Trump gets his 'big, beautiful bill.' What it means for Michigan

• US House sends tax, spending bill to President Donald Trump's desk for signature
• The sweeping legislation makes major changes to the federal tax structure, Medicaid, energy programs, student loans and more
• Proponents predict economic growth, but critics fear cuts to social safety net and impact on rural hospitals, among other things

The US House on Thursday gave final approval to a sweeping legislation that promises more tax breaks and border security but less spending on Medicaid and food assistance. 

Michigan's Congressional delegation voted along party lines for President Donald Trump's "big, beautiful bill," which passed the House 218-214 and is heading to his desk for signature. 

Trump has hailed the legislation, predicting the country will "explode with Massive Growth" as its various provisions are implemented. 

The plan "delivers on the promises" Trump and other Republicans made in the 2024 election, including tax exemptions for tips and overtime pay, US Rep John James of Shelby Township said in a statement after voting for the legislation. 

But Michigan Democrats have blasted the bill, arguing that it will provide the biggest benefit to the wealthiest Americans while removing social safety net supports for the most vulnerable. 

US Rep. Haley Stevens of Birmingham, who voted against the measure, called it a "billionaire tax handout for the people of Michigan who will have their healthcare taken away, food assistance stripped away, investments in manufacturing eliminated, and will be put further at risk due to rural hospitals shuttering."

Keep existing tax breaks

The legislation will extend $4.5 trillion in tax breaks approved in the 2017 Tax Cuts and Jobs Act during Trump’s first term. Absent congressional action, those breaks would expire at the end of the year. 

Extending the existing tax provisions would mean at least 62% of filers would avoid a tax hike in their 2026 filings, according to the Tax Foundation.

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Failure to do so would mean an average tax increase of $2,119 for Michigan residents, according to the foundation’s figures. 

While high earners would see a clear benefit from the cuts, significant changes to Medicaid and the Supplemental Nutrition Assistance Program could make the changes a net negative for lower-income individuals and families, analyses by the nonpartisan Congressional Budget Office and other organizations show.

An analysis by the left-leaning Institute on Taxation and Economic Policy found the top 5% of tax filers in Michigan would receive 40% of the net tax cuts. 

Expand deductions, create new ones

The legislation would increase the child tax credit to $2,200 per child starting in tax year 2025 and adjust for inflation into perpetuity. 

It would also make permanent a proposed increase in the standard deduction, bringing the total to $15,750 for individuals and $31,500 for joint filers and adjusted for inflation in future tax years. 

Other, temporary, tax cuts include deductions of up to $12,500 for overtime pay and $25,000 for tip income through 2028, though the reductions would drop for filers making $150,000 or more. 

Low- and middle-income seniors would see a maximum $6,000 increase in tax deductions over the same time frame to offset taxes on Social Security benefits.

Businesses could be eligible for writeoffs on equipment and research and development costs. Consumers buying new, US-built vehicles would be eligible for up to $10,000 in deductions, which could benefit Michigan automakers.

Growing the deficit

The federal debt has grown 121% since 2015, and interest payments alone on it cost $881 billion this fiscal year — more than the government spends on veterans or children. By 2034, interest costs could consume 20% of federal revenue, according to a US House analysis.

Since the pandemic, the federal deficit has doubled to nearly $1.8 trillion.

As it currently stands, the bill would add to that figure, reducing federal revenues by $4.5 trillion over the next decade while reducing government spending by $1.2 trillion, according to a report from the nonpartisan Congressional Budget Office. 

Major Medicaid changes

To partially offset the cost of tax cuts, the proposal is projected to significantly cut spending on Medicaid, including through work requirements that would begin Dec. 31, 2026. All told, estimates indicate the federal government could save more than $900 billion over the next decade under the latest version of the plan.

In Michigan, Medicaid provides health insurance to more than 2.6 million people, or 1 in 4 state residents, primarily with lower-than-average incomes. Some 200,000 residents could lose their coverage under the federal legislation, according to Gov. Gretchen Whitmer, who strongly opposes the plan. 

The federal government spent $584 billion on Medicaid in 2024, up from $52.5 billion in 1991.

Under the GOP plan, able-bodied adults under age 65 would need to provide proof twice a year of at least 80 hours a month of completing “community engagement requirements,” such as work, education or service to keep their coverage. The plan exempts seniors, parents of children aged 14 and under and people with disabilities. 

Proponents argue the plan would reduce Medicaid fraud and encourage able adults to return to the workforce or engage with their community.

But critics are concerned the new requirements could leave a wide swath of otherwise eligible people without coverage if they’re unaware of the changes or make a mistake in their paperwork.

“The hardest hit…are people that need health care, and then it also contributes to uncompensated care for hospitals as well,” said Laura Appel, executive vice president of the Michigan Health and Hospital Association. She called the plan as written “a recipe for more people losing coverage.” 

Michigan and other states were moving toward work rule requirements under the first Trump administration over objections by the Whitmer administration, before a federal court ruling ended the effort.

Rural hospitals, state budget cuts

Another provision in the bill would cap and reduce state Medicaid provider taxes starting in 2028, a strategy that Michigan and other states use to leverage federal funding for Medicaid. Industry advocates say those changes could have an adverse impact on rural hospitals, which often rely on Medicaid reimbursements to stay open. 

The plan includes a $50 billion fund for rural hospitals. Industry experts say that represents less than half of the expected total losses rural health care is expected to face over the next decade. The funds are also designed to be split amongst hospitals, health clinics and other care centers, meaning it’s unclear how much help rural hospitals would actually get. 

A provision to block coverage for undocumented immigrants likely would not impact Michigan, which already limits eligibility to citizens and legal residents. 

States like Michigan, where the vast majority of Medicaid funds come from the federal government, would have to figure out how to reduce services, trim people from the program or backfill the cuts with millions of dollars from other programs — public safety and infrastructure, for example.

A recent report from the Democratic-led state Senate warned the federal legislation could “blow a $2 billion hole into the state budget” noting that roughly 70% of state spending on the program comes from federal sources.

“The magnitude is hard to wrap your head around, because we just don't have the resources at the state level to backfill a cut of this nature,” State Budget Director Jen Flood previously told Bridge Michigan. 

SNAP pulled back 

The plan includes an estimated $285 billion reduction in federal spending over the next decade for the Supplemental Nutrition Assistance Program (SNAP), the federal food stamp program that supports roughly 1.5 million people in Michigan. 

Among other things, the legislation would cap annual increases in benefits, as well as expand existing work requirements for food assistance to older adults and parents of children over the age of 10.

Karianne Martus, manager of the Flint Farmers Market, predicted Tuesday that the changes to SNAP could be destabilizing for thousands of households in Genesee County and market patrons, many of whom take advantage of Double Up Food Bucks or other food assistance programs to access fresh fruits and vegetables. 

Food assistance “gives people choices, it provides them nourishment, and it gives them stability,” she said. “I can’t even imagine what this is going to do to the whole ecosystem of our community.”

States would also have to cover some costs of the program and would have less flexibility to waive certain work requirements. 

Most immigrants with legal status, including refugees, would be barred from receiving food assistance under the plan. 

States would be required to cover between 5% and 25% of benefit costs, plus 75% of administrative costs, which the State Budget Office estimates would cost Michigan around $890 million a year. 

Scrap EV, clean energy credits

On his first day in office, Trump vowed to end a so-called “electric vehicle mandate” and wind down green energy initiatives backed by former President Joe Biden.

That includes a $7,500 tax credit for consumer purchases of new electric vehicles, which Trump promised to eliminate during Michigan campaign stops. Those tax subsidies would end under the proposed legislation.

Also on the chopping block: tax credits incentivizing clean energy production from the 2022 Inflation Reduction Act, which coincided with several major federal investments in Michigan projects. 

Trump previously rescinded a Biden order that had established a national goal for 50% of all cars in the US to be zero-emissions by 2030 and directed the Environmental Protection Agency to establish related emissions and fuel economy standards. 

The changes could have a significant impact on Michigan automakers, which have already committed billions of dollars to transition to EVs and build batteries, and other businesses investing in renewable energy. 

A dozen vehicles produced by Detroit’s Big Three currently qualify for EV tax credits, which would go away under the legislation. 

Clean energy advocates panned the plan Tuesday, predicting the legislation could put more than 25,000 industry jobs at risk in Michigan alone and drive up energy costs. 

“At a time when energy demand is surging and families are already struggling to make ends meet, this bill would raise costs, make the grid less reliable, and make the U.S. more dependent on foreign oil,” said Lori Lodes, executive director of the advocacy group Climate Power.

Spending boost for border security, immigration fee hikes

The legislation includes new spending on border security and immigration enforcement, directing $46.5 billion towards border wall construction and billions more to detention facilities, surveillance technology, border security and the hiring and training of Immigration, Customs and Enforcement staff. 

Immigrants applying for humanitarian parole, temporary protected status, or work authorization would be subject to higher fees under the legislation. 

A former private prison facility in Michigan was recently tapped by ICE to serve as an immigrant detention center. If operated at full capacity, it’s poised to be the largest detention facility in the Midwest, and company officials estimate it could generate $70 million per year in profits. 

Homeland Security Secretary Kristi Noem also recently visited the state, vowing not to neglect security at the country’s US-Canada border.

Student loan shakeup

The GOP legislation also would eliminate several Biden-era repayment options for student loans, including the SAVE plan, an income-driven repayment program that accelerated the timeline for borrowers to get their loans forgiven after making several years of payments.

Those would be replaced with two repayment options for borrowers who take out new loans or consolidate existing ones after July 1, 2026: a standard repayment plan with fixed monthly payments and a “Repayment Assistance Plan” calculating monthly payments based on total adjusted gross income. 

There are roughly 1.4 million federal student loan borrowers in Michigan with an average of nearly $37,000 per borrower, according to the Education Data Initiative. Interest rates vary depending on the loan type and when it was taken out. 

Republican lawmakers estimate the plan could save $330 billion over the next decade. 

When announcing the repayment plan framework in April, US Rep. Tim Walberg, R-Tipton, said the current student loan system “is effectively broken and littered with incentives that push tuition prices upward,” calling the budget reconciliation process “a key opportunity to right-size this sinking ship.”

For future borrowers seeking income-based repayment assistance, the plan would require a minimum $50-per-month payment and includes adjustments for borrowers with children. 

Critics argue basing the calculations on adjusted gross income instead of a borrower’s discretionary income could mean some borrowers will have to choose between basic necessities and affording their student loan payments.