Senate parliamentarian Elizabeth MacDonough’s rulings that key portions of the bill did not meet the criteria established by the Byrd Rule, all but required Republicans to cut or revise those sections. If left in place, those elements would require the bill to gain 60 votes to pass the Senate.
Leaders have been working toward a self-imposed July 4 deadline for presenting the bill to the president: Failure to do so would further delay implementation of Trump’s signature policy initiatives and risk a breach of the nation’s debt ceiling in August.
Sen. John Kennedy (R-La.) told Fox News on June 27 that he wanted Senate Majority Leader John Thune (R-S.D.) to bring the bill to the Senate floor for a vote Saturday afternoon.
“If you’re unhappy with that, you’re welcome to fill out a hurt feelings report, and we will review it carefully later,” he told the news outlet. “But in the meantime, it’s time to start voting.”
Republicans must have near unanimity in both chambers to pass the bill, given their slim majorities in each. And with several controversial issues still outstanding, Republicans still appear far from the finish line.
Tax Matters
Speaker Mike Johnson (R-La.) had to balance demands from both moderates and fiscal conservatives to shepherd the House version of the bill last month.Among the moderates, Rep. Mike Lawler (R-N.Y.) and several other Republicans from blue states sought a higher cap for state and local tax (SALT) deductions, a federal tax break that lets taxpayers write off payments made to state and local governments.
While the House bill set the SALT cap at $40,000, the Senate initially proposed keeping it at $10,000—the same limit imposed under the 2017 Trump tax cuts—as a negotiating position.
The latest Senate draft now aligns with the House by raising the SALT deduction cap to $40,000 through 2029, with a 1 percent annual inflation adjustment, before reverting to $10,000. However, the higher cap phases out for taxpayers earning above $500,000.
For Sen. Rick Scott (R-Fla.), even the $10,000 level was too high. “There should be no SALT deduction,” Scott told reporters on June 24.
Despite the tensions around the SALT issue, Sen. Markwayne Mullin (R-Okla.), a conservative, told reporters on June 27: “It’s not great. I’m not thrilled with it. SALT guys aren’t thrilled with it. But we’re going to hold our nose and accept it.”
The latest Senate version of the bill also fulfills Trump’s campaign promise to end taxes on tips, though with limits. While the House version offered an unlimited exclusion, the Senate plan exempts up to $25,000 in tip income, reducing the benefit by $100 for each $1,000 earned over $150,000.
Beyond the debates over SALT deductions and tip income, electric vehicles (EV) have also been a flashpoint in negotiations over the bill’s tax provisions.
In the latest Senate revision, the bill would end EV tax credits after Sept. 30, 2025, eliminating the $7,500 incentive for new EVs and the $4,000 credit for used ones. By comparison, the House version sought to keep the $7,500 credit for new EVs through the end of 2025, and extend it to the end of 2026 for automakers that haven’t yet sold 200,000 units.
Also, the latest Senate bill would accelerate the end of clean energy incentives created under the Inflation Reduction Act. It proposes terminating the clean electricity production credit for new wind and solar facilities placed in service after December 31, 2027, five years earlier than scheduled. The measure would also move up the end date for the clean hydrogen production credit to Jan. 1, 2028.
The Senate bill also includes a measure to eliminate fines for automakers that fail to meet Corporate Average Fuel Economy standards, in an apparent bid to ease costs for producing gas-powered vehicles. The change would apply only to model years for which the Transportation Department has not yet issued penalty notices.
The latest version of the Senate bill would also exempt interest paid on auto loans from taxes for new cars built in the United States, up to a maximum of $10,000 per year, with the deduction phasing out for individuals earning more than $100,000 annually, and expiring after 2028.
Also, Senate Republicans dropped an earlier bid to force the U.S. Postal Service to scrap thousands of EVs and charging equipment after the Senate parliamentarian ruled it couldn’t be included under reconciliation rules.
Medicaid, Rural Hospitals
Medicaid and funding for rural health care have been major sticking points in negotiations over the budget bill.Another contentious issue has been provider taxes—fees that states charge hospitals and other health care providers to help finance their share of Medicaid costs. Although these taxes allow states to increase reported Medicaid spending and draw additional federal funds without necessarily expanding services, many states rely on the mechanism to maintain stable Medicaid programs.
While the House version would keep the current federal cap on provider taxes at 6 percent of a provider’s revenue, the latest Senate bill proposes lowering the cap to 3.5 percent. To ease the transition, the Senate plan phases in the reduction gradually: the cap would drop to 5.5 percent in 2028, 5 percent in 2029, 4.5 percent in 2030, 4 percent in 2031, and finally 3.5 percent in 2032.
Tensions over Medicaid policy have also been heightened by provisions the Senate parliamentarian ordered stripped from the bill. These included proposals to bar illegal immigrants from accessing Medicaid, prevent refugees and asylum seekers from using Medicare, and prohibit Medicaid funding for transgender-related medical procedures.
Parliamentary Challenges
The Senate bill has also received a thorough “Byrd bath,” a reference to the rule named for late West Virginia Sen. Robert Byrd. The Byrd rule limits budget reconciliation bills to fiscal issues.MacDonough ruled against many provisions in the Senate committee drafts of the legislation.
Senate Republicans could overrule the Parliamentarian, a possibility Democrats have argued against.
“It is tantamount to eliminating the filibuster,” Sen. Sheldon Whitehouse (D-R.I.) said in May.
Senate, House Agreement
Both chambers of the legislature must pass an identical bill for it to become law. Any differences between the proposed Senate bill and the version passed by the House would have to be resolved.The Senate could change course and pass the House version of the bill. The House could vote again on the bill, passing the version approved by the Senate. Or the bills passed by each House could be resolved through a conference committee.
Amid concerns that the two chambers were at odds, Johnson expressed optimism about passage within the stated time frame.
“This is a one team approach, the House and Senate Republicans working together in tandem with the White House,” Johnson told Fox News on June 24. “There’s no daylight between any of us on the ultimate goal.”
Theorizing that the Senate would pass its bill by June 27, Johnson said he had told House Republicans to keep their schedule flexible over the next several days.
“Everybody can go home and celebrate the Fourth of July with their constituents and their families. But there’s nothing more important that we should be involved in ... than getting One Big Beautiful Bill to the president’s desk,” Johnson said.
Meanwhile, Democrats took to social media early Saturday to criticize the Senate Republicans’ megabill, following the overnight release of the legislation’s text.
Stripping out provisions flagged by the Senate parliamentarian as violating the Byrd rule would raise the primary deficit impact to $3.5 trillion and push total borrowing to $4.2 trillion. Depending on final negotiations over measures such as the SALT deduction cap and other measures, total borrowing under the bill could climb as high as $4.5 trillion, per CRFB.