SEPTEMBER 5, 2025 | FEATURES | By Grace Bean
The Senate has completed a marathon of passing amendments and votes for the One Big Beautiful Bill Act (OBBBA), a sweeping reconciliation bill combining tax cut extensions with deep spending cuts.
The bill indefinitely continues Trump’s 2017 tax cuts, and raises the state and local tax cap (SALT), which allows taxpayers to deduct the amount they pay in state and local taxes.
The OBBBA will sprinkle in new tax perks (tips and overtime), while sharply reducing Medicaid and Supplemental Nutrition Assistance Program funding, a portion of the federal budget typically authorized through the Farm Bill—the U.S. government’s largest anti-hunger program.
The Senate version is projected to add $3.3 trillion to the national debt over ten years, despite arguments from finance hawks that the latest amendments could increase that figure by another $500 billion.
Public backlash is escalating as the KFF Health Tracking Polls indicate 64% opposition, with concerns from deficit watchdogs like the Committee for a Responsible Federal Budget (CRFB) and notable GOP skeptics such as Senators Thom Tillis and Rand Paul.
Pell Grants and Federal Student Loans:
The House version of OBBBA would significantly change Pell Grants, which provide federal financial assistance to low-income students to help cover college costs. Luckily, the final Senate version removed all language pertaining to Pell Grants and Federal Student Loans.
These changes would have included increasing the number of credit hours required to earn the full grant amount and introducing a credit hour minimum to receive any Pell Grant support.
These restrictions are not present in the Senate version of the bill. Provisions present in the newly passed bill maintain no actual change to Pell eligibility or amounts under the current legislation draft.
Both versions of the OBBBA include new federal student loan lifetime borrowing limits, though amounts vary between chambers.
The bill modifies repayment programs and removes some current deferment and low-cost repayment options, meaning some students may have higher federal loan payments.
Benefits of the OBBBA:
President & CEO of the National Association of Manufacturers, Jay Timmons, highlights that the Senate’s version “advances a tax package that will strengthen small businesses, family‑owned operations and manufacturing workers across the country,” calling it a significant step toward boosting job creation and economic growth.
Earlier White House messaging in May 2024 emphasized that the bill “provides entrepreneurs and small businesses with the tools and policy environment they need to invest in their businesses and workforce, to innovate and strengthen their firms.”
According to the bill’s broader summary, it makes the Section 199A deduction permanent and increases it to 23%, benefiting millions of pass-through businesses like wholesalers and distributors.
The passed bill boosts manufacturing and entrepreneurial investment, delivering major tax breaks for small and family-owned businesses.
Limits of the OBBBA:
Tip deductions up to $25,000 of cash tip income per year, a limit phased out for individuals earning over $150,000 or couples over $300,000 annually, are valid through the 2025 to 2028 tax years.
Overtime deductions of up to $12,500 from taxable income annually for individuals in the 2025 to 2028 tax years are also subject to the same phaseout thresholds.
The Child Tax Credit under the OBBBA is set to increase to $2,200 per child, indexed for inflation, and refundable portions remain unchanged.
The debt ceiling has also increased by $5 trillion, according to AP News.