House Speaker Mike Johnson speaks to the media after the House narrowly passed a bill forwarding President Donald Trump’s agenda at the US Capitol on May 22 in Washington, DC. Kevin Dietsch/Getty Images

Speaker Mike Johnson delivered a major win for President Donald Trump early on Thursday morning, uniting a deeply divided House GOP to pass a bill that many of them were still pushing fiercely to change.

Passage of the sweeping tax and spending cuts package marked a stunning victory for both Johnson and Trump after the bill appeared doomed just days earlier.

“Sometimes it’s good to be underestimated, isn’t it?” a sleep-deprived Johnson said on the House floor early Thursday, after multiple all-night negotiating sessions with all corners of his conference.

More on the bill: Trump himself played a major role in passing the bill, which contains many of his campaign trail promises, such as extending his 2017 tax breaks and eliminating taxes on tips and overtime pay. It also devotes billions to border security, allowing for a major crackdown on immigration. In multiple sit-downs with GOP lawmakers this week, Trump made impassioned appeals to members to back his agenda.

The legislative package includes measures that would deeply cut into two of the nation’s key safety net programs – Medicaid and food stamps – while making permanent essentially all of the trillions of dollars of individual income tax breaks contained in the GOP’s 2017 Tax Cuts and Jobs Act.

House Republicans unveiled a slate of changes to the bill on Wednesday evening in an effort to win over GOP holdouts. Those changes included speeding up work requirements for Medicaid to the end of 2026, from the start of 2029. Republicans also decided to phase out Biden-era energy tax credits sooner than planned, among other provisions.

Next steps: How much of the House’s version will survive in the Senate GOP is unclear. Republicans in that chamber have signaled they plan to make changes, but they are under intense pressure to move quickly: Trump and Johnson have told members they want to sign the bill into law by July 4.

And any changes in the Senate could upset the careful balance struck by House GOP leaders to pass the bill through its narrow majority. In the end, Johnson only failed to win over three GOP votes.

Key takeaways The U.S. House of Representatives passed their version of the “big, beautiful” tax bill on Thursday. The bill now heads to the Senate.

The current version of the bill includes key tax provisions, including maintaining current income tax rates that otherwise would expire, and hiking the cap on the state and local taxes (SALT) deduction to $40,000 for most taxpayers.

The bill, which along with its tax provisions includes funding for new border control initiatives and deep cuts to Medicaid and other benefit programs, faces potential headwinds in the Senate.

House Republicans managed to pass their version of the “big, beautiful” bill on Thursday, marking a major step forward in fulfilling key campaign promises made by President Donald Trump, including extending existing income tax rates and other provisions of the Tax Cuts and Jobs Act that would otherwise expire at the end of this year.

The bill, which in addition to its tax provisions includes funding for new border control measures and makes steep cuts to Medicaid and other programs, passed the House with the slimmest of margins, with 215 lawmakers voting in favor and 214 against. Next, the bill heads to the U.S. Senate, where lawmakers potentially could make significant changes. Trump has said he wants to sign the bill into law by July 4.

Key tax provisions in the bill

Here are some of the key tax provisions of the bill. Notably, many of these tax benefits would take effect for the current tax year — 2025 — and then end four years later, at the end of Trump’s term. The bill would:

Increase the standard deduction for 65-and-older Americans by $4,000, in addition to the current standard deduction and on top of the current extra standard deduction for older Americans, for tax years 2025 through 2028. The amount would phase out for single filers with income of $75,000 or more, and for married couples with income of $150,000 or more.

Eliminate taxes on tips and overtime pay, starting in 2025 and going through 2028. While a separate idea to eliminate taxes on Social Security benefits — something oft-cited by President Donald Trump as a goal — is not included in this proposal, the higher standard deduction for 65+ taxpayers is seen as an alternate way to ease older Americans’ tax burden, and hiking the standard deduction is a much easier legislative path forward than changing how Social Security benefits are taxed.

Create a new tax-deferred savings account for children. The accounts, which could be opened for children age 8 or under, would be called “Trump accounts.” These accounts would allow contributions of up to $5,000 per year (with some exceptions) until the child is 18, at which point distributions could begin. Any distributions used for qualified expenses, including certain education costs, small-business expenses and first-time homebuyer costs, would be taxed at long-term capital-gains rates (which are generally lower than income tax rates). Non-qualified distributions would face income tax rates and a 10 percent penalty if the beneficiary is under age 30. An added bonus for U.S. citizen children born from 2025 through 2028 (in other words, during Trump’s term): The accounts would be funded with an initial $1,000 from the federal government.

Raise the child tax credit to $2,500, from its current $2,000, effective from 2025 through 2008. After 2028, the child tax credit would drop back to $2,000.

Raise the state and local tax deduction (SALT) cap to $40,000, up from the current $10,000 cap, starting in 2025. The bill calls for the deduction to phase out for taxpayers with modified adjusted gross income of $500,000 or more. Those numbers apply to all taxpayers except those who are married and file separately. For married-filing-separately taxpayers, the cap would rise to $20,000, from $5,000 currently, and would start to phase out at income of $250,000. Some Republicans from high-tax states such as California, New York, and New Jersey had pushed for a higher SALT cap.

End the popular Direct File program — which offers an online free guided tool that lets taxpayers file their taxes directly with the IRS — within 30 days of the bill becoming law. The bill also calls for the development of a public-private partnership to create a new free tax filing program that would replace the existing Free File program, and that would be available to up to 70 percent of all taxpayers, according to a report in Tax Notes, a publication of the nonprofit Tax Analysts. About 170 Democratic lawmakers sent a letter on April 25 demanding that the U.S. Treasury maintain the Direct File program.

Make the popular qualified business income deduction permanent and hike the value of this deduction to 23 percent from its current 20 percent. This tax deduction is for pass-through entities such as S corporations, partnerships and sole proprietorships.

Eliminate the electric vehicle tax credit as of the end of 2025. However, the bill would allow an exception for manufacturers who have yet to sell 200,000 vehicles.

Create a tax deduction for car loan interest, available even to taxpayers who don’t itemize their deductions, from 2025 through 2028. The deduction would phase out for single filers with income of $100,000 or more, and for couples with income of $200,000 or more.

Create a deduction that would allow non-itemizers to claim charitable contributions up to $150 per single filer and $300 per married couple, effective from 2025 through 2028.

Learn more: Standard deduction vs. itemized deductions: Pros, cons and how to decide

What’s next for the tax bill

Now that the House has passed its version of the bill, it’ll go to the Senate, where it could face potential headwinds.

The tax portion of the House bill would cost close to $4 trillion over the next decade, according to a report by the Joint Committee on Taxation. However, that report was published before this latest version of the bill, and lawmakers made key amendments in the last hours of negotiations in the House, late Wednesday night.

The bill includes spending cuts worth an estimated $1.5 trillion. This cost estimate puts the bill in line with the budget blueprint lawmakers agreed to earlier this year.

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No new tax on the wealthy

The proposed bill doesn’t include a tax hike on the wealthiest Americans, and maintains 37 percent as the highest rate, despite reports that Trump had asked House Speaker Mike Johnson to include in the bill a new tax rate of 39.6 percent for high-income taxpayers. For context, here are the figures for the highest U.S. tax rate, and who it has applied to, in recent years:

Year Top income

tax rate Single filer Married filing jointly Proposed by Trump for 2026 39.6% $2.5 million+ $5 million+ Current for 2025 (and extended in proposed bill) 37% $626,350+ $751,600+ 2017 (before TCJA) 39.6% $418,400+ $470,700+

There’s a good chance that many, if not all, of the TCJA’s expiring provisions will be extended under a Republican-controlled Congress. But Republicans aren’t completely aligned on how to pay for these tax cuts, so reconciling this version with the Senate’s version won’t be easy.

How tax laws may change

While it’s unclear what the final law will look like, it’s highly likely that some type of tax-law overhaul will happen this year.

Under the 2017 Tax Cuts and Jobs Act (TCJA), key changes were made to individual tax laws, including the near-doubling of the standard deduction and increasing the child tax credit to $2,000, from $1,000. Plus, the top tax rate for high-income earners was reduced to 37 percent, from 39.6 percent, and a new 20 percent deduction was created for certain types of business income.

While some of the TCJA’s provisions were permanent and others are set to expire at the end of 2025, U.S. lawmakers can include just about any tax provision they want in a new comprehensive tax bill — assuming they can get it passed.

As a result, along with the high likelihood of extending the TCJA’s expiring provisions — which would effectively maintain the status quo for U.S. taxpayers — there’s a strong chance that lawmakers will change other tax laws as well.

During his presidential campaign and now as president, Trump has promised a variety of tax breaks, including:

Eliminating taxes for people who earn less than $150,000. This is not in the current version of the tax bill.

Removing the current $10,000 cap on the deduction for state and local taxes. The current version of the tax bill proposes lifting the cap to $40,000.

Eliminating taxes on tip income, overtime pay and retirees’ Social Security benefits. The first two tax benefits are in the current version of the bill. For retirees, the draft bill proposes an extra $4,000 standard deduction for Americans aged 65 and older — that’s instead of a tax break on Social Security benefits.

Creating a tax deduction for car loan interest payments for American-made cars. This tax break is in the current draft version of the bill.