House Narrowly Passes Trump’s Sweeping Reconciliation Bill: What It Means for Markets, Industries, and Your Taxes

The $3.7 trillion bill combines tax cuts, spending reductions, and major shifts in healthcare and energy policy—but it faces an uphill battle in the Senate.

Overview: A Narrow Passage and a Broader Reckoning

In a razor-thin 215-214 vote, the House of Representatives passed the “One Big Beautiful Bill Act,” President Trump’s signature tax-and-spending legislation. The sweeping reconciliation bill advances long-promised extensions to the 2017 Trump tax cuts, imposes new work requirements on Medicaid, and phases out clean energy tax incentives—all while carrying a Congressional Budget Office (CBO) price tag of roughly $3.7 trillion over the next decade. The bill now heads to the Senate, where revisions are expected before a final version returns to the House ahead of the debt ceiling deadline this August.

Markets initially reacted with unease—Treasury yields spiked as investors digested the cost of the bill and the potential for rising deficits, highlighting fiscal sustainability concerns.

Key Elements of the Bill: Cuts, Caps, and Credits

At its core, the bill attempts to blend economic stimulus with fiscal restraint—though not without contradictions. Some of its major components include:

• Tax Cuts Extended: The bill makes permanent several individual tax cuts from the 2017 Tax Cuts and Jobs Act, including lower income tax brackets, a larger standard deduction, and expanded child tax credits. It also introduces new breaks on overtime pay, tips, and Social Security benefits.
• Medicaid Overhaul: Accelerated work requirements will now take effect in December 2026, three years earlier than initially proposed. States like Florida and Texas, which didn’t expand Medicaid under the Affordable Care Act, will receive more favorable payment terms.
• Nutrition and Social Programs Trimmed: The bill tightens eligibility and increases documentation frequency for both Medicaid and nutrition assistance programs, resulting in projected coverage losses for 8.6 million Americans by 2034.
• Border and Defense Spending: The bill earmarks $12 billion for border security reimbursement and includes additional funds for defense and agriculture.

The Solar Shock: Clean Energy Takes a Hit

One of the bill’s most controversial shifts lies in its treatment of the clean energy sector, particularly solar.

• Solar Phaseouts Accelerated: Tax credits for solar and wind projects under Sections 45Y and 48E are now set to fully expire by the end of 2028. Developers must begin construction within 60 days of the bill’s enactment to remain eligible.
• Residential Solar in Peril: The bill ends Section 25D homeowner credits in 2026 and denies 48E benefits to residential leasing companies, directly affecting business models of firms like Sunrun (RUN), Enphase (ENPH), and SolarEdge (SEDG). BMO Capital downgraded RUN, citing political headwinds and ITC uncertainty.
• Relative Winners: First Solar (FSLR) emerged as a rare beneficiary, thanks to its U.S.-based manufacturing model and exclusion from anti-China provisions. Analysts from Mizuho and Roth Capital reaffirmed positive outlooks for the company.
• Sector ETFs to Watch: The Invesco Solar ETF (TAN) is under pressure and may continue to lag until the Senate softens the bill’s harsher provisions.

Other Industry Impacts: From Nuclear to Guns

• Nuclear Energy: A bright spot for nuclear: the bill expands reactor tax breaks and allows projects to start through 2028, potentially benefiting utilities like Dominion (D) and Constellation Energy (CEG).
• Medicaid-Linked Hospitals: Providers in non-expansion states gain a reimbursement edge—names like HCA Healthcare (HCA) and Tenet Healthcare (THC) could benefit from the revised funding formula.
• Firearms Industry: The bill excludes silencers from the definition of "firearm" and eliminates transfer taxes, a win for companies like Sturm Ruger (RGR).
• Financials: The bill eliminates the Pease limitation on itemized deductions, introduces Trump-branded “growth accounts,” and restricts IRS regulation of tax preparers using contingent fees. These changes could indirectly benefit wealth management platforms and tax advisory firms.

Personal Tax Changes: What Households Should Know

• SALT Deduction Relief: A new $40,000 cap on the state and local tax (SALT) deduction will begin in 2025, up from $10,000. However, for those earning above $500,000, the deduction phases out, and a separate cap limits the federal tax benefit to 32% instead of 37%.
• Alternative Minimum Tax (AMT): The bill quietly raises AMT exposure by adjusting inflation metrics, a move that could impact high earners in states like California and New York.
• Business Loss Rules Tightened: Excess business losses for non-corporate taxpayers will no longer convert to net operating losses, meaning many may not be able to claim full business losses unless they offset other income.

International Tax Tweaks: Slight rollbacks in planned cuts to GILTI and FDII deductions suggest multinationals may face slightly higher tax burdens.

Stocks and Sectors to Watch

• Winners: $FSLR, $HCA, $THC, $CEG, $RGR
• Losers: $RUN, $ENPH, $SEDG, $TAN ETF
• Watchlist: $UDN (Inverse Dollar ETF), $GLD (Gold), $IXC (Energy ETF), $EMB (Emerging Market Bonds)

Conclusion: A Mixed Bag with Far-Reaching Effects

The House’s passage of the One Big Beautiful Bill represents a legislative milestone—but its journey is far from over. The bill’s expansion of tax cuts, trimming of social programs, and recalibration of energy incentives will trigger significant downstream effects across markets and industries.

Pros:

• Extension of individual and business tax relief
• Clarity on Medicaid reforms and SALT deductibility
• Boosts to border security and nuclear energy sectors

Cons:

• A projected $3.7 trillion deficit impact
• Abrupt sunset for clean energy credits
• Significant healthcare coverage losses anticipated

As the bill enters Senate debate, expect political wrangling, possible softening of clean energy provisions, and volatile trading in sectors directly impacted. Traders, investors, and policy watchers alike should stay alert—because if this bill becomes law by Trump’s July 4 goal, its consequences will ripple far beyond Capitol Hill.