Trump megabill explained: When would big beautiful bill go into effect

Senate staffers rest on the U.S. Capitol steps at sunrise as Republican lawmakers struggle to pass U.S. President Donald Trump’s sweeping spending and tax bill, on Capitol Hill in Washington, D.C., U.S., July 1, 2025.
Nathan Howard | Reuters

Trump's 'Big Beautiful Bill' Clears Final Hurdle as California Faces Tax Blow

House passes Senate version after major provisions stripped, setting stage for mixed impacts on Golden State businesses and consumers

By Stephen L Pendergast
July 3, 2025

WASHINGTON—The House of Representatives passed President Donald Trump's signature domestic policy legislation Thursday morning, clearing the final legislative hurdle for a sprawling $4 trillion package that extends major tax cuts while eliminating popular clean energy incentives that have particularly benefited California businesses and consumers.

The 218-214 vote on the Senate-amended version of the "One Big Beautiful Bill Act" came after an intense lobbying campaign by the White House and House leadership, with Trump personally calling holdouts through the early morning hours to secure passage ahead of his July 4 deadline.

The legislation represents a significant victory for Trump's domestic agenda, permanently extending the 2017 Tax Cuts and Jobs Act provisions while adding new tax breaks for tips and overtime pay. But the final version that emerged from the Senate differs substantially from what House Republicans originally envisioned, with several key provisions either stripped entirely or substantially modified.

Major Provisions Lost in Senate

The most dramatic change came when senators voted 99-1 Tuesday to remove a controversial 10-year moratorium on state regulation of artificial intelligence, dealing a significant blow to technology companies that had lobbied heavily for the provision. The AI moratorium would have prevented states from enforcing laws regulating artificial intelligence systems, potentially affecting everything from deepfake restrictions to child safety protections.

"This provision could allow Big Tech to continue to exploit kids, creators, and conservatives," said Sen. Marsha Blackburn (R-Tenn.), who led the successful effort to strip the language despite initial support from Republican leadership.

Also removed was a provision that would have restricted federal courts' authority to hold government officials in contempt for violating judicial orders, which critics argued would have undermined judicial independence.

The Senate version also eliminated several smaller provisions, including excise taxes on solar and wind energy projects that were added and then removed during the marathon voting session.

California's Mixed Fortunes

For California, the legislation presents a complex mix of benefits and losses that reflect the state's unique economic profile and political tensions with the Trump administration.

On the positive side, the bill raises the cap on state and local tax (SALT) deductions from $10,000 to $40,000 for taxpayers earning less than $500,000, providing significant relief to California homeowners facing high property taxes and state income taxes. The increase, which includes annual inflation adjustments through 2029, could save eligible California families thousands of dollars annually.

"This is meaningful relief for middle-class families in high-cost areas," said Jason Smith, chairman of the House Ways and Means Committee. The SALT provision is expected to particularly benefit California's suburban communities, where median home values often exceed $1 million.

However, the legislation eliminates several clean energy tax credits that have been driving California's renewable energy boom. The $7,500 federal tax credit for new electric vehicles will expire 180 days after the bill becomes law, along with the $4,000 credit for used EVs. California leads the nation in EV adoption, with electric vehicles comprising nearly 22% of new car sales in the state.

Business Impact Varies Widely

California's technology sector faces a particularly complex landscape under the new law. While the removal of the AI regulation moratorium preserves California's ability to enforce its recently passed AI safety legislation, the elimination of various clean energy credits could affect the sector's sustainability initiatives.

The legislation permanently extends the Section 199A deduction for pass-through businesses, though at the current 20% rate rather than the 23% increase originally proposed by the House. This provision is expected to benefit California's numerous small businesses and independent contractors, including the state's large gig economy workforce.

Manufacturing companies with significant operations in California could benefit from the restoration of 100% bonus depreciation for business investments and immediate expensing for research and development, provisions that had been phasing out.

Energy Sector Transformation

Perhaps nowhere are the bill's effects more pronounced than in California's energy sector. The legislation repeals most Inflation Reduction Act clean energy incentives, including residential solar panel credits and energy efficiency improvements that have been popular among California homeowners.

"We're looking at a fundamental shift away from federal support for renewable energy," said Matt Gardner, senior fellow at the Institute on Taxation and Economic Policy. "California will need to decide whether to fill that gap with state incentives or see renewable adoption slow."

The bill does create a temporary deduction for auto loan interest up to $10,000 annually, but only for vehicles with final assembly in the United States—a provision that could benefit California consumers purchasing domestically assembled vehicles while potentially disadvantaging those buying imported models.

Healthcare and Social Services

California's extensive Medicaid program faces significant changes under the legislation, which cuts approximately $930 billion from Medicaid over the next decade while implementing new work requirements for able-bodied adults. The Congressional Budget Office estimates that nearly 12 million people nationwide could lose health insurance as a result.

The bill also reduces SNAP food assistance by roughly $230 billion over ten years and implements 80-hour monthly work requirements for able-bodied adults under 65.

Fiscal Impact and Timeline

The legislation is projected to add $3.3 trillion to the federal deficit over the next decade, despite the spending cuts. Most of the new tax provisions take effect immediately, though the tips and overtime deductions are temporary, expiring in 2028.

For California taxpayers, the higher SALT deduction cap takes effect for the 2025 tax year, while the elimination of EV and clean energy credits will phase in over the next six months.

The bill now heads to Trump's desk for his signature, which the White House indicated could come as early as Friday. The president had made July 4 passage a key priority, viewing the legislation as essential to implementing his campaign promises on taxes and spending.

Political Ramifications

The legislation's passage comes at a cost for House Republican leadership, which had to accept significant Senate changes to secure passage. Several conservative members expressed frustration with the process, while some moderate Republicans worried about the fiscal impact.

Rep. Marjorie Taylor Greene (R-Ga.), who had threatened to vote against the bill if the AI provision remained, ultimately supported the final version after its removal.

For California's congressional delegation, the vote largely split along party lines, with Democrats uniformly opposing the legislation and Republicans supporting it despite concerns about some provisions affecting their districts.

The legislation represents the most significant domestic policy achievement of Trump's second term and sets the stage for continued debates over the federal government's role in energy policy, healthcare, and technology regulation—debates that will likely play out prominently in California's politically charged environment.

reporter Claude Anthropic contributed to this article.

Sources

Congressional and Government Documents:

  1. U.S. Congress. "Text - H.R.1 - 119th Congress (2025-2026): One Big Beautiful Bill Act." Congress.gov. Accessed July 3, 2025. https://www.congress.gov/bill/119th-congress/house-bill/1/text
  2. GovTrack.us. "H.R. 1 — 119th Congress: One Big Beautiful Bill Act." Accessed July 3, 2025. https://www.govtrack.us/congress/bills/119/hr1
  3. Federal Register. "2025 Donald J. Trump Executive Orders." Accessed July 3, 2025. https://www.federalregister.gov/presidential-documents/executive-orders/donald-trump/2025

News Organizations: 

4. CNN Politics. "July 1, 2025 - Senate passes Trump's agenda bill after marathon voting session." July 1, 2025. https://www.cnn.com/politics/live-news/trump-big-beautiful-bill-vote-07-01-25

  1. CNN Politics. "July 2, 2025 - House to take up Senate version of Trump's megabill." July 2, 2025. https://www.cnn.com/politics/live-news/trump-big-beautiful-bill-vote-07-02-25
  2. Reuters. "House Republicans advance Trump's tax-cut bill to a final vote." July 3, 2025. https://www.reuters.com/legal/government/trump-tax-cut-plan-returns-us-house-republicans-divided-bill-2025-07-02/
  3. Reuters. "US Senate passes Trump's sweeping tax-cut and spending bill, setting up House battle." July 1, 2025. https://www.reuters.com/world/us/senate-vote-a-rama-pass-trumps-33-trillion-bill-extends-into-second-day-2025-07-01/
  4. NPR. "Senate Republicans pass Trump tax bill with Medicaid, SNAP cuts." July 1, 2025. https://www.npr.org/2025/07/01/nx-s1-5450367/senate-republicans-trump-tax-bill-medicaid
  5. Associated Press. "Updates on Trump's big bill from July 2, 2025." July 2, 2025. https://apnews.com/live/donald-trump-news-updates-7-2-2025
  6. Fox News. "Schumer strips 'big, beautiful bill' name from Trump's spending package." July 1, 2025. https://www.foxnews.com/politics/schumer-forces-name-change-big-beautiful-bill-moments-before-passes
  7. New Jersey Globe. "Senate Republicans eke out 'Big Beautiful Bill,' with Booker, Kim voting no." July 1, 2025. https://newjerseyglobe.com/congress/senate-republicans-eke-out-big-beautiful-bill-with-booker-kim-voting-no/
  8. Colorado Public Radio. "Senate passes One Big Beautiful Bill, getting the GOP's..." July 1, 2025. https://www.cpr.org/2025/07/01/senate-passes-trumps-big-beautiful-bill/
  9. The Washington Post. "In dramatic reversal, Senate kills AI-law moratorium." July 1, 2025. https://www.washingtonpost.com/technology/2025/07/01/ai-moratorium-defeat-senate-silicon-valley/
  10. The Hill. "Greene says she'll oppose Trump's 'big beautiful bill' if AI provision isn't removed." June 2025. https://thehill.com/policy/technology/5330705-greene-opposes-ai-regulation-provision/
  11. Time. "Senators Reject 10-Year Ban on State-Level AI Regulation, In Blow to Big Tech." July 1, 2025. https://time.com/7299044/senators-reject-10-year-ban-on-state-level-ai-regulation-in-blow-to-big-tech/
  12. Deadline. "Donald Trump's 'One Big Beautiful Bill' Can Retain Provision That Bans States From Regulating AI, Senate Parliamentarian Concludes." June 2025. https://deadline.com/2025/06/ai-provision-trump-big-beautiful-bill-1236439792/
  13. Poynter. "'One Big Beautiful Bill' could block AI regulations for 10..." June 2025. https://www.poynter.org/fact-checking/2025/ai-regulation-ban-one-big-beautiful-bill-trump-congress/

Financial and Tax Analysis: 

18. CNBC. "What the Senate Republican 'big beautiful' bill means for your money." July 3, 2025. https://www.cnbc.com/guide/the-big-beautiful-bill-act-senate-republican/

  1. CNBC. "GOP 'big beautiful' bill would end many clean energy tax credits." June 20, 2025. https://www.cnbc.com/2025/06/20/gop-big-beautiful-bill-would-end-many-clean-energy-tax-credits.html
  2. Tax Foundation. "'Big Beautiful Bill' House GOP Tax Plan: Preliminary Details and Analysis." July 2, 2025. https://taxfoundation.org/research/all/federal/big-beautiful-bill-house-gop-tax-plan/
  3. Tax Foundation. "'Big Beautiful Bill' Senate GOP Tax Plan: Details and Analysis." July 1, 2025. https://taxfoundation.org/research/all/federal/big-beautiful-bill-senate-gop-tax-plan/
  4. Tax Foundation. "One Big Beautiful Bill: Pros & Cons: The Good, Bad, and the Ugly." July 2, 2025. https://taxfoundation.org/blog/one-big-beautiful-bill-pros-cons/
  5. TaxAct. "One Big Beautiful Bill: What You Need to Know." July 2, 2025. https://blog.taxact.com/one-big-beautiful-bill-act/
  6. Fidelity. "What is the One Big Beautiful Bill Act and what does it mean for me?" May 27, 2025. https://www.fidelity.com/learning-center/personal-finance/one-big-beautiful-bill
  7. Proskauer Tax Talks. "One Big Beautiful Bill Passed by the House." May 27, 2025. https://www.proskauertaxtalks.com/2025/05/one-big-beautiful-bill-passed-by-the-house/
  8. Kiplinger. "How the EV Tax Credit Works: Up to $7,500, Income Limits, Eligible Vehicles & More." August 31, 2023. https://www.kiplinger.com/taxes/ev-tax-credit

Policy Analysis and Think Tanks: 

27. Committee for a Responsible Federal Budget. "Breaking Down the One Big Beautiful Bill." May 12, 2025. https://www.crfb.org/blogs/breaking-down-one-big-beautiful-bill

  1. Campaign Legal Center. "These Hidden Provisions in the Budget Bill Undermine Our Democracy." Accessed July 3, 2025. https://campaignlegal.org/update/these-hidden-provisions-budget-bill-undermine-our-democracy
  2. 5 Calls. "Stop State AI Regulation Ban in the 'One Big Beautiful Bill' Act - Removed from Bill (UPDATED 7/1)." Accessed July 3, 2025. https://5calls.org/issue/ai-regulation-ban-budget-reconciliation/

White House and Congressional Statements: 

30. The White House. "WHAT THEY ARE SAYING: Senate Approves Landmark One Big Beautiful Bill." July 1, 2025. https://www.whitehouse.gov/articles/2025/07/what-they-are-saying-senate-approves-landmark-one-big-beautiful-bill/

  1. The White House. "Capitol Hill Touts Benefits of the One Big Beautiful Bill." June 2025. https://www.whitehouse.gov/articles/2025/06/capitol-hill-touts-benefits-of-the-one-big-beautiful-bill/
  2. The White House. "50 Wins in the One Big Beautiful Bill." June 2025. https://www.whitehouse.gov/articles/2025/06/50-wins-in-the-one-big-beautiful-bill/
  3. The White House. "The One, Big, Beautiful Bill Endorsements." July 2, 2025. https://www.whitehouse.gov/obbb/endorsements/
  4. U.S. Senator Tim Scott. "Senator Scott Applauds Passage of the One Big Beautiful Bill." July 1, 2025. https://www.scott.senate.gov/media-center/press-releases/senator-scott-applauds-passage-of-the-one-big-beautiful-bill/
  5. House Ways and Means Committee. "The One, Big, Beautiful Bill." May 2025. https://waysandmeans.house.gov/wp-content/uploads/2025/05/The-One-Big-Beautiful-Bill-Section-by-Section.pdf

Reference Sources: 36. Wikipedia. "One Big Beautiful Bill Act." Updated July 3, 2025. https://en.wikipedia.org/wiki/One_Big_Beautiful_Bill_Act

  1. Holland & Knight. "Trump's 2025 Executive Orders." Accessed July 3, 2025. https://www.hklaw.com/en/general-pages/trumps-2025-executive-orders-chart
Trump megabill explained: When would big beautiful bill go into effect

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