — states must redetermine eligibility every six months instead of annually, doubling the administrative burden
New cost sharing — some Medicaid recipients will face copays they didn't have before
The work requirements sound reasonable, but here's what actually happens in practice. When Arkansas tested a similar requirement, thousands of people lost coverage not because they stopped working, but because of paperwork problems and reporting errors. People who were working lost their insurance because they didn't file the right form correctly.
The CBO, the nonpartisan Congressional Budget Office, estimates these provisions will result in roughly 7.5 to 11.8 million people losing health coverage by 2034.
And rural hospitals are getting f*cked. The American Hospital Association projects rural hospitals will lose $50.4 billion in federal Medicaid funding over ten years. Hospitals that lose Medicaid revenue, then face surges in uncompensated emergency room care from newly uninsured patients, start closing. Rural hospital closures are already a crisis, and this accelerates it.
Oftentimes the states that overwhelmingly vote in favor of Republicans get the most screwed by their policies. This is further evidence showing why Republicans rely on culture wars and social discourse to push through their policies. Hate is the only emotion they can confidently rely on in order to get folks to vote against their own interests.
The Through Line
If this series has had a theme, it's this: who pays and who benefits.
The OBBBA cuts taxes, primarily benefiting middle and upper income households. It pays for those cuts by reducing healthcare access, primarily for lower income households.
A Few Things Worth Knowing
The no-tax-on-tips and no-tax-on-overtime provisions expire in 2028. They were popular campaign promises and are real benefits while they last, but they're not permanent.
The OBBBA adds an estimated $3.3 trillion to the national debt over ten years, per CBO. Tax cuts that aren't offset by equal revenue increases do that.
There's a provision called "Trump Accounts,” a $1,000 government-funded investment account for babies born between 2025 and 2028. It's an interesting idea and a fun detail, even if the name is on brand.
What's Next
I want to keep this series going. Reply and let me know what tax topic you want covered next. We could go deeper on Medicaid specifically, talk about the national debt and what it actually means for you, or get into something more directly relevant to running a small business. I’m also exploring some more policies being floated in blue states to show what more left-leaning trax policies look like. Let me know.
Best,
Braden
