House Budget Committee Passes "No Tax" Bill: Key Details
On May 18, 2025, the House Budget Committee narrowly approved a sweeping Republican tax and budget bill, often referred to as the "No Tax" bill or "Big Beautiful Bill," advancing it toward a full House vote later in the week. The legislation represents a major component of President Donald Trump’s economic agenda and includes significant tax reforms, spending cuts, and policy changes.
Main Features of the Bill
- Permanent Extension of 2017 Tax Cuts: The bill seeks to make permanent the tax reductions enacted under the 2017 Tax Cuts and Jobs Act, which were previously set to expire in 2025. This move is projected to cost trillions in lost federal revenue over the next decade.
- "No Tax on Tips" Provision: The bill eliminates federal income tax on tips, fulfilling a Trump campaign promise and aiming to benefit millions of service industry workers.
- No Tax on Overtime and Car Loan Interest: Overtime pay and interest on qualified passenger vehicle loans would also be exempt from federal income tax, though these provisions are expected to benefit a relatively small share of workers and car buyers.
- Increased Child Tax Credit: The maximum child tax credit would rise to $2,500 per child through 2028, though it would remain non-refundable, limiting benefits for low-income families.
- Cuts to Medicaid and Green Energy Incentives: The bill includes controversial spending reductions, especially in Medicaid and green energy tax credits, sparking internal Republican disagreements and opposition from Democrats.
- Higher SALT Deduction Cap: The state and local tax (SALT) deduction cap would be raised for filers earning under $400,000, with some ongoing debate over the exact cap amount.
Political and Economic Impact
- Partisan Divide: The committee vote was 17-16, with all Democrats opposed and four Republican hardliners allowing the bill to proceed by voting "present" after negotiations.
- Winners and Losers: High-income earners, families with children, tipped workers, those working overtime, and car buyers stand to benefit. However, millions could lose Medicaid or Affordable Care Act coverage due to stricter eligibility and the expiration of pandemic-era subsidies.
- Deficit and Debt Concerns: Nonpartisan analysts estimate the legislation could add $3–5 trillion to the national debt over ten years. Moody’s cited rising debt as a reason for its recent downgrade of the U.S. credit rating.
Next Steps
The bill now heads to the full House for debate and a potential vote. With Republicans controlling both chambers and the White House, the measure could advance without Democratic support, though further negotiations and amendments are expected.
Summary Table: Key Provisions and Effects
| Provision | Who Benefits | Estimated Fiscal Impact |
|---|---|---|
| No tax on tips | Tipped workers | ~$1,700 avg. benefit for <3% of workers |
| No tax on overtime pay | Hourly workers earning overtime | Limited; only 8% of hourly workers regularly earn overtime |
| No tax on car loan interest | Car buyers (American-made cars) | Lower-income buyers benefit most |
| Permanent 2017 tax cuts | High-income earners | Top 20% get two-thirds of savings; cost: $2T+ through 2034 |
| Higher child tax credit | Families with children | Up to $2,500 per child (non-refundable) |
| Medicaid, ACA cuts | Federal budget (savings); Medicaid/ACA recipients lose coverage | 8.6M lose Medicaid; 5M lose ACA coverage |
| Cuts to green energy tax credits | Federal budget (savings); green energy sector loses incentives | Phase-out by 2032 |
The "No Tax" bill represents a major overhaul of federal tax and spending policy, with broad implications for taxpayers, federal programs, and the national debt.