About that notice from the Social Security Administration

Dear John,

You probably know that President Trump signed H.R.1 into law on July 4th. I have received hundreds of calls and emails in the week since about the so-called "big, beautiful bill" with questions ranging from what happens to people who are covered by Medicare and Medicaid to how much you'll save in taxes. People are confused, and rightly so. This is a big bill--nearly 1,000 pages long--and elected officials are talking about it in very different ways.

I can't address every question my offices have received since the bill passed, but I want to touch on a few big topics getting a lot of attention from our community.

First, let's tackle Social Security. Millions of Americans received an email over the weekend from the Social Security Administration which celebrated the passage of H.R.1 and claimed that it "ensures nearly 90% of beneficiaries will no longer pay federal income taxes on their benefits."

Let me be clear: There is nothing in the bill that eliminates federal taxes on Social Security income or changes its taxation structure. Nothing. (You can read the bill yourself by clicking here.)

H.R.1 does provide a temporary tax deduction (from 2025 to 2028) for individuals who are 65 and older, phased in for those who claim the standard deduction and who earn below certain income thresholds. People who qualify will receive this temporary deduction whether they are currently on Social Security or not.

Overtime and Tips

H.R.1 provides another temporary (2025-2028) federal income tax deduction for what is called "qualified" overtime and tips, which phases out entirely at the $150,000 income threshold for individuals. Because this is for federal taxes only, employers and individuals are still responsible for deducting and paying the Medicare and Social Security taxes on this income.

So what does "qualified" actually mean for overtime and tips?

"Qualified" tips are those paid in cash in a job where employees would normally be tipped. There will be a list of qualifying occupations released in the next 90 days, by law. "Qualified" overtime applies to overtime required to be paid under the Fair Labor Standards Act (FLSA) only. The deduction will apply if the overtime is earned under FLSA and only to the hourly difference so if an employee earns $10 an hour for regular hours, and $15 an hour for overtime, only the $5 difference is eligible for the new tax deduction.

Timing is Everything

Another interesting feature of H.R.1 is the timing of its provisions. While the Trump tax cuts for millionaires and billionaires are immediately effective and now permanent, the most painful and damaging of its provisions will begin in late 2026 after the midterm elections. That timing is intentional, not accidental.

Medicaid

New work rules for people covered by Medicaid insurance will take effect in December 2026. These rules, new co-payment cost-sharing and twice-annual certification will, according to the Congressional Budget Office, lead to a sharp uptick in newly uninsured Americans.

Food Aid

The $186 billion reduction in funding for SNAP begins in late 2026, a nearly 20% reduction in program funding. States will be required to cover more of the program costs and will be limited in their ability to waive work requirements. Work requirement exemptions for our veterans, people experiencing homelessness and young adults in foster care have been eliminated.

House Speaker Mike Johnson hands over the Speaker's gavel to President Trump after the signing of H.R.1

Clean Energy

Clean and renewable energy tax credits established under the Inflation Reduction Act of 2022 will be phased out beginning mid-2026. The Energy Efficient Home Improvement credit and the Residential Clean Energy Property credit will expire December 31, 2025.

Student Loans

H.R.1 makes significant changes to the federal student loan program which will be phased in gradually between now and next year. Undergraduate subsidized loans are eliminated, which means interest on the loans will accrue while students are still in school. Federal loans for graduate and professional students will also be eliminated, and income-driven repayment programs will change to two other payment plans. Parent PLUS loans will be capped and no longer eligible for repayment programs.

Cuts to affordable housing will be phased in starting in 2026, and funding for rural hospitals will decrease in early 2026 as well. I will continue to share information about the timing and impacts--both positive and negative--of H.R.1 as Congress gets more details from the Trump administration and the government agencies responsible for implementing the new policies under the bill.

Some Good News for Business Owners

If you own a business, there are a number of tax advantages in H.R.1, including research and development expenses, an employee retention tax credit and modifications to deductible business expenses for moving, transportation and more.

Read The Bill

Employee or business owner, single filer or married, college student or senior, I encourage everyone to dig into the details of President Trump's tax and spending bill to understand how it will impact you.

A Warning About Measles

We got new data from the CDC on July 9 and it's not good. The measles virus is back, cases in the U.S. are at a record high and we face deadly outbreaks. Through safe and effective vaccines, we eliminated measles 25 years ago.

The measles vaccine was safe then and is safe now. Health and Human Services Secretary Robert F. Kennedy Jr. said, "The most effective way to prevent the spread of measles is the MMR vaccine." For the health of everyone in our community, please talk to your doctor about the measles vaccine and help us stop the virus' spread.

Hot Topics

One of the folks living in PA-06 suggested I share with you the top three issues my offices get calls and emails about, and I think it's a great idea. Here's what our neighbors are thinking about this week:

The cuts made to Medicaid and SNAP in H.R. 1
Concern about the lack of oversight on Immigration and Customs Enforcement (ICE)
The cuts to staffing at the National Oceanic and Atmospheric Administration (NOAA)

Serving as our community’s representative in Congress is the honor and privilege of my lifetime and I hope you will reach out about the issues you care about.

As always, please contact my office if you need assistance.

Sincerely,

Chrissy Houlahan

U.S. Member of Congress

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