Senate Republicans Plan to Release Major Revisions to Trump’s Tax Bill

The US Capitol in Washington, DC, US, on Thursday, June 5, 2025. US House Speaker Mike Johnson said he is fighting to maintain the new $40,000 cap on state and local deductions in the draft tax bill now before the Senate, where Republicans are seeking to enact a less generous break. Photo by Eric Lee /Bloomberg

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(Bloomberg) — Senate Republicans intend to propose revised tax and health-care provisions to President Donald Trump’s $3 trillion signature economic package this week, shrugging off condemnations of the legislation by Elon Musk as they rush to enact it before July 4. 

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The Senate Finance Committee’s plan to extract savings from the Medicaid and — perhaps — Medicare health insurance programs could depart in key respects from the version of the giant bill that narrowly passed the US House in May. The release of the panel’s draft will likely touch off a new round of wrangling between fiscal conservatives and moderates. 

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As the debate unfolds, businesses in the energy, health care, manufacturing and financial services industries will be watching closely.  

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SALT Dilemma 

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A crucial decision for Majority Leader John Thune, Committee Chairman Mike Crapo and other panel members will be how to handle the $40,000 limit on state and local tax deductions that was crucial to passage of the bill in the House. 

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Senate Republicans want to scale back the $350 billion cost of increasing the cap from $10,000 to $40,000 for those making less than $500,000.   

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House Speaker Mike Johnson and a group of Republican members from high-tax states have warned that any diminishing of the SALT cap would doom the measure when it comes back to the House for a final vote. At the same time, so-called pass-through businesses in the service sector are pushing to remove a provision in the House bill that limits their ability to claim SALT deductions. 

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The Senate Finance Committee is widely expected to propose extending three business tax breaks that expire after 2029 in the House version to order to make them permanent. They are the research and development deduction, the ability to use depreciation and amortization as the basis for interest expensing and 100% bonus depreciation of certain property, including most machinery and factories.  

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Manufacturers and banks are particularly eager to see all of them extended. 

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To pay for the items, which most economists rank as the most pro-growth in the overall tax bill, senators may restrict temporary breaks on tips and overtime, which Trump campaigned on during last year’s election in appeals to restaurant and hospitality workers. The White House wants to keep those provisions as is.

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White House economic adviser Kevin Hassett said Trump “supports changing” the SALT deduction and it’s up to lawmakers to reach a consensus.

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“It’s a horse trading issue with the Senate and the House,” Hassett said Sunday on CBS’s Face the Nation. “The one thing we need and the president wants is a bill that passes, and passes on the Fourth of July.”

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Earlier: Trump Tax Bill Set to Damp Solar Power Buildout, Hammer Wind

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The committee will also face tough decisions on green energy tax credits. Scaling those back generates nearly $600 billion in savings in the House bill. 

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On Friday, rival House factions released dueling statements. 

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The conservative House Freedom Caucus warned that any move to restore some of the credits would prompt its members to vote against the bill. “We want to be crystal clear: If the Senate attempts to water down, strip out, or walk back the hard-fought spending reductions and IRA Green New Scam rollbacks achieved in this legislation, we will not accept it,” the group said.