Senate Finance Committee proposes major changes to Trump’s megabill, altering tax and Medicaid policies ahead of July 4 deadline.

Senate Finance Committee Releases Its Version of Economic Legislation

The Senate Finance Committee unveiled its section of President Donald Trump’s sweeping economic legislation on Monday, marking a pivotal stage in negotiations over the so-called “big, beautiful bill.” With just weeks to go before the self-imposed July 4 deadline, lawmakers face mounting pressure to reconcile differences between House and Senate versions of the package.

Chaired by Senator Mike Crapo, R-Idaho, the committee holds jurisdiction over tax policy, Medicaid, and other central provisions inherited from the House GOP’s bill. Senator Crapo praised the Senate draft, emphasizing its permanence for Trump’s 2017 Tax Cuts and Jobs Act, reductions in what he described as “Green New Deal” spending, and targeted efforts to eliminate waste while protecting programs for the most vulnerable.

“I look forward to continued coordination with our colleagues in the House and the Administration to deliver President Trump’s bold economic agenda for the American people as quickly as possible,” Crapo stated.

Major Tweaks on Taxes and Medicaid

The Senate’s proposal differs significantly from the House’s approach on several contentious issues, including the state and local tax (SALT) deduction cap and Medicaid funding. While House Speaker Mike Johnson, R-La., urged senators to preserve the House’s delicate compromises—particularly on SALT and Medicaid—the Senate opted to make its own mark.

The revised Senate version makes the 2017 tax cuts permanent and extends the current $10,000 SALT deduction cap, beginning at year’s end. This move reverses House efforts to raise the cap, disappointing blue-state Republicans who had demanded higher deductions. Representatives Young Kim, R-Calif., and Andrew Garbarino, R-N.Y., leading the SALT Caucus, pushed back, warning that altering the House compromise “puts the entire bill at risk.”

On healthcare, the Senate proposal intensifies cuts to Medicaid, diverging from the House’s more cautious approach. It halts the increase in provider tax rates for states that did not expand Medicaid under the Affordable Care Act and incrementally reduces rates for expansion states until they reach 3.5 percent. The House bill had simply paused rate increases. Despite concerns among some Republican lawmakers about potential impacts on healthcare coverage and rural hospitals, the committee’s bill signals a firmer stance on reducing Medicaid spending.

Child Tax Credit provisions were also adjusted. The Senate version lowers the proposed maximum credit to $2,200, down from the House’s $2,500, but makes it a permanent feature, rather than reverting to $2,000 after several years. In addition, the Senate bill offers greater flexibility on the phaseout of green energy tax credits, with more gradual expiration timelines for incentives related to electric vehicles and home energy upgrades. Some credits will remain in effect for up to a year following enactment, compared to the House’s proposal for an immediate sunset at year’s end.

Debt Limit and Future Steps

Another significant provision in the Senate package is a proposed increase to the federal debt limit, raising the ceiling to $5 trillion—a trillion dollars higher than the House version. This measure has faced criticism from senators such as Rand Paul, R-Ky., who argue that debt ceiling decisions should be made through a separate vote. However, with the Treasury Department warning that Congress must act by August to avoid a default, lawmakers are under pressure to reach an agreement swiftly.

As the House and Senate work to reconcile their differences, the path forward remains uncertain. Both chambers will need to find common ground on contentious issues such as tax deductions, Medicaid funding, and deficit spending to deliver President Trump’s economic agenda on schedule. The outcome of these negotiations will shape the future of U.S. tax and healthcare policy for years to come.