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Senate looking to tweak tax bill

Deeper Medicaid cuts could be on the table

By: Riley Beggin
USA Today

WASHINGTON - Senate Republicans are proposing deeper cuts to Medicaid that the House;s recently passed budget bill to help pay for President Donald Trump;s major tax cuts under a budget plan released June 16. [2025]
..... The measure released by GOP leaders serving on a key panel responsible for writing the nation's tax laws also seeks a more limited tax cut for tips and overtime than the House, changing one of Trump's most recognizable 2024 campaign promises.
..... Setting up a showdown with the Republican-led House, which adopted its own version of Trump's so-called "big beautiful bill" in late May, [2025] the Senate Finance Committee would not increase the federal deduction for state and local taxes from $10,000 to 440,000 for people earning less than $500,000 per year. Senate Republicans plan to continue to negotiate changes to the so-called SALT tax deduction.
..... Senators have been pushing to complete work on the package by July 4, [2025] before reconciling changes with the House and passing the bill before August. [2025]
..... They have been walking a fine line since the House passed their version May 22: [2025] Several senators have demanded deeper spending cuts to the bill, as the House's version is expected to add $2.4 trillion to the deficit over the next 10 years: others are concerned that potential cuts to Medicaid and green energy tax credits go too far.
..... Meanwhile, any changes they make could disrupt the delicate balance in the House, where Republicans have only a three-vote margin.
..... The House-passed version of the bill would extend Trump;s 2017 income tax cuts and implement new temporary tax breaks for tips and overtime. It would creates a new federally seeded savings account for children and give seniors an additional tax credit. It would poor billions of dollars into defense and the administration's deportation plans.
..... And it would add restitutions to benefit programs like Medicaid and food stamps - including new Medicaid work requirements for able-bodied adults without children - in an effort to balance out the cost of the sweeping bill.
..... The House's Medicaid changes are expected to save at least $625 billion and cause 7.6 million Americans to lose their health insurance over the next 10 years, according to initial estimates by the nonpartisan Congressional Budget Office.
..... A CBO estimate release June 12 [2025] shoos that the bill would decrease resources for low-income households while boosting resources for middle-and high-income households.

Deeper Medicaid cuts

.... As in the House, the Senate has fiscal conservative show are concerned that the bill will add to the Federal deficit and others who have problems with the potential impact on Medicaid health coverage.
..... Senators Josh Hawley, R-Missouri, and Jim Justice, R-West Virginia, have been critical of a provisions in the bill that limits states form raising money to pay for their part of Medicaid speeding through hearth-care-related taxes known as "provider taxes."
..... But instead of rolling back the House's deeper cuts to Medicaid through changes to the provider tax.
..... Currently, states charge taxes to health care providers that the providers then recoup through higher medicaid payments. This system extracts more federal spending on state Medicaid programs because federal payments match gradually reduce those taxes and thus the federal contribution.

No tax on tip, overtime

..... A few of Trump;s key campaign promises would be scaled back under the Senate's version of the bill as opposed to the House's in order to rein in the cost of the package.
..... The Senate's proposal wold cerate a new tax deduction on overtime of up to $12,500 for an individual who makes $10,000 or less in a year.
..... It would also cerate a tax deduction to on tipped wages of up to $25,000 for people who make 4150,000 or less.
..... In the House's version, tax breaks for overtime and tips would have no limit and would apply to people who make $160,00 or less

Child tax credit

..... The House's version of the legislation would increase the child tax credit to $2,500 per child through 2028 and $2,00 after that.
..... The Senate's version would instead increase the child tax credit to $2,200.
..... The child tax credit is currently $2,000 but will drop back to $1,000 at the end of this year [2025] if not extended.

Green energy credits

..... A few moderate senators had pushed for a gentler approach to rolling back green energy tax credits passed under former President Joe Biden.
..... The Senate's proposal heeds their call, slowing the phase-out of multiple clean energy provisions that the House had sought to climate more quickly.

SALT math

..... The Senate had made it clear they planed to make some changes to a hotly-contested provision that would benefit people who live in high-tax states: State and local tax deductions, known as SALT.
..... A few Republican lawmakers in the House who represent districts in Democratic-controlled states such as New York, New Jersey and California pushed to raise the 410,000 CPA on SALT deductions to $40,000 for people earing less than $500,000 per year.
..... But unlike in the House, there are no Republican senators who represent high-tax states that could benefit from the deduction. Adding a cap to the deduction, which Republicans approved during Trump's first presidency, "was the bill," said Senate Majority Leader John Thune, R-South Dakota
..... Some of those GOP lawmaker sin the House have already said they won't vote for the bill in the House if there deal on SALT is abandoned.

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