The last-minute changes made to the ‘big, beautiful bill’ to win over GOP holdouts
The article discusses significant last-minute amendments made to a tax and spending megabill passed by Republican leaders to secure support from holdout members of the party. Key changes include raising the cap on state and local tax (SALT) deductions, accelerating work requirements for Medicaid, and expediting the repeal of clean energy tax credits established by the previous governance. The SALT cap was revised to allow deductions of up to $20,000 for individuals and $40,000 for couples, addressing concerns from Republicans in high-tax states.The bill also expedited Medicaid work requirements to take effect by the end of next year and initiated a faster phase-out of clean energy credits,sparing some provisions for nuclear energy. Additional changes were made to provisions regarding retirement accounts, itemized deductions, and healthcare, showcasing the bill’s complex negotiation process aimed at unifying party members while navigating various fiscal concerns.
The last-minute changes made to the tax bill to win over holdout Republicans
Republican leaders made major last-minute changes to the tax and spending megabill that passed early Thursday. In most cases, the bill was altered to win the votes of holdout members of the party.
Here’s the rundown of significant late alterations made to secure passage of the bill, which would enact much of President Donald Trump’s domestic agenda.
SALT Deductions
The bill increased households’ ability to deduct state and local taxes from their federal taxable income. This revision was made to win over Republicans from high-tax states, such as Rep. Mike Lawler (NY), who had insisted on lifting a $10,000 cap on SALT deductions, which was implemented as part of the 2017 GOP tax overhaul.
Initially, the GOP megabill introduced earlier this month raised the cap to $15,000 for individuals and $30,000 for couples. The added cap would have phased down for couples earning more than $400,000.
The revised version lifts the cap to $20,000 for individuals and $40,000 for couples, and implements a phase-down starting at $500,000 for couples.
While the enlarged SALT cap had strong support from some GOP representatives of blue states, it is opposed by conservatives, who argue that it facilitates big spending by Democratic state governments and predominantly benefits the wealthy.
Accelerated Medicaid changes
The final bill speeds up the implementation of work requirements for Medicaid, the joint federal-state health insurance program for low-income and disabled people.
The initial bill instituted work requirements to go into effect in early 2029. The final bill moves that timeline up to the end of next year.
Some fiscal conservatives complained about the imposition of the work requirements being delayed until 2029. By putting off implementation until after the next presidential election, they argued, the legislation opened the door to having a future Congress peel back the reform. The savings, too, would be reduced over the 10-year budget window.
Clean energy tax credit repeal sped up
The final bill includes a shorter timeline for undoing clean energy tax credits enacted by the 2022 Inflation Reduction Act, which was passed by Democrats and signed by President Joe Biden.
Earlier versions of the bill would have begun phasing out some of the credits in 2029, perhaps most notably clean electricity production and investment tax credits.
The revised text ends credits for all projects unless they are able to start construction within 60 days of the bill’s enactment and are placed in service, or up and running, by the end of 2028.
GOP fiscal hawks, such as Rep. Chip Roy (TX), had called for a quicker elimination of the credits.
But the final bill included a bit of a reprieve for nuclear energy, which was facing strict phase-outs of related subsidies by 2031 — a timeline nuclear advocates said would threaten new domestic buildout. Energy Secretary Chris Wright lobbied for a gentler treatment of nuclear power in the bill.
Other changes
The final bill also included other changes of note.
DEMOCRATS AGHAST AT LAST-MINUTE CHANGE OF ‘MAGA’ ACCOUNTS TO ‘TRUMP’ ACCOUNTS IN TAX BILL
- The original text included major savings from reforms to federal work retirement savings. The bill was amended in the Rules Committee to remove $30 billion to $40 billion in those budget savings.
- The final bill slightly expands a new provision that limits itemized deductions for taxpayers, which claws back some of the added SALT deductions.
- The final bill changed the name of new savings accounts for children from “MAGA accounts” to “Trump accounts.”
- A provision that would have eliminated the tax on indoor tanning services was removed.
- A new provision bans Obamacare plans that cover abortion from receiving cost-sharing reduction payments.
- The final bill removes silencers from the definition of “firearm” under the National Firearms Act and eliminates the transfer tax on silencers.
- A new tax on remittances is lowered from 5% to 3.5%.
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