How the ‘One Big Beautiful Bill’ affects South Carolina

On July 4th, President Trump signed into law his budget bill, titled the “One Big Beautiful Bill” (OBBB).

The bill has sparked debate on the proper levels of federal spending and what the appropriate size and scope of the social safety net is.  

The bill has drawn consternation from both sides of the political aisle. But let's shift the focus onto what the bill means for South Carolina. 

Wins for South Carolinians 

There are several provisions in the bill that will lighten the federal tax burden for South Carolinians: 

• A permanent extension of the Tax Cuts and Jobs Act  

• An increase in the child tax credit from $2,000 to $2,200 

• A $6,000 boost to the standard deduction for seniors from 2025–2028 

• A $1,700 income tax credit for donations to K-12 education scholarship organizations 

• 100% bonus depreciation, allowing businesses to fully expense assets immediately 

• Bonus depreciation for manufacturing  

These changes will benefit individuals and employers across the state of South Carolina. 

 *Tax changes for overtime pay, tips, and social security income earners will expire in 2028. 

Medicaid changes and state impact 

One of the more controversial items is Medicaid reform. The bill imposes work requirements for able-bodied adults ages 19 to 65 and shortens the renewal period. According to a February 2025 KFF poll, 62% of Americans support work requirements. But only 17% want to see Medicaid funding reduced. 

In principle, fewer people relying on the federal government is good. In practice, the state must determine whether it will be forced to absorb costs for individuals who are dropped from the program. That’s a major question: If federal rules result in the same amount enrollees, will the state be on the hook to cover the federal shortfall? 

Whether these new projections hold true will only be revealed over time. Several policy experts have rightfully raised questions about the projections of services shrinking.  

As Economic Policy Innovation Center’s David Ditch writes for National Review: “Even after the passage of the OBBBA, Medicaid spending will continue to increase at roughly 3 percent per year, which makes complaints about the program having been ‘slashed’ or ‘gutted’ utterly absurd. Only in Washington is continued growth considered a ‘cut.’” 

Renewable energy and EV credits cut short 

In another major change, the bill accelerates the expiration of renewable energy and electric vehicle (EV) tax credits—now set to sunset in 2027. 

The Biden administration had distributed energy subsidies across red and blue states, betting that Republican lawmakers would hesitate to cut incentives tied to job growth in their districts. But that strategy ultimately has failed. 

 The early sunset will likely be a direct hit to South Carolina’s manufacturing ambitions. The Scout Motors EV facility in Blythewood, backed by more than $1 billion in state incentives, is scheduled to open in 2027. That leaves just one year before the EV credit disappears, weakening demand and undermining the long-term economic impact promised by state leaders. 

Battery and solar manufacturing operations across South Carolina face the same clock. These projects were pitched as long-term economic engines, but now they face policy headwinds that could cut their impact short. 

SCPC has long supported a simpler tax code with minimal subsidies and targeted credits. This should not be read as an endorsement of green energy tax policy. But removing these incentives could have consequences for South Carolina. Constantly changing tax structures create economic uncertainty and weaken the effectiveness of the very policies they are meant to support. It also underscores a point SCPC has raised from the start: pouring taxpayer dollars into an EV manufacturing hub was a poor investment.

Playing favorites with the tax code 

Another questionable provision is the decision to exempt tips and overtime pay from taxation. The logic? Unclear. 

For example, consider two workers: Person A earns a $50,000 salary. Person B earns $40,000 in standard wages and $10,000 in overtime. Why should Person A pay taxes on all $50,000 while Person B only pays taxes on $40,000 when both earn the same amount? 

Tax policy should not favor one kind of labor over another. Rather than picking winners and losers, lawmakers should broaden the base and lower the rate. 

The bigger picture: fiscal responsibility still missing 

At SCPC, we’ve built our reputation on standing for fiscal responsibility. This bill, while including several commendable policies, it continues the trend of runaway spending. It raises the debt ceiling by up to $5 trillion, further fueling the spending issue.

 National debt remains a looming crisis. Both parties are reluctant to reform entitlements or touch military spending. But ignoring the problem won’t make it go away. 

The often-repeated line is truer than ever: “We are mortgaging our children’s future.” And instead of reining in spending, we continue driving up the spending and inflating the currency in a misguided attempt to escape debt without discipline. 

There are clear policy wins in this budget. But they come bundled with more of the same: rising federal spending, economic distortions, and new uncertainty for the economy. 

This report may be republished in whole or in part, provided that proper credit is given to the author(s) and the South Carolina Policy Council.