Trump's 'Big Beautiful Bill' Passes House: What It Means For Taxes, Student Loans, Medicaid And More - Invesco QQQ Trust, Series 1 (NASDAQ:QQQ), SPDR S&P 500 (ARCA:SPY)

President Donald Trump’s “big beautiful bill” has been approved by the House, marking a significant step towards its potential impact on Americans’ finances.

What Happened: The bill, passed on Thursday, is a comprehensive piece of legislation that extends the President’s 2017 tax cuts and introduces substantial alterations to the tax system, reported Business Insider. The bill also contains measures related to Medicaid and the Supplemental Nutrition Assistance Program (SNAP).

The bill covers a range of tax measures, such as eliminating taxes on tips and overtime pay, introducing a $4,000 tax deduction for seniors earning under $75,000 a year, and raising the child tax credit from $2,000 to $2,500 through 2028. It also makes Trump's 2017 tax cuts permanent and increases the state and local tax deduction limit from $10,000 to $40,000.

The bill proposes ending income-driven student loan repayment plans, including Biden's SAVE plan, and introducing two new options: the Repayment Assistance Plan and a standard repayment plan.

Low-income Americans on Medicaid and SNAP are set to see major changes, including a monthly 80-hour work requirement for certain childless Medicaid recipients by 2026 and expanded SNAP work requirements for adults aged 55 to 64.

The bill proposes “Trump accounts,” offering $1,000 government deposits for babies born between Dec. 31, 2024, and Jan. 1, 2029, along with tax incentives and reduced long-term capital gains tax rates for parents.

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Why It Matters: The bill, which is part of Trump’s tax-and-spending package, has been narrowly passed by the House with a 215-214 margin. The bill may boost the economy short term, but experts warn it could raise fiscal deficits due to tax cuts and increased defense spending.

However, the bill has also been criticized for potentially exacerbating wealth inequality. A report by Oxfam America suggests that the proposed tax cuts would disproportionately benefit the affluent, further stacking the odds against ordinary citizens. Meanwhile, an economics professor analyzed that the top 10% of households would receive approximately $3.1 trillion in tax cuts over a decade.

The 10-year Treasury yield dipped to 4.53% on Thursday, but remains elevated, reflecting investors’ increased demand for compensation due to fiscal risk.

Stock markets showed mixed reactions, with the S&P 500, tracked by SPDR S&P 500 SPY, edging 0.039% higher to close at $583.09 on Thursday, while Invesco QQQ Trust, Series 1 QQQ climbed 0.19% to close at $514.