Senate Advances Trump’s Tax-Cut Bill
WASHINGTON (Reuters) – U.S. Senate Republicans are advancing President Donald Trump’s tax-cut and spending bill, featuring significant components of his domestic agenda.
The Senate has passed the bill and will consider numerous amendments before the final passage, after which it will return to the Republican-controlled House of Representatives for final approval before Trump can sign it into law. Here are some details of the bill:
Temporary vs. Permanent Tax Breaks
The nonpartisan Congressional Budget Office estimates that the Senate bill will add about $3.2 trillion to the national debt over the next decade. This is higher than the $2.8 trillion estimated cost of the House version, mainly because the Senate bill makes several tax cuts permanent, whereas the House version would have allowed them to expire after a few years.
| TAX | CURRENT HOUSE VERSION | SENATE VERSION |
|---|---|---|
| Child tax credit | $2,000 | Raised to $2,500, permanent through 2028, then reverts to $2,000, indexed to inflation. |
| Standard deduction | $30,000 | Temporary increase to $32,000 for married couples, reverts in 2026. |
| Business research | Amortized over 5 years | 100% expensing for domestic research until 2029, then reverts. |
| Bonus depreciation | 40% this year | 100% through 2029, then phases out to 0% by 2026. |
| Business interest expenses | Up to 30% | Expanded to include EBITDA permanently until 2029. |
State and Local Tax Deduction
The Senate version raises the maximum deduction for state and local tax payments to $40,000, with annual inflation adjustments. This will revert to $10,000 after 2029. The House version would have maintained the deduction at $40,000 after 2026.
Deduction for Older Americans
The Senate bill would provide a federal income tax deduction of $6,000 per year for people over 65, while the earlier House version offered a $4,000 deduction. Both would end after 2028.
No Tax on Tips
The Senate bill allows a deduction of up to $25,000 for tipped income through 2028, unlike the House version, which does not cap the deduction.
Retaliatory (Section 899) Tax
Both bills included a provision for new taxes on residents and businesses from countries with “unfair foreign taxes,” but it was removed after advice from Treasury Secretary Scott Bessent regarding ongoing negotiations with G7 nations.
Debt Ceiling
The Senate bill would raise the debt ceiling by $5 trillion, while the House version proposed a $4 trillion increase. Congress must act this summer to avoid a default on the $36.2 trillion debt.
Clean Energy Projects
The Senate bill intends to repeal clean-energy incentives from President Joe Biden’s 2022 Inflation Reduction Act, with a new tax on projects unable to prove they are free from Chinese parts, as well as a tax break for coal production.
Medicaid
Both bills propose to restrict state-levied “provider taxes” on Medicaid providers to boost federal funding. The Senate version delays these changes until 2028, plus adds $25 billion for rural hospitals.
Sports Teams
The Senate version does not include a provision from the House bill that would cut a tax break for sports-team owners in half.
Courts
The current Senate bill excludes a clause intended to limit U.S. judges’ power to block federal policies nationwide, following a ruling by the nonpartisan Senate parliamentarian, determining it does not align with chamber rules for this budget process.
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