BREAKING: Trump’s Big Beautiful Bill Targets Key Tax Rules

July 4, 2025, 11:30 AM, Washington D.C. — Former President Donald Trump’s proposed “Big Beautiful Bill” could overhaul Medicaid funding, reintroduce car loan interest deductions, and remove the $10,000 SALT cap. The sweeping tax and healthcare reforms aim to win back middle-class voters ahead of the 2026 elections.

Medicaid Funding Faces Federal Restructuring

The bill proposes converting Medicaid into a state block grant system, limiting federal liability but raising concerns of budget cuts.

“It gives states more flexibility but risks reducing coverage,” said Dr. Rachel Lin, a public health analyst at Kaiser Foundation.

Block grants would cap federal aid per state, unlike the current open-ended model. Critics fear this may reduce access for low-income individuals.

Car Loan Interest May Return as Tax Deduction

For the first time since 1986, the bill proposes letting individuals deduct car loan interest for non-business vehicles.

“This move could ease inflation pressure on car buyers,” said Chris Turner, an analyst at AutoPolicy.org.

Analysts suggest the deduction would be capped at a certain income bracket and tied to American-made vehicles to boost domestic industry.

Healthcare Deductions Set for Expansion

Medical expense deduction thresholds would drop from 7.5% to 5% of AGI, expanding access for taxpayers with high out-of-pocket costs.

“Middle-income families battling health issues stand to gain the most,” said Dr. Anita Jha, policy advisor at Health Watch USA.

This is seen as a rollback of Obama-era limits and a political olive branch to suburban voters concerned with rising healthcare costs.

SALT Deduction Cap Removal Gains Steam

The $10,000 SALT deduction cap from the 2017 Tax Cuts could be fully repealed under the bill, especially benefiting high-tax states.

“This helps NY, CA, and NJ taxpayers immensely,” said economist Kevin Lopez.

While Republicans previously pushed for the cap, Trump’s pivot signals a political strategy shift to win support in traditionally blue states.

FAQs About Big Beautiful Bill

Q1: Will Medicaid coverage reduce under this bill?
A1: Possibly. The bill shifts Medicaid to block grants, which may lead to state-level coverage cuts.

Q2: Can everyone deduct car loan interest now?
A2: No. The proposed deduction may only apply to certain income brackets and vehicle types.