On May 22, 2025, the U.S. House passed a sweeping tax and spending bill, dubbed the “One Big, Beautiful Bill Act,” advancing President-elect Donald Trump’s economic agenda. The legislation, now headed for Senate debate, includes a novel tax deduction for American-made cars and an enhanced small business deduction, aiming to bolster domestic industries. However, its elimination of electric vehicle tax credits and significant deficit increase have sparked debate over its long-term impact.
The bill introduces a tax deduction of up to $10,000 on interest for loans on American-made cars, a temporary measure expiring in 2028. This provision aligns with Trump’s push to prioritize domestic manufacturing, incentivizing consumers to purchase vehicles assembled in the U.S. Critics argue the deduction’s benefits may be limited, as many buyers may not itemize deductions, and questions remain about defining “American-made.” The move comes alongside the elimination of electric vehicle tax credits, such as the $7,500 consumer credit, which has drawn opposition from EV manufacturers and environmental groups. The CBO estimates this rollback could hinder EV adoption in key states.
For small businesses, the bill raises the small business deduction from 20% to 23%, a significant win for entrepreneurs. This provision, part of extending the 2017 Tax Cuts and Jobs Act, aims to reduce taxable income for pass-through entities like sole proprietorships and partnerships. Posts on X on May 14, 2025, highlighted this as a boost for economic growth, though critics note the benefits skew toward higher earners. The bill also makes permanent the 2017 tax cuts, maintaining lower rates and an expanded standard deduction, but at a cost of over $2 trillion over a decade.
The legislation eliminates taxes on tips for workers earning under $160,000 and taxes on overtime pay, both temporary measures through 2028. These fulfill Trump’s campaign pledges but have been criticized for their $124 billion cost and limited impact on low-income workers who owe little federal tax. A tax deduction for seniors, offering an additional $4,000, phases out for high earners, partially addressing Trump’s promise to eliminate taxes on Social Security.
The bill’s fiscal impact is a major concern, with the CBO projecting a $3.8 trillion deficit increase, prompting Moody’s to downgrade the U.S. credit rating. Senate debate will likely focus on balancing these tax cuts with spending reductions, including cuts to Medicaid and SNAP, which could affect 7 million people. The elimination of electric vehicle tax credits and the remittance tax on non-citizens, reduced to 3.5%, add further complexity, with implications for Non-Resident Indians and other immigrant communities.
As the Senate deliberates, the bill’s mix of populist and pro-business measures faces scrutiny. The American-made cars deduction and small business incentives signal a focus on domestic growth, but their benefits may be overshadowed by fiscal and environmental concerns.
