The latest tax bill from the Trump administration is packed with cuts, but the real pain—spending reductions—won’t hit until after the 2028 election. Lawmakers have structured the legislation to lock in tax breaks while delaying fiscal tightening, ensuring that voters feel the benefits now while the consequences come later.
The bill includes $3.7 trillion in tax cuts over the next decade, according to the Joint Committee on Taxation. The biggest beneficiaries are individual taxpayers, as the legislation makes Trump’s 2017 tax cuts permanent. The corporate tax rate, already lowered to 21%, remains untouched, while capital gains brackets are adjusted to favor long-term investors.
The standard deduction, which doubled under the 2017 Tax Cuts and Jobs Act, is now permanently set at $30,000 for married couples and $15,000 for individuals. A temporary boost adds $1,500 in the first year and $1,000 in subsequent years, but only for four years starting in 2025. This provision alone will add $1.3 trillion to the deficit.
The bill also includes targeted tax breaks for specific groups. Service industry workers will see tax-free tips, while auto buyers can deduct up to $10,000 in car loan interest, but only if the vehicle was assembled in the U.S.. Seniors earning less than $75,000 will receive a $4,000 deduction on Social Security wages, doubling the previous benefit.
While tax cuts dominate the bill, spending reductions are delayed until 2028. The legislation calls for $1.7 trillion in spending cuts, but those reductions won’t take effect until after the next presidential election. This strategic timing ensures that voters feel the tax relief now, while the fiscal tightening happens under a future administration.
The bill also rolls back Biden-era clean energy tax credits, eliminating the $7,500 electric vehicle subsidy and cutting incentives for solar and wind projects. These changes help offset some of the tax cuts, but the overall package still adds trillions to the deficit.
Republicans argue that the bill will boost economic growth, preventing tax hikes on 62% of Americans who would otherwise see increases if the 2017 cuts expire. However, critics warn that delaying spending cuts creates a fiscal time bomb, leaving the next administration to deal with ballooning deficits.
The fight over this bill is far from over. With Memorial Day approaching, House Republicans are pushing for quick passage, while Democrats vow to block what they call an irresponsible tax giveaway. The final version may see adjustments, but the core structure—tax cuts now, spending cuts later, is unlikely to change.
Sources:
https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/