The law unfolds in phases, with tax, health care, and safety-net provisions taking effect over multiple years.

President Donald Trump, joined by Republican lawmakers, signs the One, Big Beautiful Bill Act into law during an Independence Day military family picnic on the South Lawn of the White House on July 4, 2025. Samuel Corum/Getty Images

Some measures apply immediately or retroactively to income earned this year, while others—particularly changes to health care, federal assistance programs, and student loans—are delayed to allow agencies and states time to adapt administrative systems and implement the new rules.

At the core of the legislation is the permanent extension of key provisions from the 2017 Tax Cuts and Jobs Act, locking in individual income tax brackets and the expanded standard deduction. For 2025, the standard deduction is $15,750 for single filers and married individuals filing separately, $31,500 for married couples filing jointly, and $23,625 for heads of household.

The law also creates a temporary senior deduction, allowing eligible taxpayers 65 and older to claim an additional $6,000 deduction for 2025 through 2028, with a phaseout beginning at $75,000 in modified adjusted gross income for single filers.

Beginning in tax year 2025, the legislation also makes up to $5,000 of the adoption credit refundable, indexed to inflation. It further allows taxpayers to deduct interest paid on a loan used to buy a personal vehicle, up to a maximum of $10,000, with the deduction phasing out at incomes over $100,000.

The law raises the cap on the state and local tax (SALT) deduction from $10,000 to $40,000 beginning in 2025, providing relief to taxpayers in high-tax states. The cap will increase in subsequent years before reverting to $10,000 in 2030.

Several clean-energy incentives begin winding down in 2025 as well.

The law accelerates the end of clean vehicle credits, making the new, used, and commercial clean vehicle credits unavailable for vehicles acquired after Sept. 30, 2025. It also ends energy-efficiency credits for homes placed into service after Dec. 31, 2025, and halts residential clean energy credits for expenditures made after that date.

On health policy, several changes take effect immediately. The law halts enforcement of a Centers for Medicare & Medicaid Services (CMS) rule designed to simplify enrollment in the Medicare Savings Programs, and blocks a separate CMS rule streamlining enrollment across Medicaid, the Children’s Health Insurance Program (CHIP), and the Basic Health Program.

It also suspends CMS’s minimum nurse staffing standards for long-term care facilities until 2034, and bars federal payments to abortion providers—except in limited circumstances—for one year beginning July 4, 2025.

Later in 2025, the law allows the Affordable Care Act’s (ACA) enhanced premium tax credits to expire and requires marketplace enrollees to repay excess premium tax credits if their final income exceeds eligibility thresholds.

Health policy changes also accelerate in 2026. Beginning Jan. 1, the law ends a temporary federal financing incentive that had boosted matching funds for states that expanded Medicaid under the ACA, reducing federal support for expansion states relative to prior years.

The legislation also narrows eligibility for subsidized ACA marketplace coverage. Starting in 2026, lawfully present immigrants with incomes below the federal poverty level lose access to premium tax credits, and individuals who enroll through a low-income special enrollment period are barred from receiving subsidies. Beginning Oct. 1, the law restricts Medicaid eligibility by narrowing the definition of qualified immigrants, limiting coverage largely to lawful permanent residents and a small set of exempt groups.

Implementation of Medicaid work and reporting requirements also begins to take shape in 2026. By June 1, the Department of Health and Human Services must issue an interim final rule detailing compliance standards. States must begin enforcing the requirements by Dec. 31, 2026, generally obligating able-bodied Medicaid expansion enrollees ages 19 to 64 to document at least 80 hours per month of work, community service, or other qualifying activities to maintain coverage. The law allows a one-time compliance extension through 2028 for states demonstrating good-faith implementation efforts.

Additional coverage design changes also take effect in 2026. The law expands the use of high-deductible health plans by treating certain bronze and catastrophic plans sold on the ACA marketplaces as eligible for health savings accounts, allowing enrollees to shelter more income from taxes.

Beginning Jan. 1, 2027, individuals who lose Medicaid coverage due to noncompliance with work and reporting requirements are barred from receiving subsidized ACA marketplace coverage, limiting alternative coverage options for disenrolled beneficiaries. The law also prohibits federal officials from waiving the work requirements, cementing the policy nationwide.

Additional Medicaid administrative rules take effect the same year. States must begin verifying enrollee addresses using reliable data sources, conduct at least quarterly checks of federal death records to ensure deceased individuals are removed from rolls, and shorten retroactive Medicaid coverage to one month before application for expansion enrollees and two months for traditional enrollees.

Changes also take effect in the ACA marketplaces. Most lawfully present immigrants become ineligible for premium tax credits and cost-sharing reductions, with limited statutory exceptions.

Later in the year, the law begins phasing down states’ use of Medicaid provider taxes, gradually lowering the safe-harbor threshold for expansion states from the current 6 percent to 3.5 percent by 2032, reducing states’ ability to use provider taxes to finance Medicaid and draw down federal matching funds.

Several tax benefits—including deductions for tips, overtime, seniors, and qualifying vehicle loan interest—are scheduled to expire at the end of 2028 unless extended by Congress. That same year, states will be required to assume some responsibility for SNAP benefit costs, ending the program’s longstanding structure of full federal funding.

Medicaid financing and oversight also tighten beginning in 2028. The law starts to reduce state-directed Medicaid payments by 10 percent each year until they reach the allowable Medicare-related payment limit. It also imposes stricter provider screening and verification requirements, including regular checks of federal death records.

Changes to ACA marketplaces also take effect in 2028, requiring pre-enrollment verification for premium tax credits. Enrollees may still sign up for coverage, but subsidies are withheld until income and eligibility information are verified. Individuals who fail to reconcile prior-year credits may lose access to new subsidies.

Later in 2028, states must impose new cost-sharing requirements on certain Medicaid expansion enrollees with incomes between 100 and 138 percent of the federal poverty level, allowing charges of up to $35 per service, subject to caps and exemptions for primary care and other safety-net services, as well as for rural health clinics.

Additional integrity measures extend into 2029, including new systems to prevent duplicate Medicaid enrollment across states and reductions in federal payments tied to improper Medicaid payments.

Federal agencies are expected to issue additional guidance as implementation deadlines approach, clarifying eligibility rules and compliance requirements.