Senate Unveils Trump’s ‘Big Beautiful’ Tax Bill Amid GOP Debate Over Provider Levies

Key Points

• It seems likely that the Senate is adjusting the Trump tax bill to gain support from Republican holdouts, focusing on SALT deductions and Medicaid provisions.
• Research suggests key changes include raising the SALT cap to $40,000 and addressing concerns about Medicaid provider tax cuts.
• There is controversy around the bill’s cost and impact on rural hospitals, with some GOP senators opposing certain provisions.

Background

The Senate is working on a $4.2 trillion tax cut package tied to President Trump’s agenda, with a deadline of July 4, 2025. To secure enough Republican votes, the Senate has made tweaks to address concerns from holdouts, particularly those from high-tax states and areas reliant on rural hospitals.

Key Tweaks

• SALT Deduction: The cap on state and local tax deductions has been temporarily raised from $10,000 to $40,000 for married couples with incomes up to $500,000, expiring after 2028. This aims to win over Republicans from high-tax swing districts.
• Medicaid Provider Tax: The bill initially proposed cuts that faced opposition for harming rural hospitals. President Trump has directed a return to the House’s approach, likely mitigating these cuts.
• Other Adjustments: The bill includes $4 trillion in tax cuts, extending 2017 cuts, and adding deductions for tip wages, overtime pay, and child tax credit, among others.

Current Status

The Senate plans to start voting as early as today, June 28, 2025, with final votes by Sunday. The House will consider it early next week, but some opposition remains, like from Senator Ron Johnson (R-WI), who questions the rush.

A Comprehensive Analysis of Senate Tweaks to the Trump Tax Bill to Court Republican Holdouts

As of June 28, 2025, the Senate is actively refining President Donald Trump’s proposed $4.2 trillion tax cut package, aiming to secure sufficient Republican support before the July 4 deadline set by Trump. This note provides a detailed examination of the tweaks made to the bill, the reasons behind them, and the implications for its passage, particularly in addressing concerns from Republican holdouts.

Context and Timeline

The bill, often referred to as Trump’s “big, beautiful bill,” seeks to extend and expand the 2017 tax cuts, a significant legislative achievement from his first term. The Senate unveiled an updated 940-page draft on June 28, 2025, with plans to begin voting as early as Saturday afternoon and finalize votes by Sunday. The House is expected to return early next week for final approval, reflecting the urgency driven by Trump’s deadline.

Recent reports, such as those from Yahoo Finance and NPR, highlight the Senate’s efforts to court Republican holdouts, particularly those from high-tax states and areas with specific policy concerns. This process is complicated by internal party tensions, with some GOP senators questioning the need to rush, as noted by Senator Ron Johnson (R-WI) on Fox News on June 28, 2025.

Key Tweaks to Court Republican Holdouts

The Senate has made several adjustments to the bill to address the concerns of Republican holdouts, focusing on key areas such as the State and Local Tax (SALT) deduction, Medicaid provisions, and other tax-related deductions. Below is a detailed breakdown:

• SALT Deduction Changes: The cap on SALT deductions, previously set at $10,000 under the 2017 tax cuts, has been temporarily raised to $40,000 for five years, applying from 2025 and increasing by 1% annually thereafter. This adjustment phases out for incomes over $500,000 per year. This move is crucial for Republicans from high-tax states, particularly members of the House SALT caucus, who have been vocal about the need for higher limits. The deal has the support of most of these members, as reported by Yahoo Finance.
• Medicaid Provider Tax Adjustments: Initially, the bill proposed cuts to the Medicaid provider tax, which faced significant opposition from GOP senators such as Josh Hawley (R-Mo.) and Thom Tillis (R-N.C.). These senators argued that the cuts would harm rural hospitals that depend on this funding, with hospital organizations warning of potential closures, as detailed in AP News. In response, President Trump directed the Senate to revert to the earlier House proposal, likely mitigating these cuts, to address these concerns and prevent a bloc of opposition.
• Other Tax Provisions: The Senate bill includes $4 trillion in tax cuts, slightly higher than the House’s $3.8 trillion proposal, extending the 2017 tax cuts. Additional tweaks include deductions for tip wages (up to $25,000 through 2028, reduced for incomes over $150,000), overtime pay (up to $12,500 through 2028, reduced for incomes over $150,000), and an increased child tax credit to $2,200 per child with inflation adjustments after 2025. The standard deduction is permanently expanded, and a tax deduction for those over 65 is boosted to $6,000 through 2028, phasing out for earnings over $75,000. These changes, as outlined in NPR, aim to broaden support among various GOP factions.
• Removal of Controversial Provisions: The bill also removed Section 899, a “revenge tax” on some foreign companies and investors, following a request from Treasury Secretary Scott Bessent. This provision had spooked Wall Street, and its deletion, as reported by Yahoo Finance, was likely to reduce opposition from business-friendly Republicans.

Reasons for Opposition and Holdouts

Republican holdouts have been driven by specific policy concerns, particularly:

• SALT Deduction Limits: Republicans from high-tax states, such as those in the House SALT caucus, have pushed for higher SALT deduction caps, as the current $10,000 limit disproportionately affects their constituents.
• Medicaid Cuts: Senators from rural states, like Hawley and Tillis, have opposed Medicaid provider tax cuts, citing potential harm to rural hospitals, a critical issue in their constituencies, as evidenced by AP News and an X post by @ramsberry1 .
• Cost and Fiscal Responsibility: Some conservatives, like Senator Ron Johnson, have criticized the bill’s cost, estimated at hundreds of billions, and questioned the need to rush, as noted in Yahoo Finance.

Implications and Controversy

The tweaks have garnered support from most of the House SALT caucus, but controversy remains. The White House has blessed the revised bill despite conservative criticism over its cost, as reported by Yahoo Finance. Additionally, the Senate’s changes could threaten passage in the House, where some policy adjustments might not align with earlier proposals, as mentioned in an X post by @JWalshCORRIDORS

The bill’s passage is seen as a significant legislative victory for Trump and the GOP, with $4 trillion in tax cuts aimed at stimulating economic growth. However, the tension between addressing holdouts and maintaining party unity underscores the political nature of the process, with potential market implications if the bill faces delays or fails.

Historical Context

The 2017 tax cuts, extended in this bill, were a cornerstone of Trump’s first-term agenda, and their expiration would lead to significant tax increases, as noted by Senator John Barrasso (R-WY) in The New York Times. The current effort reflects ongoing efforts to solidify Trump’s economic legacy, with the Senate using reconciliation to pass the bill with a simple majority, a process detailed in NPR.

Conclusion

As of June 28, 2025, the Senate’s tweaks to the Trump tax bill, including raising the SALT deduction cap, addressing Medicaid provider tax concerns, and expanding various deductions, are strategic moves to court Republican holdouts. These adjustments aim to secure the necessary votes for passage, with voting set to begin today. However, controversy over cost and policy impacts, particularly on rural hospitals, persists, reflecting the complex dynamics within the GOP as they push for this significant legislative achievement.

Key Citations

• Senate unveils Trump tax draft Yahoo Finance
• Senate big beautiful bill NPR
• Trump big bill hospital provider tax AP News
• Fearing Tax Increases and Trump G.O.P. Toils to Pass a Bill With The New York Times
• Who the Senate parliamentarian who ruled against a minimum wage increase NPR