H.R. 1, the Fiscal Year (FY) 2025 Budget Reconciliation bill signed into law (P.L. 119-21) by President Trump on July 4th, 2025, will result in massive cuts to programs critical to older Americans and their families. Specifically, the law slashes spending on Medicaid by more than one trillion dollars over the 10-year period from 2025 to 2034. Additionally, it shrinks food aid spending in the Supplemental Nutrition Assistance Program, or SNAP, by over $180 billion.
For seniors, the law is the worst of all worlds: unprecedented cuts to longstanding safety net programs that provide health care and essential services to lower- and moderate-income Americans of all ages – all to partially offset the cost of huge tax cuts that primarily benefit the already-wealthy, and large, profitable corporations. At the same time, the law adds trillions of dollars to the nation’s debt. This will inevitably give some in Congress the excuse to push for cuts to Social Security and Medicare – earned benefit programs that are relied on by all seniors and their families.
While the massive law has many provisions that could affect seniors, below are the five most damaging changes to law that older Americans need to know about:
- The law unleashes rivers of red ink
The Republican law is the most expensive reconciliation law in history. It increases the federal debt limit by $5 trillion, and is estimated to add $3.4 trillion to the national debt over the next decade, plus over $500 billion in increased interest costs. If the temporary provisions in the law are made permanent, the cost is estimated to rise to $5.5 trillion, raising the national debt from 100 percent of the economy today to 127 percent by 2034. Because Republicans have refused to look at the revenue side of the budget, and have instead chosen to funnel trillions of dollars of revenue through tax giveaways to the uber-rich, many of them are now falsely arguing that the real threats to our nation’s economy are American’s earned benefit programs. Cutting and privatizing Social Security and Medicare have long been a goal of many fiscal conservatives, and the artificial economic crisis Republicans have triggered by enacting this law could provide an excuse – and a false argument – that these critical programs must be cut deeply.
- Historic cuts to Medicaid will leave seniors struggling to find health care services
The cuts in Medicaid are the largest in history. CBO’s final analysis of the law estimates that cutting Medicaid spending to states by $1 trillion will cause 10 million American to lose their health insurance. The decision to end current subsidy payments to offset premium costs at the end of this year for Affordable Care Act (ACA) insurance will make out-of-pocket costs unaffordable for many, causing an additional 4.2 million Americans to lose their coverage – many of them ages 55-64 who, due to their age, are charged the most expensive premiums. Along with other health care cuts, a total of about 17 million Americans will lose their health insurance according to CBO.
While President Trump and the other supporters of the law promised not to cut Medicaid and claim that only those in the country illegally will be harmed, this is not true. The law’s cuts will starve many hospitals and health facilities of financial resources to operate, forcing some to close – thus endangering the health not only of those who lose Medicaid coverage, but of everyone living in the community. In addition, many of the law’s cuts could increase inefficiency in the Medicaid system. Medicaid cuts that result in longer wait times for services, reduced access to preventive and primary care, and decreased quality of services, may usher in a new epidemic of sicker people seeking help in emergency rooms – the highest health care cost setting.
The drastic cuts to Medicaid funding and increasing costs for states will result in fewer staff being hired to provide services, and less training. At the same time, the massive cuts will leave states with little choice but to cut the home and community-based services (HCBS) that make it possible for seniors and the disabled to age outside of institutional settings. That’s because while it is mandatory for states to provide Medicaid coverage, HCBS services are optional. It is highly likely that both older adults and people with disabilities will be less able to get home and community-based services that support them living independently in a residence of their choosing.
Medicaid is our nation’s largest health care coverage program, and it provides essential resources for hospitals, clinics, outpatient surgery centers and much more. Medicaid is also the largest payer of long-term services and supports for seniors in our country, and provides over 60 percent of the funding for nursing homes. The impact of the severe funding cuts and policy changes in the Republican law – which take effect after the election next year in order to hide the harm from voters – means nursing homes will further cut nurse and nurse aide staff, already at critically low levels in many facilities, leading to thousands of premature deaths every year.
These impacts could be especially severe in rural areas, where health care services are already stretched thin. Rural hospitals often face unique challenges such as high marginal costs due to serving fewer patients – a big reason why so many rural hospitals have already closed in the last 20 years. Nearly half of all rural hospitals nationwide operate at a deficit, with Medicaid barely keeping them afloat. According to a recent survey, nearly 60 percent of nursing homes could be forced to fire staff and 27 percent could be forced to shut down entirely. Although the Senate added a $50 billion Rural Health Fund to attempt to mitigate the impact of the Medicaid funding cuts, this represents about one-third of the estimated loss of Medicaid funding in rural areas.
Harsh new work requirements under the law will adversely impact the more than nine million adults aged 50 to 64 who rely on Medicaid. Analysts warn they are likely to cause administrative headaches for many employed in low-wage jobs with little scheduling flexibility, leading more people to lose their coverage due to procedural issues, rather than actual ineligibility. Additionally, older adults often face employment challenges that are exacerbated by age discrimination. They typically contend with longer unemployment duration, age-related health and physical limitations, and difficulties in securing new positions that match their skills and experience. The Administration’s counterproductive proposal to eliminate a key federal program focused on job training and placement for lower income seniors – the Older Americans Act’s Senior Community Service Employment Program (SCSEP) – will compound these serious challenges.
Many of those who are low income and between the ages 50 to 64 are family caregivers providing assistance to their working adult children who need a reliable source of child care. A majority of this cohort are middle-aged and older women, who are also frequently called upon to support relatives who are ill, and those who have functional disabilities. For the first time ever, these older adults could lose their health care coverage through Medicaid, as well as food assistance benefits, conditioned on meeting work and reporting requirements that will be set and enforced by states and the federal government.
Medicaid also helps to make Medicare more affordable for lower income older adults by covering services that Medicare does not cover, such as nursing facility care, dental, vision, hearing, and non-emergency medical transportation. Under the new law, these important optional benefits for millions of people with Medicare are also in grave danger of being eliminated or cut significantly.
- Medicare is Also Vulnerable to Future Cuts
In an era of high deficits, federal budget law requires across-the-board cuts to many programs, including Medicare, if deficit spending in any fiscal year reaches certain thresholds. CBO has estimated the Republican law will trigger an automatic 4 percent cut in Medicare spending at the end of 2025 – unless Congress acts to block these cuts. Already, many Republicans are claiming – as they did falsely for Medicaid – that Medicare should be cut to reduce “waste, fraud and abuse.”
In addition, 12.5 million low-income Medicare beneficiaries rely on Medicaid to pay for, or partially subsidize, their Medicare copayments, deductibles and premiums. The cuts to Medicaid will make their earned Medicare benefits difficult to afford – or unaffordable – for many of these dually eligible beneficiaries.
The new law also halts implementation of a recent policy change designed to increase participation in the Medicare Savings Program (MSP), which helps seniors access Medicare by paying for their deductibles, premiums and copayments. Analysts estimate that 1.4 million low-income Medicare beneficiaries will lose this critical financial assistance, which is also linked to the Low-Income Subsidy (LIS) program that lowers out-of-pocket costs for prescription drugs.
Finally, while seniors advocacy groups thought that the drug price negotiation provisions in the Inflation Reduction Act (IRA) remained relatively unscathed by the budget reconciliation law, a further review of the new provisions indicates they could be much more harmful. Changes originally portrayed as a minor technical tweak to IRA affecting a small number of drugs for rare diseases (e.g., orphan drugs) appears to be broad enough to cover a number of huge, blockbuster drugs that would soon have been subject to price negotiations. For example, two of the top selling cancer drugs appear to meet the new definition of prescription medication that can be excluded from negotiation. As more experts look at the language, this number could grow.
- Historic cuts to SNAP food nutrition programs will leave millions of seniors hungry
The Republican law cuts over $180 billion from the Supplemental Assistance Nutrition Program (SNAP), the largest cut to SNAP in the program’s history, totaling about 20 percent of the program’s cost. The cuts come in two forms – shifting part of the cost of the program to the states for the first time in SNAP’s history, which breaks the traditional model where the federal government covers 100 percent of the cost of these benefits, and imposing work requirements that will require massive amounts of red tape and are unlikely to actually result in more people working.
The consequences of the law’s cost-shifting to the states is made clear in a letter from the governors of 23 states to Congressional leaders:
“Under this plan, states will need to find millions or even billions of extra dollars in their budgets or be forced to leave the SNAP program entirely, potentially cutting off millions of Americans from this vital assistance… If states are forced to end their SNAP programs, hunger and poverty will increase, children and adults will get sicker, grocery stores in rural areas will struggle to stay open, people in agriculture and the food industry will lose jobs, and state and local economies will suffer.”
In addition to the history imposition of new costs to the states, the Republican law also expands existing work requirement for SNAP beneficiaries so they apply to Americans up to age 64, similar to those described above for the Medicaid program, and significantly reduces the ability of states to qualify for waivers for areas with poor economic conditions. The harsh requirements of the law, combined with the red tape and frequent verification requirements, could cost millions to lose these critical benefits.
Of the more than 40 million Americans who receive basic food assistance through SNAP, 8 million are seniors and 4 million are non-elderly adults with disabilities. In addition to preventing hunger, regular access to healthy foods helps older adults prevent and manage chronic conditions, improve their resistance to illness, maintain strong bones, and lower their risk of falls. Having SNAP benefits also frees up much-needed money for prescriptions, health care costs, and other expenses that improve senior’s health. Cutting these benefits for seniors could easily result in higher costs for health care services rather than the budget savings envisioned by proponents of the cuts. From the perspective of families, SNAP food assistance benefits for buying groceries have never been generous, currently averaging $726 per month in Virginia for a family with two children, or $181 per week.
As federal funding for both food assistance and health care services is withdrawn, many economists predict that states will not be able to fill the gap and make up the difference. Rather, since both SNAP and Medicaid are major contributors to the economic base of communities, the law’s draconian federal spending reductions will likely produce steep job losses in the health care sector and others, slowing overall economic activity.
- The tax cut on Social Security benefits is a bait-and-switch
Despite many proponents’ claims, the law does NOT eliminate income taxes on Social Security benefits. It does provide a temporary tax break for some Social Security beneficiaries, mostly those with higher incomes and only if they are age 65 or older. At the same time, Social Security’s Actuary projects it will advance the insolvency date of the Social Security Trust Funds by two quarters, from the third quarter to the first quarter of 2034. If Congress does not act to solve this looming crisis, the Committee for a Responsible Federal Budget estimates that the additional loss of revenue means every Social Security beneficiary will see their benefits cut by about 24 percent once the Trust Funds are depleted, almost five percent deeper than if the provision had not been enacted. Because part of the revenue from the income tax on Social Security benefits also helps fund Medicare, the Part A Trust Fund is also expected to become insolvent one year earlier than currently predicted, at which point spending on the program would be cut by 11 percent.
The Trump tax cut law of 2017 increased the standard deduction for all taxpayers who do not itemize their deductions – the new law increases the amount of the deduction and makes the higher level permanent. In addition, seniors are eligible for an extra deduction on top of the regular standard deduction. The new law provides some seniors over age 65 a new, additional, bonus deduction of up to $6,000 through the 2028 tax year. Seniors may take this bonus deduction whether they itemize or not.
Under prior law, nearly one-half of seniors already did not pay any income tax, including on their Social Security benefits, which means the increased senior deduction does not provide them any benefit at all. While they received no benefit from the new deduction, they will be exposed to potential across-the-board cuts if Congress does not address the now-accelerated insolvency of the Trust Funds. The remaining Social Security beneficiaries may currently pay some income tax on their Social Security benefits, but only if their “provisional” income is over $25,000 for an individual and $32,000 for a couple. “Provisional” income is defined as Adjusted Gross Income (AGI), plus tax exempt interest income, plus one-half of a beneficiary’s Social Security income.
There is nothing in the new law that changes this requirement. But taxpayers who are currently paying this tax and who are 65 and older may take the new bonus deduction if their Modified Adjusted Gross Income (MAGI) is below $75,000 for an individual taxpayer or $150,000 for a couple. Above those income levels the bonus deduction begins to phase out, reaching zero for taxpayers with MAGI over $175,00 for individuals and $250,000 for couples. This bonus tax break does not apply to over 13 million beneficiaries who are under age 65 or for those receiving disability benefits. The amount of the tax break for qualifying taxpayers will depend on their tax bracket.
According to the Tax Policy Center, seniors with incomes between $80,000 and $270,000 – or those between 60 and 95 percent of the income scale, adjusted for family size – will receive nearly two-thirds of the benefits of the new deduction even though they only make up a quarter of people over age 65.
The effect of the new bonus deduction is to lower overall taxable income for qualifying older taxpayers for the four years it will be in effect, which will result in lower income taxes. However, a portion of these taxes goes into the Social Security and Medicare Trust Funds. The reduction in revenue to the Funds is why their insolvency dates advance.
Overall, the Republican law is highly skewed toward high income taxpayers. Estimates vary, but the non-partisan Tax Foundation finds the law’s tax provisions alone would cut 2026 taxes on average by about $2,900. However, the biggest beneficiaries would be households making between $460,000 and $1.1 million, who would get an average tax cut of $21,000. Middle-income households (making between $67,000 and $119,000) can expect a 2026 cut averaging about $1,800. The lowest-income households (those who make less than about $35,000), will get a tax cut averaging a mere $150. This analysis is focused on the law’s tax provisions alone – it does not include the law’s impacts on the millions of Americans who will lose their health care coverage or SNAP nutrition benefits.
Other tax breaks in the law could benefit some seniors and hurt others
The Republican law includes a long list of other changes to law that could affect seniors differently, depending on their situation. A brief list of examples includes:
- Very wealthy seniors concerned about paying estate taxes will find the law permanently increases the amount exempt from inheritance taxes to $15 million for individuals and $30 million for couples.
- Seniors considering buying a new car might benefit from the new tax deduction for some auto loan interest. On the other hand, those considering buying an electric or hybrid car to save money on gas could pay more for their purchases as the new law phases out tax credits for these cars.
- Seniors considering modifications to their homes to save on energy costs, such as new energy-efficient appliances, will find the law phases out current tax incentives for these purchases. Costs could also increase for seniors who purchase their energy from companies that invest in alternative energy sources such as solar or wind.
- Seniors who help children or grandchildren with the costs of going to college will find the law limits borrowing options and raises some repayment costs. Taxes are also increased on some college endowment funds, which could raise tuition for students attending these schools.
- Seniors living in high property tax jurisdictions will see an increase in their State and Local Tax deduction (SALT) from the current $10,000 to $40,000 if their incomes are below $500,000. This provision expires in 2030.
Congress could easily have chosen to pass a budget law that provided tax cuts to lower- and middle-income taxpayers while raising taxes on high-income taxpayers and large corporations. Such a law could have avoided the damaging cuts to Medicaid and SNAP nutrition benefits and would have added significantly less to our growing debt. Instead, Republicans in Congress chose to pass a law that slashes Medicaid and SNAP, while providing tax breaks that primarily benefit the wealthy and large, profitable corporations.
The bottom line on the law is this: Millions of older adults will be harmed in order to help finance more tax cuts for the wealthiest among us and huge corporations, and the resulting increase in the nation’s debt will hurt everyone through higher inflation and a slowing economy. The magnitude of the debt will also fuel false arguments by the same members of Congress who will then claim our country can no longer afford to meet its obligations to hard- working Americans who are counting on their earned benefits through Social Security and Medicare to help support them in retirement and if they become disabled or a survivor.
Department of Government Relations, August 2025