On July 2, 2025 (local time), the “One Big Beautiful Bill” (OBBBA) passed the U.S. Senate by a narrow margin of 51 to 50. Three Republican senators — Susan Collins, Thom Tillis, and Rand Paul — joined 47 Democrats in voting against the bill due to disagreements over Medicaid spending, the debt ceiling, and other issues. Vice President Vance cast the decisive tie-breaking vote.
Procedurally, the bill still requires review by the House of Representatives, and further revisions remain possible.The next legislative steps are: review by the House Rules Committee → floor debate → House vote → presidential signature into law. The House is expected to begin reviewing the bill as early as the morning of July 2, U.S. time. If the House rejects the Senate’s version, further negotiations and a conference committee may be required to reconcile the differences between the two chambers.
There are three possible scenarios for the final passage of the bill: First, passage before July 4, if the House largely accepts the Senate version and votes it through directly; Second, if fiscal hawks in the House push for amendments, passage could be delayed until mid-July; Third, if the House rejects the Senate version, Congress may adjourn briefly and reconvene negotiations starting July 8, with final passage possibly occurring in late July or August.
Adjustments in the Bill: Larger Deficit, Greater Corporate Tax Cuts, Reduced Personal Tax Relief
The Senate version features deeper tax cuts, weaker spending cuts, and a larger deficit. Net deficit expansion over the next decade is expected to reach approximately $4.1 trillion — about $550 billion more than the House version — with the debt ceiling raised from $4 trillion to $5 trillion. To secure the support of swing Republican senators, the bill expands tax benefits for high-income earners and accelerates the phase-out of new energy subsidies.
On the tax side, the Senate version increases corporate tax cuts while narrowing individual tax relief. For corporations, three major deductions — R&D expense deduction, accelerated depreciation, and interest expense deduction — will be made permanent. On the personal side, the tax cuts continue to favor high-income groups while scaling back benefits for low- and middle-income households. New time limits have been added for the exemption of tips and overtime pay, and the child tax credit has been reduced.
On spending cuts, the Senate version makes deeper cuts to healthcare and other social welfare spending and accelerates the rollback of wind power and other new energy subsidies. Medicaid cuts have expanded from $800 billion to $930 billion, potentially stripping healthcare coverage from 10.3 million low-income individuals. Funding for food assistance programs will be tightened, and the tax credit for new energy vehicle purchases will end on September 30. To appease rural constituencies, a new $25 billion Rural Hospital Fund has been added.
On spending increases, the bill significantly boosts federal expenditures in defense and immigration enforcement. In 2026, defense spending will rise by $150 billion to reach $1 trillion, with funds primarily allocated to naval shipbuilding and missile defense systems. An additional $150 billion will go to immigration and border security, including $46.5 billion for continued border wall construction and $45 billion for immigrant detention and deportation operations.
Economic Impact of the “One Big Beautiful Bill”: Mild Economic Boost, Benefits for Capital-Intensive Industries, Losses for New Energy
The OBBBA is expected to moderately support U.S. economic growth. According to Yale University research, the bill could raise average annual real GDP growth by 0.2 percentage points between 2025 and 2027, with the effect peaking at up to 0.6 percentage points in 2026–2027. Its impact on inflation is expected to be moderate, but it may push 10-year U.S. Treasury yields up by about 11 basis points next year. Over the medium term, the crowding-out effect of higher debt is likely to dampen GDP growth.
The bill will reduce incomes for low-income households, resulting in a neutral overall effect on consumption. The income of the lowest 20% of households is projected to decline by 2.9% (about $700) due to cuts in Medicaid and SNAP benefits, while the top 20% of households will see an average increase of 1.9%, mainly due to expanded tax cuts. Overall, the bill reflects a redistribution trend tilted towards higher-income groups.
Traditional and capital-intensive industries will benefit, while new energy and electric vehicle sectors will be negatively impacted. Capital-intensive sectors (such as manufacturing and data centers) will benefit most from investment depreciation incentives. The fossil fuel industry will gain from reduced public land extraction fees and other incentives. The defense industry will benefit from expanded military spending. Meanwhile, the early phase-out of clean energy tax credits may hurt wind, solar, and electric vehicle industries.
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