• A KFF analysis found that Iowa will see federal Medicaid spending decrease between $8 billion and $14 billion over the next ten years as a result of the law.
• The law extends the 2017 tax cuts Trump signed during his first term in office, expands the child tax credit and permanently increases the estate tax exemption.
• One group estimates that 23,000 Iowans live in a household that could lose at least some SNAP benefits, and 15,000 of those people are at risk of losing their benefits entirely.
• Changes to clean energy tax credits give a boost to biofuels, while phasing out incentives for wind and solar power.

Big changes are coming to Iowans’ health care, taxes, nutrition assistance, energy generation and student loans — courtesy of President Donald Trump’s “One Big, Beautiful Bill Act.”

Trump signed the law July 4 in a ceremony at the White House after all six of Iowa’s Republican members of Congress voted for the legislation. And over the next few years, Iowans can expect its impact to affect their lives in a variety of ways.

The law makes permanent a set of 2017 tax cuts that Trump signed during his first term, as well as cutting taxes on tips and overtime pay and boosting spending on border security and the military. 

It cuts Medicaid spending by about $1 trillion over a decade, which is expected to lead to 11.8 million people becoming uninsured, and cuts nearly $200 billion in spending on the Supplemental Nutrition Assistance Program, according to estimates from the nonpartisan Congressional Budget Office. 

It also is projected to increase deficits by about $3.4 trillion over the next 10 years, according to the CBO. 

Here are eight ways the law will affect Iowans. 

Federal spending on Iowa Medicaid could decrease by billions

The law makes major changes to Medicaid, the federal program that provides health care to low-income and disabled Americans, and it reduces spending by nearly $1 trillion over 10 years. 

A KFF analysis found that Iowa will see federal Medicaid spending decrease between $8 billion and $14 billion over the next 10 years as a result. 

“This bill was not framed as a health care reform effort,” said Larry Levitt, executive vice president for health policy at KFF. “But it represents the biggest change to the health care system since the passage of the Affordable Care Act 15 years ago.” 

The law will require states, which administer Medicaid, to perform eligibility checks twice a year instead of once annually. And states will have to set up systems to verify a person’s employment or exemption status. 

The legislation requires “able-bodied” Medicaid recipients to work 80 hours a month, although some people will qualify for an exemption, such as students, caregivers or those with a disability. 

Republicans say the changes will strengthen Medicaid by reducing fraud, waste and abuse.

The nonpartisan Congressional Budget Office has projected that 11.8 million Americans could lose Medicaid coverage over the next decade as a result of the law. 

In Iowa, Democrats on the House Joint Economic Committee estimate that 113,979 people could lose health care coverage. That includes coverage through Medicaid and the Affordable Care Act. 

Iowa’s Republican Gov. Kim Reynolds signed legislation earlier this year requiring new work requirements for tens of thousands of Iowans seeking Medicaid. But those requirements won’t kick in until the state gets a waiver approved by the Trump administration.  

It’s not clear how the new federal law will affect Iowa’s law. Many of the provisions will be phased in over time, Levitt said.

“We’re not all going to wake up one morning and find millions more people uninsured,” he said.

The Congressional Budget Office has cautioned that it can’t know how states will respond to and implement these changes, causing major uncertainty in their cost estimates. 

Rural hospitals brace for ‘profound’ negative effect

Rural hospitals are expected to be hit particularly hard by the Medicaid changes.  

In Iowa, rural hospitals account for 67.8% of all community hospitals, according to KFF.  

According to a KFF analysis, Iowa will see an estimated $4.45 billion reduction in federal Medicaid spending in rural areas over the next decade as a result of the law.  

Iowa Hospital Association President and CEO Chris Mitchell said even a conservative estimate of the loss of funding, which he pegs at $3.5 billion, would have a “profound” negative effect on Iowa hospitals, “particularly ones in rural areas.”

Republicans included a $50 billion stabilization fund for rural hospitals to try to offset some of those negative effects. But experts say it’s far from enough. 

Mitchell said the fund “doesn’t really move the needle in mitigating the long-term damages (of) these cuts.” 

A June 12 letter from four Democratic U.S. senators identifies two Iowa hospitals that are at risk of closing or losing services from the law: MercyOne’s Newton Medical Center and the Manning Regional Healthcare Center. 

Mitchell said he couldn’t speak to the data underlying that report. 

“But, for the larger question, are there hospitals at risk today as a result of the passage of the ‘big, beautiful bill’? I would say yes,” he said.

Even though many of the law’s biggest Medicaid provisions won’t take effect immediately, Mitchell said hospitals already need to make decisions about how they will adjust their business models to account for future changes. 

“Rural hospitals as we stand today are already operating on razor-thin margins,” he said. “… A lot of the questions are: Do we eliminate service? Do we reduce staff? Do we think about closure?” 

Law extends tax cuts, expands child tax credit, creates new breaks for tips and overtime wages 

The law extends the 2017 tax cuts Trump signed during his first term in office.  

It keeps in place the seven tax brackets created in the Tax Cuts and Jobs Act, with a bottom rate of 10% for lower earners and a top rate of 37% for higher earners. 

Starting in tax year 2025, the law permanently increases the standard deduction to $15,750 for single filers, $23,625 for heads of household and $31,500 for joint filers. There are adjustments for inflation after 2025.   

Without the law, U.S. Sen. Chuck Grassley’s office said “the average Iowa household’s taxes would increase by $2,063.” 

It also includes new tax breaks for tipped wages and overtime for tax years 2025 through 2028. 

Workers will be able to deduct up to $25,000 in tips (so long as they “customarily and regularly” receive them, as servers do) and $12,500 in overtime pay. 

And seniors 65 years old and older will see a $6,000 federal income tax deduction from 2025 through 2028, intended to offset Social Security taxes. The deduction tapers off for those making at least $75,000 per year. 

That’ll compound benefits such as Iowa’s exemption of retirement income from the state income tax, Iowans for Tax Relief President Chris Hagenow said.  

“We obviously have an older population in Iowa, and any benefit to senior citizens is going to be felt strongly in Iowa,” Hagenow said. “… It’s another benefit that can help retirees stay in their homes longer, stay in the state, and that can be a good thing for Iowa.” 

The law expands the child tax credit from $2,000 to $2,200 and ties the amount to inflation so it will increase further in the future, according to Grassley’s office. 

Plus, taxpayers can write off up to $40,000 in state and local taxes, or SALT, from their federal taxes. That’ll give a bigger tax deduction to Americans in high-tax states such as California. 

“Sometimes that’s cast as a red-state-versus-blue-state thing, but property taxes have gotten so high in Iowa that that is going to provide relief for a growing number of Iowans,” Hagenow said. 

Estate taxes exemptions ‘bolster farmers’ financial stability’

Beginning in 2026, the law permanently increases the estate tax exemption to $15 million. Under the Tax Cuts and Jobs Act, which had been set to expire, the exemption was $10 million.   

The estate tax is beneficial for farmers passing land and expensive farm property down to their children.  

“These measures bolster farmers’ financial stability, allowing them to invest in their operations and pass family farms to the next generation without the lingering fear of excessive tax penalties,” Iowa Agriculture Secretary Mike Naig said in a statement. 

23,000 Iowans live in a household that could lose some SNAP benefits, estimate says

The law reduces federal spending on the Supplemental Nutrition Assistance Program by roughly $186 billion over a decade. 

It expands work requirements for the program by extending them to people aged 55 to 64, as well as parents of children 14 and older, veterans, people experiencing homelessness and young adults who have aged out of the foster care system. 

The left-leaning Center on Budget and Policy Priorities estimates that 23,000 Iowans live in a household that could lose at least some benefits, and 15,000 of those people are at risk of losing their benefits entirely. 

About 264,000 Iowans were enrolled in SNAP as of March, according to the U.S. Department of Agriculture. 

The law also puts states on the hook for more of the cost of running the SNAP program, and for the first time states could be responsible for paying for some SNAP benefits. 

Previously, the federal government and states equally split the cost of running the program. But under the new law, states will pay 75% of administrative costs beginning in fiscal year 2027. 

Luke Elzinga, chair of the Iowa Hunger Coalition, said that could cost Iowa $13 million to $15 million per year. 

And the law says if states have a SNAP payment error rate above 6%, they must pay a percentage of the cost of SNAP benefits for the first time.