Senate GOP Releases Revised Trump Budget Bill

The Senate Finance Committee unveiled its portion of President Trump’s “big, beautiful bill” Monday, containing provisions on Medicaid, taxes and green energy tax credits.

The committee’s text is the final piece of the upper chamber’s version of the bill to be released, and was the most highly anticipated. It contains some of the thorniest provisions that Senate GOP holdouts have expressed concerns about, and the issues that could set the upper chamber on a collision course with the House.

The House narrowly passed its version of the legislation last month. Here’s what’s in the Senate’s bill.

2017 tax cuts

The bill makes many of the core elements of their 2017 tax cuts permanent but scales back additional cuts from what the House passed.

The Senate bill locks in existing federal tax brackets, boosts the standard deduction and maintains the termination of personal exemptions — all without sunsets.

In contrast with the House version, the bill sets a lower increase for the child tax credit, raising it to $2,200 per child as opposed to the House’s $2,500.

Taxes on tips

The bill creates new deductions for taxes on tips, overtime pay and car loan interest — a priority of Trump’s that he campaigned on — but doesn’t make them fully deductible.

Tips are deductible up to $25,000 through 2028. Overtime pay is deductible up to $12,500, or $25,000 for joint filers, through 2028. Auto loan interest is deductible up to $10,000, also through 2028.

Medicaid funding

Senate Republicans are taking a bigger swing at Medicaid in their version of the bill.

The legislation would effectively cap provider taxes at 3.5 percent by 2031, down from the current 6 percent, but only for the states that expanded Medicaid under the Affordable Care Act. The cap would be phased in by lowering it 0.5 percent annually, starting in 2027.

Nonexpansion states would be prohibited from imposing new taxes, but as was true in the House-passed version, their rates would be frozen at current levels. The lower cap would not apply to nursing homes or intermediate care facilities.

Limiting provider taxes is a long-held goal among conservatives, who argue states are gaming the current system and driving up federal Medicaid spending. The policies are designed to inflate Medicaid spending on paper to allow states to receive more federal reimbursement dollars.

The Senate bill also cuts certain existing state-directed payments to hospitals, which would be a significant hit to the hospitals’ bottom line. The House version, in contrast, limited future payments but grandfathered existing arrangements.

The change in the Senate bill is sure to anger Republicans who were already expressing concerns about the impact of the freeze in the House-passed version, including key holdouts led by Sens. Susan Collins (R-Maine), Lisa Murkowski (R-Alaska) and Josh Hawley (R-Mo.). Provider taxes have become an important lifeline for hospitals, and rural hospitals would be hit hardest by the cuts.

Hawley signaled dissatisfaction with the newly unveiled text Monday night.

Medicaid eligibility

Like the House bill, the Senate legislation imposes work requirements on Medicaid beneficiaries beginning at 19 years old.

But the Senate version says adults with dependent children older than 14 will also have to prove they work, attend school or perform community service for 80 hours per month, while the House-passed version would exempt all adults with dependent children.

Green energy tax credits

The bill includes changes to green energy tax credits that are more flexible than those passed by the House — but would still be a significant rollback.

The Senate text appears to eliminate the most stringent provision in the House bill, deleting a measure that would have required climate-friendly energy sources to start construction within 60 days of the bill’s enactment to qualify for the credits at all.

Instead, projects such as solar panels and wind farms would need to begin construction this year in order to receive the full credit amount.

Projects that begin construction in 2026 would get 60 percent of the credit, while projects that begin construction in 2027 would receive 20 percent. Projects constructed in 2028 or later would not be eligible for the credit.

This, too, appears to be more flexible than the House text, which required projects to not just start construction but actually be producing electricity by the end of 2028 to qualify for the credit.

Nevertheless, the Senate provisions are still a major rollback of the tax credits passed by Democrats in their 2022 Inflation Reduction Act. Under that law, the credits would have lasted until either 2032 or when U.S. emissions from the electric sector are 25 percent lower than their 2022 levels, whichever came later.

The Senate text also adds carve-outs for hydro, nuclear and geothermal power, allowing them to receive the full credit if they begin construction before 2034.

SALT

The Senate bill as drafted would keep the cap on state and local tax (SALT) deductions at $10,000 per year, rolling back the deal Speaker Mike Johnson (R-La.) painstakingly cut with blue-state Republicans to raise the limit on SALT deductions to $40,000 per year for households earning less than $500,000 annually.

It would permanently extend the $10,000 cap, which is scheduled to expire at the end of this year.

Senate Majority Leader John Thune (R-S.D.) told reporters Monday afternoon that the $10,000 deduction cap is a “marker” for talks with House Republicans, and that they will find a number in the middle that satisfies both camps.

But the House’s SALT Caucus Republicans are insisting $40,000 be the final answer.

Rep. Mike Lawler (R-N.Y.), a key member of the group, wrote on the social platform X that the proposal was “DEAD ON ARRIVAL” and warned in a statement that a $40,000 deduction cap “is the deal and I will not accept a penny less.”

Debt ceiling

The bill would raise the debt ceiling by $5 trillion, instead of the $4 trillion increase adopted by House Republicans.

The debt-ceiling language is a major problem for Sen. Rand Paul (R-Ky.), who has told leadership he won’t support the bill if it includes such a large extension of federal borrowing authority.