Now that the Big Beautiful Bill is law, here’s what it might mean for New Jersey

Last week, when President Donald Trump signed the One Big Beautiful Bill (OBBB) into law, he said it would help to bring about the “Golden Age of America,” repeating a line from his inauguration speech six months ago.

“As we approach the 250th anniversary of America’s founding exactly one year from now, we are creating an economy that delivers wealth for the middle class, a border that is sovereign and secure, and a military that is unmatched, unequalled, anywhere in the world,” Trump said from the White House balcony.

Republicans, who supported the bill en masse in Congress, cheered him on; Democrats, who harshly opposed it every step of the way, said it was a disastrous day for the American people. The bill will likely remain a political football through the 2026 midterm elections, when Republicans will be defending their House and Senate majorities (with at least two highly competitive seats in New Jersey).

But what will the bill actually do, in New Jersey and elsewhere? That’s a complicated question, given how broad it is – it touches on Medicaid, tax policy, the Supplemental Nutrition Assistance Program (SNAP, or food stamps), immigration enforcement, clean energy, abortion, and more – and how much is still unknown about the ways the American economy and health care system will react. Some of its most far-reaching provisions, too, won’t take full effect for years, making it even harder to forecast its long-term effects.

New Jersey’s politicians, state officials, and advocacy groups, though, are already preparing for what the bill will do for New Jersey’s finances and health care systems. And if you’re a Medicaid recipient in New Jersey, or you’re on food stamps, or you pay taxes of any kind, you’ll eventually feel some of its impacts, too.

Medicaid and health care

From the moment that the OBBB was drafted – in fact, from the moment the budget resolution, which simply laid out spending goals for the bill, was released – Medicaid, the enormous federal health care program for disabled and low-income Americans, has been its single biggest political and policy issue.

The final version of the bill reduces Medicaid funding by around $1 trillion, a number that steadily climbed as the bill made its way through the House and Senate this spring, with Republicans seeking to balance spending cuts against the bill’s expensive tax breaks. And according to the nonpartisan Congressional Budget Office, the results will be stark: an estimated 11.8 million Americans could lose health coverage by 2034.

In New Jersey specifically, state health officials have estimated that 350,000 people stand to lose NJ FamilyCare (the state’s local name for Medicaid) coverage due to new barriers put in their way; Rep. Frank Pallone (D-Long Branch) said that amounts to 20% of the state’s total NJ FamilyCare population and half of its Medicaid expansion population, those who became eligible for Medicaid under the Affordable Care Act. One state health official likened the effects of the bill to the Obamacare repeal that Republicans never managed to pass in 2017.

“Since the beginning of this debate, Governor [Phil] Murphy and I have been clear about what these proposed cuts to Medicaid, food assistance, and other essential programs would mean for New Jersey older adults, individuals with disabilities, and families struggling to make ends meet,” New Jersey Department of Human Services Commissioner Sarah Adelman said in a statement shortly after the bill passed the House. “We’ve conveyed this message – both publicly and privately – to our Congressional delegation, warning of the devastating consequences these measures would bring.”

What, exactly, is bringing about the reductions in coverage? Primarily two bureaucratic changes: one that mandates most able-bodied recipients complete at least 80 hours of work, education, or community service a month, with an additional community engagement requirement for childless adults; and another that requires Medicaid expansion recipients to reaffirm their eligibility twice a year rather than just once. Republicans cited the changes as critical to rooting out “waste, fraud, and abuse” in the Medicaid system.

Most Medicaid recipients are already working or in school, but Democrats have warned that the new requirements will create red-tape barriers that prevent otherwise eligible people from accessing Medicaid. Per the state Department of Human Services, the bill will also require the expansion population to pay out of pocket costs and impose a one-month limit on retroactive coverage for expansion recipients and a two-month limit for other recipients.

The bill additionally prevents some categories of legal immigrants, such as refugees, asylees, and visa holders, from accessing Medicaid and other programs like Medicare and Affordable Care Act subsidies. (Another proposed provision would have penalized New Jersey for its policy of providing NJ FamilyCare coverage for undocumented children, but that was stripped out of the bill by the Senate parliamentarian.)

Rep. Jeff Van Drew (R-Dennis), who had sounded the alarm about Medicaid cuts during negotiations on the bill, said that he believes the CBO’s estimate is overblown, arguing that those who need to access Medicaid will still be able to. He, along with fellow New Jersey GOP Reps. Tom Kean Jr. and Chris Smith, ultimately voted for the bill.

“These are not seniors, these are not people with disabilities, these are not people in nursing homes, these are not moms with young kids,” said Van Drew, who spoke repeatedly with Trump about Medicaid throughout the process. “These are able-bodied, generally single people, or couples, without kids that are getting Medicaid. In that case, they have multiple options: to work 20 hours a week, which is less than most people work, or to get involved in the community… We want people to improve themselves, and to have a better lot in life.”

Van Drew also noted that harsh Senate-proposed cuts to the provider tax, a policy that allows most states to collect more federal money for Medicaid, were scaled back in the final bill, in part at his insistence.

“As the bill was originally written by the Senate, it would have had a serious negative impact on our hospital system,” the congressman said in a statement. “I made it clear to Congressional leadership that I would not accept any legislation that did not correct this issue.”

Importantly, most of the changes to Medicaid won’t be coming for several years; both the work requirements and the more frequent eligibility checks won’t take effect until at least January 2027. That means that the next time the Republican members of Congress who supported the bill will be on the ballot in 2026, the Medicaid recipients most affected by the bill won’t have actually felt the brunt of its impact yet.

And while it’s not directly related to the provisions in the One Big Beautiful Bill itself, Democrats have also hit Republicans for allowing insurance premium tax credits implemented under the Affordable Care Act to expire, which will increase the cost of health care for many New Jerseyans and could push some off of it entirely.

The bill will additionally have major repercussions for the nation’s hospitals, with New Jersey officials estimating that the state will lose $3.3 billion per year in hospital and public health funding. 

Some of that is the result of direct changes to federal reimbursement policies that affect funding for hospitals and state governments. And some of it is also related to the fact that when hundreds of thousands of people are no longer covered by Medicaid, a big part of the state’s health care system is simply thrown out of whack, and hospitals have to deal with the fact that many of their patients no longer have health coverage.

To offset those problems, Senate Republicans added a provision that grants $50 billion towards the Rural Health Transformation Program, a new program designed to improve health care in rural areas and assist rural hospitals.

But New Jersey is far from a rural state – it’s the densest state in the nation – and doesn’t have any designated rural hospitals, calling into question whether any of the funds appropriated will actually make their way to the Garden State. (Per PBS, all 50 states will have until the end of this year to apply for funding.) And Democrats note that, given the $1 trillion reduction in Medicaid spending, a new $50 billion investment doesn’t nearly make up the gap.

All in all, Pallone said, the bill stands to harm both New Jerseyans who rely on Medicaid and the hospitals that serve everyone in the state regardless of their health insurer.

“[The bill] disproportionately hurts New Jersey, more than other states, and that’s what really bothers me,” Pallone said. “It makes the situation even worse for New Jersey hospitals, in my opinion, than for a lot of other hospital networks around the country.”

Taxes and SALT

The wide-ranging spending reductions for Medicaid were primarily done with one purpose in mind: lowering taxes, both by making prior tax cuts permanent and by adding some new tax policies that Republicans say will help working families.

In 2017, the Tax Cuts & Jobs Act broadly amended the U.S. tax code, reducing tax rates for both individuals and corporations as well as creating new tax credits for families and children. The OBBB makes those tax rates permanent, long a goal for Republicans who wanted to codify the tax rates before they expired at the end of this year.

The OBB also also adds a number of new policies like allowing workers to deduct up to $25,000 of tipped earnings and up to $12,500 in overtime earnings on their federal taxes, largely fulfilling Trump’s “no taxes on tips” pledge; creating a new tax deduction for automobile loan interest; and extending the child tax credit while boosting it from $2,000 to $2,200. (The New York Times has a tool allowing people to see how the various policies might impact their own pocketbooks.)

Chris Emigholz, the chief government affairs officer for the New Jersey Business & Industry Association, said that his organization is excited about what the bill’s tax provisions will do for New Jersey, especially when it comes to manufacturing.

“We all know that New Jersey is too expensive and taxes are too high,” Emigholz said. “A bill that has a lot of tax cuts that will benefit a lot of different people in New Jersey – across the income spectrum, not just higher earners, as sometimes has been reported – I think that’s a good thing for New Jersey.”

But Democrats argue that the net effects of the bill, accounting for both its tax changes and its cuts to social programs, will be negative for the poor and positive for the rich. An oft-cited study from Yale University’s Budget Lab found that the bottom 20% of earners stand to see their after-tax incomes fall by 2.3%, while the top 20% stand to see them rise by 2.3%.

One aspect of the bill’s tax policy that’s particularly important for New Jersey, both politically and policy-wise, is the State and Local Tax (SALT) deduction cap.

In 2017, Republicans passed a bill implementing a new $10,000 cap on SALT deductions, limiting how much higher-income taxpayers in high-tax states like New Jersey could deduct on their taxes. For years, New Jersey Republicans and Democrats alike had fought in Congress to raise the cap or get rid of it entirely, but they were repeatedly foiled regardless of who held power in Washington.

The OBBB at last addresses the issue, although with some caveats. After months of negotiation within the House and Senate GOP conferences, the final bill raises the SALT cap to $40,000 with further 1% increases each year, but it has a sunset provision that kicks the cap back down to $10,000 at the end of 2029. There’s also a phase-out of the higher cap once a taxpayer’s income exceeds $500,000.

Kean, who was part of a small cohort of blue-state Republicans laser-focused on the SALT cap, had initially fought for a permanent $40,000 SALT hike (or an abolition of the cap entirely), but he cited the eventual compromise as a major win for New Jersey regardless.

“We secured the full SALT deduction for every middle-class family in New Jersey,” Kean said in a statement after the bill passed. “I never backed down from the fight for SALT relief, standing up to Democrats and Republicans alike to quadruple the deduction to $40,000.”

The tricky thing about the change, though, was that the SALT cap was theoretically already set to expire, alongside many of the other tax cuts from the 2017 tax bill, at the end of this year. That gives Democrats the political ammunition to argue that Kean (and Smith and Van Drew) voted to keep a SALT cap, even a higher one, rather than letting it disappear.

“Doing nothing would be an improvement over the position that you and your party have put New Jersey families in for nearly a decade,” Senator Andy Kim wrote in a letter to Kean, who represents a swing district that Democrats are targeting next year. “Frankly, anything you vote for other than a full repeal of the SALT cap harms our constituents.”

Food stamps

Aside from Medicaid, the other major social spending program targeted by the OBBB is SNAP, or food stamps, the federal government’s program for helping low-income Americans buy food.

Under current policy, SNAP is entirely federally funded, but the bill implements a new cost-sharing policy that will require states to pay for a portion of SNAP funding starting in 2028 based if they have a payment error rate above 6%. New Jersey officials estimate that could cost the state an additional $100 million to $300 million; the wide range in estimates comes from the fact that it remains unclear how the error rate will be calculated.

That’s a major new hole to fill in the state budget, with officials warning that it could lead to the entire program falling through. And another change, cutting the federal administrative reimbursement by half, stands to increase costs by another $78 million for New Jersey’s county governments, which handle enrollment and eligibility.

“Feeding those in need is a test of our shared humanity and it should never be treated as fodder for a political agenda,” said New Jersey Assembly Speaker Craig Coughlin (D-Woodbridge), who has frequently made food security programs a priority as speaker. “With the stroke of a pen, millions of Americans are now at risk of having food taken off their dinner tables in order to extend tax cuts for the wealthiest Americans. It’s a cruel and backward choice that punishes those who need help the most.”

Clean energy

Back in 2022, President Joe Biden’s Inflation Reduction Act implemented a huge number of new tax credits and incentives for clean energy development around the country. The OBBB rolls many of those programs back, and more generally takes a hatchet to clean energy in favor of traditional energy sources like gas and coal.

The bill phases out many of the federal government’s longstanding credits for wind and solar energy, with most new projects that enter service after 2027 becoming ineligible for the credits. It also targets some consumer-focused programs like one tax credit for purchasing electric vehicles and another for making energy efficiency improvements on one’s own home, both of which will now phase out later this year.

For oil and gas companies, meanwhile, the bill opens up more areas across the country and offshore to drilling and mining, and it “slashes the royalties that producers pay the government for pumping oil and gas on federal lands,” per CNBC.

The precise impacts of these changes on New Jersey are still somewhat opaque. They will certainly make it harder for the state, which has been in the process of trying to transition to a cleaner energy system for years, to proceed with major green energy projects – but the state’s biggest recent foray into clean energy, its offshore wind program, was already faltering even before the bill was passed.

Pallone and state officials, though, said that the effects of the changes can only be negative for New Jersey’s clean energy economy.

“We have to prioritize clean energy, because ultimately it’s going to be cheaper, it’s renewable, and it reduces greenhouse gases in the atmosphere,” Pallone said. “They’re essentially saying in this bill, forget about clean energy. We’re not prioritizing that at all. We’re not giving you the tax credits, we’re phasing down the tax credits.”

Kean, too, expressed some worries during the negotiation process that the bill cut into clean energy programs too deeply despite ultimately voting for the bill. And Emigholz said he remains skeptical about the GOP’s decision to phase out what had been a growing piece of New Jersey’s economy, though he said that some of it was offset by the bill’s parallel investments in manufacturing.

“We should support alternative energy sources,” he said. “I think it was a good thing that New Jersey invested in clean energy; I think it’s a good thing that the feds did. I am concerned about rolling back some of the Inflation Reduction Act investments in clean energy.”

Immigration enforcement

One of the chief arguments Trump and Republican leaders made for passing the bill was its substantial new investments in national defense and immigration enforcement, two major priorities for the deportation-focused Trump administration.

The bill allocates $175 billion for border security and immigration enforcement; according to CBS, that includes $45 billion for Immigration and Customs Enforcement (ICE)’s sprawling network of immigrant detention facilities and $30 billion for ICE’s deportation efforts, plus billions more for security at the U.S.-Mexico border.

How that money will ultimately be used and allocated is yet to be seen, but it will undoubtedly have impacts on New Jersey, which is home to a huge number of immigrants here both legally and illegally. The state is home to two federal immigrant detention facilities, Delaney Hall in Newark and the Elizabeth Detention Center, that may get increased funding under the bill.

More generally, New Jersey has hosted two of the biggest immigration-related battles of the early Trump administration: the detainment of former Columbia graduate student Mahmoud Khalil (whose release was ordered by a New Jersey federal judge) and the scuffle at Delaney Hall that resulted in charges against Rep. LaMonica McIver (D-Newark). More money going towards ICE may mean yet more battles like those, in New Jersey and elsewhere.

“While families brace with skyrocketing rents and lose essential services, our tax dollars will be funneled for the creation of more ICE jails that will tear our families apart,” argued Nedia Morsy, the director of the immigrant rights group Make the Road NJ.

Other impacts

The OBBB truly lives up to the “big” part of its name, and at 870 pages, there are all sorts of other policies embedded in the bill that could reshape key areas of American life.

One of those provisions, as detailed more thoroughly in NJ Spotlight News, relates to abortion. Under the bill, Planned Parenthood and other organizations that provide abortions would be unable to accept funding from Medicaid, which Planned Parenthood officials project would force cuts and closures at its New Jersey clinics; the policy has been temporarily paused by a federal judge in Massachusetts.

The bill also provides some funding that will head directly to certain states or facilities, including New Jersey; Van Drew has touted its major investments in South Jersey’s aviation and Coast Guard infrastructure, with $425 million going towards the U.S. Coast Guard Training Center in Cape May alone.

“It might be the most money in one shot that ever came into my district,” Van Drew said. “What we’re doing with the Coast Guard is unbelievable.”

And Kean said that one of his priorities, a policy reimbursing state and local governments for security expenses incurred when presidents come to visit, also made it into the bill. (The provision is important for Kean, who represents the Trump golf course in Bedminster that the president often visits.)

The bill had so many facets, in fact, that some Republicans seemed unaware of everything they had voted for; several Republican senators told HuffPost that they didn’t know how a provision limiting tax deductions for gambling losses ended up in the bill.

And on a larger scale, one of the bill’s biggest long-term effects is an increase in the federal deficit – a $3.4 trillion increase, according to the CBO, though Republicans dispute that number and argue that the total is lower if one uses a budgetary trick to essentially wipe away the cost of extending the 2017 tax cuts. (The bill also includes a hike to the debt ceiling, a priority for both Trump and Democrats.)

To what extent that will end up mattering in New Jersey is unclear – unlike the state government, after all, the federal government doesn’t have to produce a balanced budget every year – but Democrats will undoubtedly use it as a political cudgel against Republicans, who have long proclaimed the virtues of bringing down the federal deficit.

What’s next

Because so many of the bill’s most impactful provisions won’t go into effect for years, it will take a while for anyone to lose SNAP benefits or health coverage, though some of the tax cuts and credits will take effect right away. That creates something of a vacuuminto which both Democrats and Republicans can put their own political messaging.

Democrats argue that the bill’s cuts, especially to Medicaid, are devastating both morally and politically, and they have data to support their argument: multiple polls have shown solid majorities of Americans disapproving of the bill, though certain individual policies are more popular. When speaking on the bill, many New Jersey Democrats specifically point to the fact that the state’s three Republican congressmen had the votes to sink it at several points if they wished, and chose not to.

“If our three Republicans had voted the other way, it would have failed,” Pallone said. “They’re fully responsible.”

Republicans, for their part, have leaned heavily into messaging around the bill’s tax cuts, explaining away its Medicaid provisions as common-sense reforms to prevent bad actors from abusing the system. By opposing the bill, they contend, vulnerable Democratic like Rep. Nellie Pou (D-North Haledon) essentially voted for a tax hike, since failing to pass any bill would have allowed the 2017 tax cuts to expire.

On a practical level, state politicians will have to spend the next several years preparing for the eventual shortfalls that the bill creates. Republican gubernatorial nominee Jack Ciattarelli said that he supported the bill while Rep. Mikie Sherrill (D-Montclair), his Democratic opponent, opposed it – but either of them will have to find a way to resolve the losses in federal funding for health care and SNAP if they win the governor’s office in November.

From his perspective, Emigholz said that he thinks the bill will be a mixed bag for New Jerseyans, with some things to celebrate and other things to criticize.

“With a bill this massive, there’s going to be good and bad, and some of those bad things might offset some of the good things,” Emigholz said. “Is it a net negative, a net positive? That’s hard to say.”