The Senate Republicans continue to meet internally and with stakeholders regarding the provisions of a reconciliation package (H.R. 1).

Senate Majority Leader John Thune (R-SD) made it clear that the Senate will make modifications to the bill in the next two weeks and aim to vote on revisions to the bill, including the tax title during the last week of June. Republicans hope to send a compromise bill to President Trump’s desk by July 4, a goal that is increasingly difficult to achieve.

Senate Republicans have yet to determine whether to amend the House-passed package directly on the floor, and Senate Finance Committee Chairman Mike Crapo (R-ID) has said he has not decided whether the committee will mark up the tax portion of the bill. In either event, Senate committees have started to release draft text of their substitute amendments to the bill, and the Finance Committee is expected to release text of the tax title in the next two weeks.

Provisions currently under discussion by Senate leadership include:

• TCJA Business Provisions: While Republicans on the Senate Finance Committee have called for making the three major business provisions of the Tax Cuts and Jobs Act (i.e., expensing of research and development costs, bonus depreciation and deductibility of business interest) permanent, the White House signaled last week that the House’s temporary extensions for five years are preferable.
• Energy Tax Provisions: Senators on and off the Finance Committee continue to examine the stark changes to the Inflation Reduction Act (IRA) energy provisions included in the House bill, with many looking to provide a more orderly transition to the termination of the IRA incentives.
• Estate Tax: Despite championing efforts to repeal the estate tax, Leader Thune has stated that the final bill is unlikely to repeal the tax. He said that the final bill will likely replicate the estate tax provision in the House-passed bill, which permanently increases the estate tax exemption to $15 million for a decedent, and exemption thresholds continuing to be indexed for inflation.
• State and Local Tax (SALT) Deduction: While House Speaker Mike Johnson (R-LA) has urged the Senate to maintain the increased $40,000 SALT deduction limitation, Senate leaders may look to scale back the deduction, as Leader Thune noted that there are no Republican senators “who care much about the SALT issue” because no Republican senator represents the high-tax states of California, New York and New Jersey. Some House Republicans who represent districts in these states have threatened to vote against the bill if the Senate lowers the cap.

CBO Estimates House-Passed Reconciliation Bill to Increase Deficit by $2.4 Trillion: According to a budgetary assessment from the Congressional Budget Office (CBO) released June 4, the House-passed reconciliation package would add $2.42 trillion to the federal deficit over the next 10 years, with a $3.67 trillion decrease in expected revenues and a $1.25 trillion decrease in spending. Republicans have argued that CBO’s projections are inaccurate, claiming that estimates do not account for economic growth generated by the bill’s tax cuts and easing of regulatory burdens, as well as revenue from tariffs.

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