Republicans are setting up a celebration of HR1 (the One Big, Beautiful Bill) for the Fourth of July weekend while many of the most impactful parts of the measure will not be felt by the American people until the next president and congress is seated in 2028.

The delayed impact of the One Big Beautiful Bill Act (HR1) closely mirrors the strategy used in the 2017 Tax Cuts and Jobs Act (TCJA), particularly through the use of sunset provisions. In 2017, the Trump administration made corporate tax cuts permanent while setting individual tax breaks to expire after 2025, a move that kept the bill’s official cost lower while creating future pressure on lawmakers to extend the cuts. HR1 repeats this playbook by delivering immediate tax relief and spending cuts, especially for corporations and wealthy households, while delaying some of the most consequential changes until after 2028.

The expiration dates embedded within the legislation, which passed the Senate by the narrowest of margins with Vice President JD Vance’s tie-breaking vote in July 2025, will force lawmakers to make consequential decisions about extending, modifying, or allowing major policy changes to lapse. These sunset provisions affect everything from business tax deductions to family tax credits, creating potential fiscal cliffs that could reshape the American tax code and federal spending priorities.

Key provisions facing expiration include the enhanced Child Tax Credit dropping from $2,200 back to $2,000 in 2029, 100% bonus depreciation for business investments ending between 2030 and 2031, and research and development expensing reverting to amortization requirements in 2030. The temporary increases to standard deductions will also disappear after 2028. 

But that’s just the beginning. 

The One Big Beautiful Bill Act would slash federal revenues by approximately $4.5 trillion while reducing government spending by $1.2 trillion, ultimately adding $3.9 trillion to the $36 trillion national debt.

The legislation would also raise the debt ceiling by $5 trillion, marking the largest such increase in U.S. history, to allow the Treasury Department to borrow more to pay the bills that have already been incurred.

All of this paves the way for the One Big Beautiful Bill Act (OBBBA) to deepen the divide between those who benefit from its $4.5 trillion in tax cuts and those who shoulder the burden of its $1.2 trillion in spending reductions. Ultimately, it amounts to a transfer of wealth from younger generations to older ones, from the poor to the wealthy. 

High-Income Earners and Wealthy Families

Ultra-wealthy households will be the beneficiaries of the OBBBA’s tax structure. The top 1% of earners  receive an average tax cut of almost $70,000, representing 21% of all tax cut benefits. Households in the top 95th to 99th percentiles receive the largest proportional benefits, with tax cuts averaging nearly $21,000 annually or 4.3% of their after-tax income.

The legislation permanently increases the estate tax exemption to $15 million per individual ($30 million for married couples), indexed for inflation. This represents a substantial increase from the current exemption levels and prevents the scheduled reversion to approximately $7 million that would have occurred without the legislation.

A Senate HR1 proposal to temporarily raise the cap on state and local tax (SALT) deductions from $10,000 to $40,000 for five years. The increased deduction would apply to households earning under $500,000, aiming to offer financial relief to homeowners in high-tax states.

Large Corporations and Defense Contractors

Major corporations benefit significantly from the permanent extension of the 2017 corporate tax rate reduction from 35% to 21%. Defense contractors particularly stand to gain from increased spending on air and missile defense, munitions, and border security. 

Technology giants like Alphabet, Amazon, Apple, Meta, and Tesla could collectively receive $75 billion in tax breaks if Congress reinstates the research and development expensing provision that was repealed under the 2017 tax law. The OBBBA permanently allows immediate deductibility of R&D expenses rather than five-year amortization for businesses with annual gross receipts of $31 million or less.

Small Businesses and Pass-Through Entities

Small businesses structured as pass-through entities (S corporations, LLCs, and sole proprietorships) benefit from the permanent 20% qualified business income deduction. The legislation also provides permanent increases to the employer-provided child care credit, with small businesses receiving a 50% rate for qualifying expenses with a $600,000 maximum credit.

Bonus depreciation allowing businesses to deduct 100% of equipment costs in the first year continues through December 31, 2029. This provides substantial cash flow benefits for businesses making capital investments during the remainder of Trump’s second term.

Families with Children (Temporary Benefits)

Middle-income families with children receive a temporary boost through the enhanced Child Tax Credit, which increases from $2,000 to $2,200 per child from 2025 through 2028. However, an estimated 4.5 million children become ineligible under new requirements that both parents have a Social Security number.

The legislation creates “Trump Accounts,” tax-deferred savings accounts for “eligible individuals under the age of eighteen” and includes U.S. citizen children born from 2024 through 2028 receiving an initial $1,000 federal contribution. These accounts allow up to $5,000 in annual contributions until the child reaches 18.

Tipped Workers and Service Industries

The tip and overtime provisions in H.R. 1 (the “One Big Beautiful Bill Act”) would temporarily allow many tipped and overtime workers to deduct those earnings from their federal taxable income, but the details and duration are important to understand.

Service workers in restaurants, salons, and cafes can deduct tax worth up to $25,000 in tip income, with income limits that phase out the benefit for higher earners between 2025 through 2028. Tips and overtime pay would still be subject to Social Security and Medicare payroll taxes, as well as state and local income taxes unless states enact their own exemptions. 

This only applies to people who earn enough to owe federal income tax in the first place. Workers with very low incomes, who already pay little or no federal income tax, would see little or no benefit.

The Senate bill allows a deduction for overtime pay, capped at $12,500 per individual or $25,000 for married couples filing jointly, from 2025 to 2028. The deduction begins to phase out once individual earnings exceed $150,000 and $300,000 for joint filers. 

After 2028, the deduction would end unless Congress acts to extend it.

Low-Income Americans and Medicaid Recipients

The bottom 20% of income earners face the harshest impacts, with their resources dropping by about 3.9% of income, or approximately $1,600 per year on average. These households receive minimal tax benefits, only about $160 on average, while losing substantial government assistance.

An estimated 7.8 to 10.9 million Americans will lose health insurance coverage due to Medicaid cuts, with 4.8 million low-income adults without dependents losing coverage due to work reporting requirements. The legislation requires states to reverify Medicaid eligibility for expansion adults every six months, creating additional administrative burdens that will cause many to lose coverage.

Medicaid spending faces cuts of $1.02 trillion over ten years, with expansion adults who maintain coverage facing copayments of up to $35 per visit on most services. 

While the Trump administration continually says immigrants are draining programs like Medicaid and SNAP by not paying into it, undocumented immigrants are not eligible for these programs and data shows that eligible immigrant households actually participate in SNAP at lower rates than U.S.-born households.

Among poor households with children, 62% of all-U.S.-born households participated in SNAP compared to only 51% of immigrant households where all members were eligible and 47% of mixed-eligibility households.

Under existing federal law, undocumented immigrants are already prohibited from accessing most major federal programs like SNAP, Medicaid (except emergency care), TANF, and SSI. Access to social programs is essentially limited to WIC benefits and emergency medical care. 

However, many lawfully present immigrants currently do have access to various federal programs after meeting certain conditions, a reality that HR1 seeks to eliminate through sweeping restrictions that would strip benefits even from refugees, asylees, and other humanitarian immigrants who are currently eligible.

HR1 represents an unprecedented assault on immigrant access to social services by eliminating SNAP eligibility for refugees, asylees, parolees, and those with suspended deportation, restricting Medicare to only citizens and permanent residents while cutting off elderly humanitarian immigrants, and imposing new verification requirements that will reduce Medicaid access for those unable to promptly prove citizenship status. The legislation goes beyond restricting undocumented immigrants to also bar many lawfully present noncitizens from ACA premium subsidies, including asylum seekers and those with Temporary Protected Status.

Rural Communities and Healthcare Providers

Rural hospitals face a devastating $58 billion reduction in Medicaid funding over ten years, while the proposed Rural Health Transformation Fund provides only $25 billion, less than half of what’s needed.

Healthcare workers could lose up to half a million jobs due to cuts in Medicaid funding and insurance coverage, while restrictions on Planned Parenthood funding could force clinic closures.

Students and Educational Institutions

College students face barriers to accessing higher education as the legislation proposes tighter eligibility rules for Pell Grants that could remove nearly 10% of current recipients and reduce award amounts for most participants. The Congressional Budget Office estimates these changes could affect over 6 million low- and middle-income students.

Federal education funding faces a $12 billion reduction, with Trump’s budget proposal eliminating many K-12 and higher education programs. The administration has already frozen $6.8 billion in education funds nationwide.

Clean Energy Sector and Environmental Workers

Renewable energy companies face a triple blow: elimination of wind and solar tax credits by 2028, a new excise tax on projects, and accelerated phaseouts of existing incentives. The American Clean Power Association estimates the new tax alone will cost clean energy businesses an additional $4-7 billion by 2036 and increase consumer energy prices by 8-10%.

An estimated 1.75 million construction jobs in clean energy could be eliminated, representing over 3 billion work hours and $148 billion in lost annual wages and benefits. The North American Building Trades Union called the legislation potentially “the biggest job-killing bill in the history of this country”.

“In some cases, it worsens the already harmful trajectory of the House-passed language, threatening an estimated 1.75 million construction jobs and over 3 billion work hours, which translates to $148 billion in lost annual wages and benefits,” the statement said. “These are staggering and unfathomable job loss numbers, and the bill throws yet another lifeline and competitive advantage to China in the race for global energy dominance.”

Younger Generations and Future Taxpayers

Future generations bear the long-term costs of the legislation’s projected $3.3 trillion addition to the federal deficit over ten years. The Congressional Budget Office estimates that total interest payments on the debt will soar, potentially consuming more than a third of federal revenues in coming decades and reducing the government’s ability to respond to future crises.

Younger workers face reduced investment in education, infrastructure, and climate resilience that would benefit their long-term economic prospects. The legislation’s focus on immediate tax cuts for current earners comes at the expense of investments that would build long-term economic competitiveness.

Middle-Income Families

Middle-income households ($50,000-$100,000 annually) receive modest benefits averaging $1,800 in tax cuts, or about 2.4% of their after-tax income. The Senate bill provides temporary increases of $1,000 for single filers, $1,500 for heads of household, and $2,000 for married joint filers from 2025-2028. The base amounts are $15,750 for single filers, $23,625 for heads of household, and $31,500 for married joint filers. However, these benefits may be offset by reduced government services, higher healthcare costs, and increased long-term debt burdens that could affect their children’s future opportunities.

Seniors and Retirees

Older Americans receive some targeted benefits, including a temporary “bonus” standard deduction of up to $6,000 for those 65 and older who earn no more than $75,000 per year (phasing out at higher income levels). However, seniors who rely on Medicaid for long-term care or those with modest incomes may face reduced access to healthcare services due to program cuts.

This “bonus” expires after 2028.