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The Senate Proposes its Own One Big Beautiful Bill
In May 2025, the U.S. House passed the One Big Beautiful Bill Act—a sweeping $3.8 trillion budget reconciliation measure designed to extend the 2017 Tax Cuts and Jobs Act, restructure Medicaid and SNAP, and roll back Biden-era clean-energy incentives. The bill also included increased military funding, a raised debt ceiling, tip income deductions, and a $40,000 cap on state and local tax (SALT) deductions.
But when the legislation reached the Senate, lawmakers made significant revisions to align it with fiscal constraints and conservative priorities. Here's a section-by-section comparison of the House and Senate versions—and why the changes matter
State and Local Tax (SALT) Deduction
House: Raised the SALT cap from $10,000 to $40,000 (for earners under $500,000), a major boost for taxpayers in high‑tax states.
Senate: Retained the current $10,000 cap, acknowledging rural and progressive objections—but still signals flexibility.
Implications: The Senate’s rollback disappoints beneficiaries in blue and high‑tax states but appeases fiscal conservatives. With SALT still under negotiation, a compromise may emerge before July.
Business Tax Breaks and Expensing
House: Extended 2017 business tax cuts, including full expensing and a 20% deduction for pass-through entities—potentially boosting investments.
Senate: Took it further—permanently enshrined expensing and R&D deductions, offering long-term certainty for businesses.
Implications: Senators prioritized stability for businesses, supporting innovation and capital investment. Small and large firms stand to benefit from enhanced planning confidence.
Tip & Overtime Income Deductions
House: Created a broad deduction for tip and overtime income, without defined caps.
Senate: Capped the deduction at $25,000—preventing high-earners from abusing the benefit, and adjusting based on income thresholds.
Implications: Offers relief to service workers, but confines windfalls. Balances wage support with fiscal responsibility.
Child Tax Credit
House: Expanded the credit to $2,500 per child.
Senate: Moderated to $2,200, but made permanent.
Implications: A compromise aimed at aiding families while honoring fiscal discipline.
Medicaid and SNAP Work Requirements
House: Expanded work mandates and funding strictures across Medicaid and SNAP, causing coverage losses.
Senate: Deepened Medicaid cuts—with tougher work rules and stricter provider tax caps, and rolled back SNAP savings slightly.
Implications: Sparking backlash from rural hospital advocates and state governments, as millions lose coverage and providers face tighter revenue constraints.
Clean‑Energy & EV Tax Credits
House: Phased out Biden-era clean energy and electric vehicle incentives.
Senate: Allowed more gradual phase‑downs—preserving credits through 2035 or 2029 for hydrogen, solar, and EV projects.
Implications: Keeps investment in renewables viable and supports U.S. climate and energy objectives, balancing fiscal goals with innovation.
Debt Ceiling & Deficit Management
House: Raised the debt ceiling by $4 trillion, matching the budget's $3.8 trillion size.
Senate: Increased that to $5 trillion, signaling room for enhancement while managing future growth.
Implications: Reduces risk of a default—but raises concerns from fiscal conservatives and rating agencies about debt sustainability. What’s Next?
- Reconciliation Required: Conflicting House and Senate versions must be reconciled by July 4.
- Key Battlegrounds: SALT, Medicaid, energy incentives, and fiscal offsets will drive negotiations.
- Political Pressure: With slim Republican majorities and Democratic opposition, any deviation might derail final passage.
- Economic Significance: The final version will influence investment patterns, energy development, student aid, and social safety net coverage.
The Senate’s version of the One Big Beautiful Bill leans more fiscally cautious than the House’s expansive version—trimming benefits in key areas while cementing business incentives and maintaining strategic priorities. For stakeholders—families, students, small businesses, hospitals, and climate advocates—the outcome hinges on final compromises made in the next legislative steps.
Meet The Author:
As Vice President for Government Relations and Public Affairs, I work to explain how actions on Capitol Hill can impact the self-employed. I love D.C. and have made my home in Capitol Hill, where I live with my husband and black Labrador, Coltrane. We love playing volleyball and softball on the National Mall.
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