Clean energy tax credits
To secure sufficient support among a bloc of conservative Republicans, House leaders agreed in the final hours before last week’s vote to amend the tax committee’s version of termination and phasedown timelines of Inflation Reduction Act tax credits. In the final version, the clean electricity investment tax credit (Section 48E) and clean electricity production tax credit (Section 45Y) — with exceptions for advanced nuclear facilities — would be terminated as quickly as 60 days after the bill’s enactment.
“We have a lot of work that we need to do on the timeline and scope of the production and investment tax credits,” said Sen. Thom Tillis, R-N.C., one of several senators who believe a softer landing is necessary for companies that have made investments and hires based on these provisions. “Undoubtedly, there’s going to be changes.”
State and local taxes (SALT)
It remains unclear whether the Senate will seek to change the carefully crafted compromise the House reached on the SALT deduction cap. Raising the cap from its current $10,000 to the $40,000 in the House bill (with a 1% increase each year from 2026 through 2033) is an expensive provision — one that rankles those who view it as a gift to high earners in high-tax districts of the country — but it was an essential change to secure House passage. (Several House members refused to support the bill without the increase.)
There are no senators from states where the SALT cap has caused outcry since its inclusion in the Tax Cut and Jobs Act. Democrats represent the states with the highest state and local taxes, including California, Maryland, New Jersey, and New York — so the provision lacks invested champions in the upper chamber. Despite this, some senators have said they recognize how crucial the issue is to certain House Republicans and believe the Senate should take a hands-off approach. However, others want to go after the SALT changes and reclaim some or all of the revenue the changes would lose.
And more
Beyond their concerns with tax provisions and disagreements between more conservative and more moderate members on spending cuts, some senators also have expressed qualms about changes to the Medicaid program.
Discussions about the package will begin in earnest the week of June 2, when lawmakers return to Washington. While Republican leaders’ stated goal is to have the final bill on President Trump’s desk for signature by July 4, this is considered a highly ambitious timeline. The two chambers must pass identical legislation, so after the Senate makes its changes, the bill will either have to go back to the House for another vote, or — less likely in this situation, given the large number of legislators from more than 20 committees that would be in the room — the two chambers will form a so-called conference committee to reconcile differences and then vote on the compromise package. That makes it essential for the GOP to balance the many concerns of its members on both sides of the Capitol.
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