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Senate Finance Committee Highlights

  • Tax Cuts & Credits
    • Child Tax Credit: Lowered to $2,200 per child, down from the House-approved $2,500 (politico.com).
    • SALT Deduction: Capped at $10,000, aligning with current law—not the $40,000 cap in the House bill (politico.com).
    • Tips & Overtime: More limited break compared to House, but still included (politico.com).
    • University Endowment Tax: Raised cap to 8% (vs. 21% proposed by House) (politico.com).
    • Charitable Deduction: Non-itemizing couples get $2,000 (instead of $300) (politico.com).
    • Business Tax Breaks: Several permanent extensions, including R&D expensing (reuters.com).
  • Medicaid & Health
    • Deeper Medicaid cuts than House: includes work requirements, co-pays, and provider tax phase-down (apnews.com).
    • Smaller provider tax gradually phased out (apnews.com).
  • Energy & Climate
    • Gradual rollback of green energy credits (e.g., EV subsidies cut immediately; solar/wind phased out later) (apnews.com).
    • Clean-energy tax breaks phased but not eliminated entirely (washingtonpost.com).
  • Debt Ceiling & Spending
    • Increases the debt ceiling—not $4 trillion (House), but $5 trillion (ft.com).
    • Boosts defense and border security funding (apnews.com).

Key Tensions & Implications

  • SALT Cap: Senate’s $10,000 cap sharply diverges from House’s popular $40,000—facing strong opposition from representatives in high-tax states (ft.com).
  • Budget Limits & Deficits: Senate version likely exceeds the House’s $4 trillion tax-cut target and could increase the deficit by over $2 trillion over 10 years—risking pushback from fiscal conservatives (politico.com).
  • Negotiation Pressure: Senators working to finalize their version before the July 4 recess, but House-Senate reconciliation will hinge on SALT and Medicaid compromises (politico.com).

Bottom Line

The Senate Finance Committee’s draft largely trims back the House’s more expansive tax and spending proposals—scaling down credits, locking in existing SALT limits, targeting Medicaid cuts, and softening climate provisions—while aiming to preserve core Trump-era tax cuts, extend business incentives, and raise the debt ceiling. The package reflects a balancing act between appealing to fiscal hawks and high-tax-state representatives, with final passage dependent on bridging those divides.

For additional questions, please contact LRCC SVP of public affairs Steve Japinga at sjapinga@lansingchamber.org