US House passes Trump’s showpiece tax bill

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The US House of Representatives has passed Donald Trump’s showpiece tax bill by a single vote after days of wrangling between disparate factions of his Republican party, paving the way for the first big legislative success of his second term.

The Republican-controlled House voted at about 7am in Washington by 215-214 to approve the more than 1,000-page legislation, which would slash taxes, reduce social spending and increase federal debt.

It now goes to the Senate, where the Republicans hold a slim majority.

The sprawling legislation, which Trump has called his “big, beautiful bill”, has been at the centre of a fierce battle among Republican lawmakers in recent days.

House Speaker Mike Johnson had battled to overcome sticking points including cuts to state-backed healthcare spending and clean-energy tax credits, and the level of state and local taxes that can be deducted from federal levies.

“This one big, beautiful bill is the most consequential legislation that any party has ever passed, certainly under a majority this thin,” Johnson said minutes before the legislation’s passage, hailing it as a “turning point in American history”.

He added that Democratic opponents of the bill were voting for “the largest tax increase” in US history.

But Hakeem Jeffries, the minority leader of the House, said the bill would deprive at least 13.7mn people of their healthcare insurance, “taking food out of the mouths of children, disabled Americans, veterans and older Americans” because of cuts to food stamps.

“It’s one, big ugly bill,” he said. “It’s an assault on the economy . . . to enact the largest tax breaks for billionaires in American history.”

The bill’s passage by the House marks a big political victory for Trump, whose approval ratings have languished following weeks of market turmoil triggered by his trade war.

The non-partisan Committee for a Responsible Federal Budget estimates that the legislation will increase US national debt by more than $3.3tn over the next decade, increasing federal government debt held by the public from about 98 per cent of GDP to a record 125 per cent.

Investors have closely watched the bill amid concerns about the US’s growing fiscal deficit, which led Moody’s to strip the US of its triple A credit rating last week and pushed up bond yields, which move inversely to prices.

The 30-year Treasury yield has risen 0.19 percentage points this week to 5.08 per cent, the highest level since late 2023, as the price of the bonds fell.

The S&P 500 share index fell 1.6 per cent on Wednesday as concern about the deficit spilled into equity markets.

The bill would make permanent tax provisions from Trump’s first administration — including individual income tax cuts — that would otherwise expire at the end of this year.

It would also slash taxes on tips and overtime pay, following Trump’s pledges during his successful 2024 presidential campaign and increase spending on border security.

Republicans have sought to reduce the price tag of the bill by slashing nearly $800bn from Medicaid — the US healthcare scheme for those on low incomes — and hundreds of billions more from the food stamp programme and clean energy tax credits.

Thursday’s vote came after Republicans who opposed the bill met Trump at the White House on Wednesday.

The president also visited Capitol Hill this week to urge his party to pass the legislation after conservatives expressed concern about its cost and moderate Republicans pushed for a greater state and local tax deduction.

Russell Vought, Trump’s director of the Office of Management and Budget, has said that the legislation includes the most significant spending cuts in the past three decades. However, some hardline conservatives pushed for further cuts.