Washington — Senate Republicans released the latest version of President Trump’s massive spending and tax bill late Friday as the GOP eyes an ambitious July 4 deadline to approve the centerpiece legislation of the president’s second-term agenda.
After the House narrowly approved the legislation that addresses the president’s tax, defense, border and energy priorities last month, Senate Republicans have been putting their imprint on the bill. But GOP leaders are seeking a middle ground to appease the upper chamber without alienating House Republicans, who will have to approve the Senate’s changes before the bill can head to the president’s desk for his signature.
At the center of the bill is an extension to Mr. Trump’s 2017 Tax Cuts and Jobs Act, slated to sunset at year’s end, seeking to make the cuts permanent in what has been a key priority for Senate Republicans. It also includes increased spending for border security, defense and energy production, which are offset in part by cuts to healthcare and nutrition programs.
But along with different dynamics in the Senate, Republicans have also been contending with input from the Senate’s rulekeeper, known as the parliamentarian. She has been weighing in on the bill’s components to determine whether they may fly under the reconciliation process, which allows the GOP to move forward with the bill without any support from across the aisle.
Here’s what’s in the Senate’s updated version of the “big, beautiful bill,” some of which remains in flux:
Medicaid restrictions
The legislation includes restrictions on Medicaid, which provides government-sponsored health care for low-income and disabled Americans. Like the House-passed bill, the legislation imposes work requirements for some able-bodied adults and more frequent eligibility checks. But the Senate parliamentarian determined that a measure cutting federal funds to states that use Medicaid infrastructure to provide health care coverage to undocumented immigrants, along with banning Medicaid from covering gender transition services, isn’t in compliance with Senate rules.
The parliamentarian also weighed in on the provider tax, which states use to help fund their portion of Medicaid costs, in a blow to the Senate GOP’s initial plan.
Senate Republicans have proposed steeper cuts to Medicaid funding, in part by incrementally lowering provider taxes from 6% to 3.5% by 2032. The timeline is delayed by one year from the Senate GOP’s initial proposal, after the issue became one of the bill’s sticking points in the Senate in recent weeks. It’s a departure from the House-passed bill, which sought to lower federal costs by freezing states’ provider taxes at current rates and prohibiting them from establishing new provider taxes.
The bill also includes a rural hospital stabilization fund after some GOP senators expressed concern over how rural hospitals could be impacted by the Medicaid restrictions, allocating $25 billion for rural hospitals over the same period that the provider taxes would be lowered.
Increasing the state and local tax deduction, or SALT
The package also includes an increase to the cap on the state and local tax deduction, raising it from $10,000 to $40,000. After five years, it would return to $10,000, a departure from the House-passed bill.
The issue was a major sticking point in the House, where blue-state Republicans threatened to withhold their support without the increase to the deduction. But with no Republicans hailing from blue states in the Senate, the upper chamber has been contending with its own dynamics.
Before the rule, taxpayers could deduct all their state and local taxes from their federal taxes, which some policymakers have said mainly benefits wealthy homeowners in states with high taxes, such as New York and California. But advocates for increasing the caps argue that the $10,000 cap is increasingly impacting middle-class homeowners who live in regions where property taxes are rising.
Restrictions on food stamps
The Senate bill still shifts the costs of the Supplemental Nutrition Assistance Program, also known as SNAP, or food stamps, to some states. The program is currently fully funded by the federal government.
The federal government would continue to fully fund the benefits for states that have an error payment rate below 6%, beginning in 2028. States with error rates above 6% would be on the hook for 5% to 15% of the costs. States are also given some flexibility in calculating their share.
However, Alaska and Hawaii would receive temporary exemptions from the cost-sharing requirement. Both states would receive a two-year reprieve if the Department of Agriculture determines they are “actively implementing a corrective action plan.”
The package also aligns with the House version on age requirements for able-bodied adults to qualify for SNAP benefits. Currently, in order to qualify, able-bodied adults between 18-54 must meet work requirements. Both the Senate and House bills would update the age requirement to 18-64, with some exemptions for parents.
Alaska and Hawaii could also receive waivers for the work requirements if it’s determined that they’re making a “good faith effort” to comply.
Addressing the debt limit
The legislation would raise the debt ceiling by $5 trillion, going beyond the $4 trillion outlined in the House-passed bill, as Congress faces a deadline to address the debt limit later this summer.
Treasury Secretary Scott Bessent has urged Congress to address the debt limit by mid-July, outlining that the U.S. could be unable to pay its bills as early as August, when Congress is on recess.
By addressing the debt ceiling as part of the larger package, Republicans in Congress are aiming to bypass negotiating with Democrats on the issue. Unlike most other legislation in the Senate, the budget reconciliation process that governs the package requires a simple majority, rather than the 60-vote threshold to move forward with a bill.
Child tax credit
The current $2,000 child tax credit is set to return to the pre-2017 level of $1,000 in 2026. The tax credit would permanently increase to $2,200 under the Senate bill, $300 less than the House-passed hike. The House version reverts the increase to $2,000 after 2028.
Limits on overtime and tips deductions
The bill would allow individuals to deduct up to $25,000 for tip wages and $12,500 for overtime. But the provisions would expire in 2028. The Senate bill would reduce the deductions for individuals making over $150,000, while the House bill does not include income limits.
Changes to standard deduction
The Senate wants to permanently expand the basic standard deduction, which was nearly doubled in 2017. The increases will expire at the end of the year. The House bill, however, would expand the deduction only through 2028.
Asylum fee
The legislation also includes a minimum $100 fee for those seeking asylum, down from the $1,000 fee outlined in the House bill. The Senate parliamentarian ruled out the $1,000 fee for anyone applying for asylum and other fees on diversity immigrant visas.
AI moratorium
A revised proposal on a 10-year moratorium on state regulations on artificial intelligence also made it into the Senate bill. The updated provision provides federal aid to states as long as they do not regulate AI. According to Democrats on the Senate Budget Committee, the parliamentarian determined that the provision is in compliance “as long as the conditions only apply to the new $500 million provided by the reconciliation bill.”
Public lands
The Senate version would order the sale of up to 0.5% of public lands in 11 states, including Alaska, Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Washington and Wyoming. Eligible lands would have to be located within 5 miles of a population center and the sale of federally protected lands is prohibited.
Supporters of the provision say it would address the housing availability and affordability crisis.
