{"id":20757,"date":"2025-06-09T09:26:32","date_gmt":"2025-06-09T09:26:32","guid":{"rendered":"https:\/\/theprogenygroup.com\/knowledge-hub\/president-trumps-big-beautiful-tax-bill-and-what-it-means-for-markets\/"},"modified":"2025-06-09T12:21:07","modified_gmt":"2025-06-09T12:21:07","slug":"president-trumps-big-beautiful-tax-bill-and-what-it-means-for-markets","status":"publish","type":"post","link":"https:\/\/theprogenygroup.com\/en-be\/knowledge-hub\/president-trumps-big-beautiful-tax-bill-and-what-it-means-for-markets\/","title":{"rendered":"President Trump’s ‘big, beautiful’ tax bill and what it means for markets"},"content":{"rendered":"\n

What happened?<\/strong><\/h2>\n\n\n\n

<\/p>\n\n\n\n

Last month the Republican-controlled U.S House of Representatives narrowly passed a sweeping multi-trillion-dollar tax and spending bill likely to enact much of Trump\u2019s policy agenda for his second term in the White House. As the bill now moves to the Senate, which will have the chance to approve or change some provisions of it, markets have delivered their initial verdict.<\/p>\n\n\n\n

<\/p>\n\n\n\n

What are the details of the bill?<\/strong><\/h2>\n\n\n\n

<\/p>\n\n\n\n

The package would cut both individual and corporate taxes deeply \u2013 essentially making permanent the sweeping income tax provisions of Trump\u2019s 2017 Tax Cuts and Jobs Act, whilst also adding several temporary tax breaks to fulfil the president\u2019s campaign promises.<\/p>\n\n\n\n

The bill increases the deduction limit for state and local taxes (Salt), a significant issue for some in the Republican party. There is currently a $10,000 cap on how much taxpayers can deduct from the amount they owe in federal taxes, but under the new bill House Republicans have raised the Salt limit to $40,000 for married couples, with incomes up to $500,000.<\/p>\n\n\n\n

In a move designed to make up for tax revenue loss, one of the more controversial details includes additional restrictions and requirements for Medicaid, the healthcare programme relied upon by millions of elderly, disabled and low-income Americans. However, the tax revenue loss would still swamp these spending reductions.<\/p>\n\n\n\n

Of equal note during the campaign trail was Trump\u2019s promise to end tax on tips and overtime pay, which were both successfully included. The bill would also boost military spending by $150 billion and add $175 billion for immigration enforcement. Other provisions include reorienting the government away from climate change provisions in favour of fossil fuels, and new language that would speed up the end of clean energy tax credits passed under the Biden administration.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Why are Bond markets concerned?<\/strong><\/h2>\n\n\n\n

<\/p>\n\n\n\n

Following news at the start of last week that Moody\u2019s had downgraded the country\u2019s long-standing triple-A rating to Aa1 – blaming successive presidents for a ballooning budget deficit \u2013 concerns about fiscal sustainability were already growing, with government debt at uncomfortably high levels.<\/p>\n\n\n\n

The non-partisan Committee for a Responsible Federal Budget estimates that the legislation would increase the public debt by at least $3.3tn through to the end of 2034. It would also increase the debt-to-GDP ratio from 100% today to a record 125%, the group said, which would exceed the rise to 117% projected over that period under current law.<\/p>\n\n\n\n

With that, yields on the 30-year Treasury bonds passed the 5% mark on Wednesday, a signal that investors will require an additional premium to lend longer-term to the US government. This reflects concerns about not only a higher budget deficit, but potentially more elevated inflation too, which still remains short of the Federal Reserve\u2019s 2% target \u2013 despite making good progress, more recently. This, combined with ongoing concerns around the impact of tariffs, will likely add to more immediate-term volatility.<\/p>\n\n\n\n

<\/p>\n\n\n\n

How should investors respond?<\/strong><\/h2>\n\n\n\n

<\/p>\n\n\n\n

Whilst these latest developments have added to an already uncertain environment, it is important to be mindful of the importance of a longer-term, strategic outlook. After President Trump\u2019s \u2018liberation day\u2019 tariffs, in which the markets initially responded with a dramatic sell-off, the US large-cap index returned 19.6% from 8th<\/sup> April to 16th<\/sup> May, making it one of the sharpest comebacks in stock market history. We well know how markets can quickly gyrate over geo-political news, but we equally know that staying the course and sticking to one\u2019s longer-term goals has proven to be the most appropriate course of action, and we do not expect any different this time around.<\/p>\n\n\n\n

<\/p>\n\n\n\n

\n

This article is distributed for educational purposes only and should not be considered financial advice.<\/p>\n\n\n\n

The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.<\/p>\n\n\n\n

Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.<\/p>\n\n\n\n

The Financial Conduct Authority does not regulate will writing and some forms of estate planning. <\/p>\n\n\n\n

The information provided within this guide is of a generic nature, which is not specific to your personal circumstances and should not be taken as advice or recommendation. Individuals must not rely on this information to make any financial or investment decision. Before making any decision, we recommend you consult your financial planner to consider your particular investment objectives, financial situation, and individual needs. Any tax treatment is dependent on the individual circumstances of each client and may be subject to change in future. This email\/webpage may contain links to third\u2011party websites that are not operated or controlled by us. <\/p>\n\n\n\n

We are not responsible for the content, security, or practices of any third\u2011party sites. Clicking these links is at your own discretion and risk.<\/p>\n\n\n\n

Any links to third party websites provided are for convenience only. We do not control, endorse, or guarantee the content, accuracy, or availability of these external sites. Users access these links at their own risk<\/p>\n\n\n\n

<\/p>\n<\/div>\n\n\n