Introduction to Trump’s Tax Law
The massive spending bill signed into law by President Donald Trump on Independence Day is expected to have a significant impact on the youngest Americans. The law extends tax cuts and pours billions into border security, but it also cuts Medicaid and food stamps, programs that are crucial for low-income families with children.
Impact on Low-Income Families
Many middle-class and wealthy families will benefit from the new legislation, but programs that help low-income families keep their babies healthy have been cut back. While state money funds public schools and preschool in some cases, programs supporting the youngest children are largely backed by the federal government. The law cuts Medicaid and food stamps by more than $1 trillion, which will disproportionately affect poor households with children.
Benefits for Families with Children
The legislation increases tax credits, including one that now allows parents to deduct up to $2,200 per child from their tax bills. It also introduces investment accounts for newborns dubbed "Trump Accounts," each seeded with $1,000 from the government. However, advocates argue that these benefits do not make up for what children are likely to lose under the new law.
Medicaid Cuts Could Add to Strains on Families
Over 10 million Americans rely on Medicaid for health care, and about 40% of births are covered by Medicaid. Newborns also qualify for it when their mothers have it. The new law institutes Medicaid work requirements for childless adults and adults with children over the age of 13. However, pediatricians warn that the cuts will be felt broadly, even by those who do not use Medicaid.
President Donald Trump signs his signature bill of tax breaks and spending cuts at the White House, Friday, July 4, 2025, in Washington, surrounded by members of Congress. (AP Photo/Evan Vucci)
The Medicaid cuts are expected to put a financial strain on health care providers, forcing them to cut their least profitable services. That’s often pediatrics, where young patients are more likely to use Medicaid, said Lisa Costello, a West Virginia pediatrician who chairs the federal policy committee for the American Association of Pediatrics.
The Law Increases Tax Credits for Parents Who Qualify
The law increases the child tax credit to $2,200 per child, up from $2,000. However, parents who don’t earn enough to pay income tax will still not see the benefit, and many will only see a partial benefit. The measure also contains two provisions intended to help families pay for child care, which in many places costs more than a mortgage.
‘Trump Accounts’ Will Be Opened with $1,000 for Newborns
The law launches a program that creates investment accounts for newborn children. The "Trump Accounts" are to be seeded with $1,000 from the government, and children will be able to use the money when they become adults to start a new business, put the money toward a house, or go to school. Unlike other baby bond programs, which generally target disadvantaged groups, the federal program will be available to families of all incomes.
A Food Assistance Program Faces Cuts
The Supplemental Nutrition Assistance Program (SNAP) faces the largest cut in its history under the law. It will, for the first time, require parents to work to qualify for the benefit if their children are 14 or older. But even households with younger children could feel the impact. The law kicks some immigrants — including those with legal status — off food assistance and makes it more difficult for individuals to qualify by changing how it considers their utility bills.
Conclusion
The impact of Trump’s tax law on the youngest Americans will be significant, with both positive and negative effects. While some families will benefit from increased tax credits and investment accounts for newborns, others will lose crucial support from Medicaid and food stamps. As the law is implemented, it is essential to monitor its effects and advocate for the needs of low-income families and their children.
FAQs
Q: What are the main provisions of Trump’s tax law that affect the youngest Americans?
A: The law extends tax cuts, increases tax credits for parents, and introduces investment accounts for newborns. However, it also cuts Medicaid and food stamps, which will disproportionately affect low-income families with children.
Q: How will the Medicaid cuts affect families with children?
A: The Medicaid cuts will put a financial strain on health care providers, forcing them to cut their least profitable services, often pediatrics. This could exacerbate an existing shortage of pediatricians and hospital beds for children.
Q: What is the "Trump Account" program, and how will it benefit newborns?
A: The "Trump Account" program creates investment accounts for newborn children, seeded with $1,000 from the government. Children will be able to use the money when they become adults to start a new business, put the money toward a house, or go to school.
Q: How will the cuts to the Supplemental Nutrition Assistance Program (SNAP) affect families with children?
A: The cuts to SNAP will require parents to work to qualify for the benefit if their children are 14 or older. Even households with younger children could feel the impact, as the law kicks some immigrants off food assistance and makes it more difficult for individuals to qualify.
