President Donald Trump’s “big, beautiful bill” is expected to cost Michigan more than $1 billion, forcing steep cuts to safety net programs like Medicaid and food assistance that support millions of lower-income residents.
The “One Big Beautiful Bill Act,” signed into law on July 4, reduces taxes to corporations and wealthy Americans and increases funding to the military and immigration enforcement. But to pay for it, the Republican-led bill slashes federal spending on Medicaid and the state’s Supplemental Nutrition Assistance Program (SNAP), shifting those costs onto cash-strapped states.
A new analysis by the nonpartisan Citizens Research Council of Michigan warns that the megabill’s immediate impact on the state budget will be severe. Lawmakers currently working on the state’s fiscal year 2026 budget will need to trim an estimated $1.1 billion from the general fund to offset lost corporate tax revenue and higher state costs for health and food benefits.
The corporate tax reductions will lead to “immediate” revenue declines in Michigan to the tune of $677 million in the 2026 fiscal budget, the report states.
“For years since the onset of the COVID-19 pandemic, Michigan experienced an unexpected state revenue high driven largely by federal stimulus initiatives,” Robert Schneider, senior research associate for state affairs and lead author of the report, said Wednesday. “Even before OBBBA [One Big Beautiful Bill Act] it was evident that those days were coming to an end and state revenue growth was returning to pre-COVID trends.”
Medicaid covers more than $2.6 million Michiganders, or about one in four residents, through a joint federal and state partnership. In 2024, the state received $17.8 billion in federal funding, covering 76% of Medicaid costs. The program includes traditional coverage for low-income families, pregnant women, people with disabilities, and seniors, as well as the Healthy Michigan Plan, which expanded eligibility to more adults.
Under the new law, that federal support will significantly decline. The Congressional Budget Office estimates that nearly 12 million Americans could lose Medicaid coverage nationwide.
The impact on SNAP will also be substantial. About 14.7 million Michiganders – or about 14.5% of the population – rely on the food assistance program, known locally as the Bridge Card. The new law requires states with higher payment error rates to begin covering a share of the costs beginning in 2028.
In Michigan, nearly 700,000 households depend on SNAP, and the average benefit is just $146 per month for each recipient.
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Michigan Legislature in Lansing.
The legislation also imposes strict new work requirements for certain able-bodied adults receiving SNAP, which could result in an estimated 3 million people nationwide losing benefits, according to the Congressional Budget Office.
In Detroit, where more than half of children live in poverty, the reductions in assistance could be devastating.
By 2032, the Citizens Research Council warns, the bill will consume roughly 40% of the state’s projected general fund growth, which would force future budget cuts and put essential services at risk. The cuts to SNAP and Medicaid could increase Michigan’s spending on those programs by more than $1 billion by 2032, the Citizens Research Council warns.
“With the enactment of the OBBBA, Michigan now faces an added budget challenge that will be particularly severe over the next few budget cycles,” Schneider said. “State lawmakers should get to work on developing a budget plan that considers these new realities.”
Trump’s budget is expected to increase the federal deficit by $3.4 trillion over the next decade, putting future generations at risk.
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