Following House passage of the One Big Beautiful Bill Act (OBBBA) (H.R. 1) on May 22, members of the Senate have begun to comment on potential changes they want considered as the upper chamber works to move forward the massive Republican bill. GOP members are generally in agreement on the parameters of the bill and much of the substance, but there are some notable areas that will be the subject of debate during what is expected to be a multiweek process, including in the tax title of the legislation.
As in the House, where the OBBBA passed by a 215-214 vote, Senate Republicans have a narrow majority and must find their way to a product supported by at least 50 of the conference’s 53 senators. Vice President J.D. Vance can provide the tie-breaking 51st vote, if necessary. To get there, they will need to balance demands that in some cases are contrary to one another — or to the House bill.
Revenue baselines and permanency
One key area where the chambers’ approaches currently differ is their choice of revenue baseline — the starting point for calculating the overall revenue impact the legislation will have. The House bill was drafted using the current law baseline, which assumes that laws sunset or change as written in statute. The Senate, however, is looking to use the more favorable current policy baseline, which assumes the continuation of current law with no additional cost to the fisc. The difference is significant, as the Senate’s choice would mean that extending the TCJA’s policies officially adds nothing to the federal debt, rather than adding about $4.2 trillion, and would make it far easier to enact longer-lasting or permanent provisions and to add additional tax breaks.
It remains to be seen whether this accounting change will garner enough political support in both chambers and a favorable ruling from the nonpartisan Senate parliamentarian, who is consulted on issues related to bills moved under budget reconciliation. (For a more detailed discussion of the baseline debate, see our April 8 article.)
However, the current policy baseline has detractors in the Senate among fiscal conservatives who oppose additions to the debt, which stands at more than $36 trillion, and want to see even deeper spending cuts than in the House bill. This includes Sen. Rand Paul, R-Ky., who has said he will not support the bill as long as it includes an increase in the federal debt limit, an element that is in the House bill as well as the Senate instructions and is expected to remain.)
“I think we have enough to stop the process until the president gets serious about the spending reduction and reducing the deficit,” Sen. Ron Johnson, R-Wis., said on CNN May 25.
Among the provisions senators have called out as wanting to extend for longer than in the House bill are three business-favorable tax provisions and several tax breaks championed by President Donald Trump during his campaign. For businesses, a more generous calculation for net interest deductions (Section 163(j)), 100% bonus depreciation and elements of research and experimentation (R&E) expensing (Section 174), which all expired or phased down in recent years, were restored in the House bill, but only for 2025–2029. Some senators hope to make these provisions permanent. Similarly, the House bill included new deductions for tip and overtime income and interest on loans for American-made car purchases, and a boost to the standard deduction for seniors, all through 2028.
“With the tips and with the overtime stuff, sure, they cost some money, but at the same time, really and truly, what we’re doing is spending some dollars to make $5,” said Sen. Jim Justice, R-W.V., advocating for permanency.
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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