House Republicans are working to give their “big beautiful bill” a face lift as they try to appease warring factions of the party in hopes of sending President Trump’s legislative agenda to the Senate before Memorial Day.
The broad outline of the megabill is already set, with committees completing advancement of all 11 portions of the sprawling bill in marathon markups this week.
The legislation includes an extension of the tax cuts Trump signed into law in 2017; doing away with taxes on tips and overtime pay; implementing new work Medicaid work requirements on “able-bodied” adults that are projected to result in millions losing health coverage; repealing green energy tax credits that Democrats enacted in 2022; and making states share the cost of food assistance for the first time, among other provisions.
There are, however, plenty of gripes that are complicating the bill’s path in the razor-thin majority, since no Democrats will support the bill. Moderate Republicans are holding out for a bigger blue-state tax break, while fiscal hawks are disappointed with Medicaid cuts not going far enough and are demanding that the reforms be put in place sooner — complaints that are stalling progress on the party’s measure.
On Friday, a group of fiscal hawks tanked a key committee vote on the measure in the latest sign of the difficulty of finding consensus.
Speaker Mike Johnson (R-La.) acknowledged this week that changes were being negotiated between the party’s various corners, explaining that alterations that increase the fiscal impact in one area would require turning the “dials” up in “savings” elsewhere to meet the legislation’s deficit targets — a dynamic that makes for a delicate balancing act.
“If you do more on SALT, you have to find more in savings,” Johnson said, referring to the state and local tax (SALT) deduction cap. “So these are the dials, the metaphorical dials I’m talking about.”
Here are the key sticking points lawmakers are looking to address.
SALT cap
Moderate Republicans in high-tax blue states like New York, New Jersey and California have long said that their top issue is securing an increase to the SALT deduction cap, which allows taxpayers to deduct the cost of high state and local taxes on their federal return.
Trump implemented a SALT deduction cap of $10,000 in the 2017 Tax Cuts and Jobs Act, prompting a decrease in filers using the deduction from 31 percent in 2017 to just 9 percent in 2022 and causing a hit to constituents in key toss-up districts represented by members like Reps. Nick LaLota (R-N.Y.), Mike Lawler (R-N.Y.), and Young Kim (R-Calif.). To keep the slim House GOP majority, the members argue, they must deliver an increase in the SALT cap.
The draft bill as written would triple that deduction cap to $30,000 for individuals making $400,000 or less, gradually decreasing the cap for those who exceed the income ceiling. But the SALT members have vocally rejected that number, leading many to expect a change down the road.
Members of the SALT Caucus have floated a $62,000 cap for single filers and a $124,000 cap for joint filers.
“We have been very clear from the beginning: If there was not a fix in this bill for SALT there would not be a bill,” Lawler said this week. “And as far as I’m concerned, this is not a fix.”
Other Republicans, meanwhile, argue that the SALT cap primarily benefits wealthier filers and does nothing more than subsidize blue states, removing the incentive for them to lower their own tax burdens.
A hike to the proposed SALT deduction cap to appease moderates will likely prompt more problems on the right. Hardline conservatives are demanding that any increase to the current cap will have to be paid for by spending cuts elsewhere, adding to the conundrum of the current debate.
“I think $30,000 is more than generous,” Rep. Byron Donalds (R-Fla.) told reporters on Thursday.
“I’m open to making sure we get the president’s agenda through, and at its core, everybody in that room, we want to get the president’s agenda through, we’re committed to that,” he added. “It’s about really, how we put the math together. So if SALT goes up, then there’s gonna have to be some adjustments elsewhere.”
Medicaid work requirements start date
Conservatives are pushing GOP leaders to speed up the start date of work requirements for Medicaid beneficiaries. The provision would require childless adults aged 19-64 years old to prove they work, go to school or volunteer for 80 hours a month.
As written, the work requirements would take effect in 2029 — a four-year delay that many conservatives say is far too long. They are pushing for the requirements to start earlier, possibly as soon as 2027. That accelerated time frame would front-load much of the savings, but also the coverage losses.
Work requirements currently account for the largest savings in the health portion of the legislation; about $301 billion over seven years.
According to estimates released by Energy and Commerce Committee Republicans, the requirements would result in nearly 5 million people losing Medicaid. As currently written, those losses would occur after the 2028 presidential election. Moving up the start could mean even more people losing coverage, especially if states have to rush to set up their employment verification systems.
Democrats could be handed a powerful political argument if millions of people lose insurance in the run-up to the election.
Green energy tax credits
House leadership’s effort to cut billions of dollars in subsidies for climate-friendly energy sources is meeting pushback from both the party’s left and right flanks. Budget holdouts like Chip Roy (R-Texas) say they’re too lenient, while moderates like Rep. Jen Kiggans (R-Va.) say they’re too stringent.
The document passed by the Ways and Means Committee phases out tax credits for solar, wind and nuclear projects that come online between 2029 and 2032.
Projects that start producing energy in 2029 can get 80 percent of the credit while those that join the grid in 2031 can only get 40 percent.
Roy said in a recent post on X that this isn’t sufficient, lamenting that the bill “delays IRA subsidy repeal until after Trump.”
However, the GOP’s bill is expected to be tougher on the low-carbon energy credits than they appear at first glance.
This is especially true because it adds new restrictions that bar projects that want to claim the credit from containing any components, subcomponents or minerals tied to China, a major minerals processing hub.
These restrictions go into effect for any project that starts construction just one year after the bill is passed and are expected to make a large number of projects ineligible for the credits, even if subsidies are still technically on the books.
A group of 13 moderate Republicans this week called for changes to that restriction and others in a letter to house leadership this week, writing “The last thing any of us want to do is provoke an energy crisis or cause higher energy bills for working families.”
Other issues at play
Fiscal hawks have brought up many other changes they’d like to see in the bill — namely surrounding the controversial issue that bill-drafters declined to touch: Lowering the Federal Medical Assistance Percentage for the Medicaid expansion established under ObamaCare.
They have also suggested taking a tougher stance on the “provider tax” that allows states to extract more federal Medicaid matching dollars. The current bill bans states from increasing current provider tax rates.
It is unclear, though, whether there would be changes to those provisions.
There could also be changes to a section of the bill overhauling pensions for government employees, including by increasing the required employee contribution to the Federal Employee Retirement System and basing their pension benefit on the highest 5-year average pay rather than highest 3-year average pay. Some Republicans raised objections to changing the terms of current employees’ retirement plans.
