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Tax Bill Update: Senate Text in Flux

June 24, 2025

Last week, the Senate Finance Committee released its draft of the One Big Beautiful Bill, which included a number of key changes to the text the House passed on May 22. 

• The most high-profile changes include reverting the state and local tax (SALT) deduction to $10,000, extending the time horizon on Inflation Reduction Act (IRA) energy tax credits, and expanding reductions to Medicaid. 
• The Section 899 foreign “revenge tax” saw some changes, which are covered in detail in the story above. 
• A Steptoe LLP summary chart of significant provisions of the House tax bill and the draft Senate tax bill is available here. 

Go deeper: Senate Finance Chairman Mike Crapo (R-ID) had made permanency a key focus of business provisions in the draft, which is supported by Majority Leader John Thune (R-SD). Highlights include:

• Makes permanent the 199A pass-through deduction at 20%. While the House made the provision permanent, it also increased the deduction to 23%. 
• Makes permanent full expensing for domestic research and development. 
• Makes permanent full expensing for new capital investments, like machinery and equipment.
• Restores and makes permanent the EBITDA standard for 163(j) interest deductibility. 
• Permanently renews and enhances the Opportunity Zone program.

Yes, but: The changes to SALT, IRA, and Medicaid have drawn opposition from some House and Senate members and may imperil the bill’s timeline. 

While the Senate SALT provision is viewed as a placeholder for further negotiation, the $40,000 House-passed number was critical to getting Blue-district Republicans to support the bill. Two members of the SALT Caucus, Rep. Young Kim (R-CA) and Rep. Andrew Garbarino (R-NY), released a statement criticizing the Senate language: 

Instead of undermining the deal already in place and putting the entire bill at risk, the Senate should work with us to keep our promise of historic tax relief and deliver on our Republican agenda.

The longer wind-down time for some of the IRA tax credits is also drawing criticism from some House moderates who want to preserve the treatment for those who have deployed investments. On the other end of the spectrum, House fiscal hawks want the provision eliminated more quickly.

The bill caps Medicaid provider taxes at 3.5% in states that expanded coverage, down from the current 6% rate, and it reduces existing supplemental payments to hospitals, rather than just limiting future ones as in the House bill. The Senate version further expands work requirements. House moderates and Sen. Josh Hawley (R-MO) have warned that the cuts go too far and could impact rural hospital viability.

The bottom line: The White House is pushing Congress to pass the bill by July 4 and is actively negotiating on a variety of issues. While there are still expectations that the bill will pass, the August recess may be a more realistic target given the current sharp disagreements.

Contact David McCarthy (dmccarthy@crefc.org) with any questions.

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