Today, Senate Republicans unveiled their version of the landmark combination tax-and-spending package known as the "One Big Beautiful Bill" (OBBBA). The new Senate draft introduces significant changes compared to the House version, particularly on Medicaid cuts, SALT deductions, energy incentives, and tax credits creating marked divergence that will shape negotiations ahead of the July 4 deadline.
- SALT Cap Remains at $10,000 Unlike the House’s proposal to raise the state and local tax deduction cap to $40,000, the Senate version retains the current $10,000 cap permanently. Future negotiations will need to bridge this divide
- Modest Child Tax Credit Increase The Senate raises the child tax credit to $2,200 per child, a smaller bump compared to the House’s proposed $2,500—reflecting more conservative fiscal positioning
- Clean Energy Credit Phase-Outs While the Senate softens the House’s aggressive clean energy rollbacks, it still phases out tax credits for residential solar, EVs, and hydrogen while extending incentives for nuclear, geothermal, and hydropower through 2036
- Estate Tax Exemption Indexed and Made Permanent The Senate legislation increases and permanently indexes the estate tax exemption to $15 million per person ($30 million for married couples). The change saves wealthy estates from experiencing a tax cliff in 2026 but comes at a projected cost of $212 billion over 10 years
- New Standard Deduction Levels The Senate locks in a standard deduction of $16,000 (single), $24,000 (head of household), $32,000 (joint) and ensures they remain indexed for inflation after 2025
Deep Medicaid Cuts
The Senate calls for up to $1 trillion in Medicaid cuts—$200 billion more than the House plan—via provider tax limitations and stricter work requirements. The CBO estimates nearly 11 million people may lose coverage
Additionally, much hinges on reconciling House-Senate differences, particularly on SALT, green credits, and social program funding. The razor-thin Senate margin means every GOP vote counts.
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