In Washington, Republican lawmakers are on the verge of advancing a comprehensive tax and spending cut bill through Congress, with the Senate expected to hold a final vote late Monday or early Tuesday. Spanning over 940 pages, the legislative proposal includes a wide array of tax breaks, spending reductions, and other Republican priorities, encompassing increased funding for national defense and deportation measures. President Donald Trump has urged Republican legislators, who maintain majority control in both the House and the Senate, to forgo their holiday recesses and finalize the bill by July 4.
Democrats remain firmly opposed to the legislation and have introduced numerous amendments in a bid to modify it as the Senate undergoes a process known as a “vote-a-rama,” which permits senators to propose unlimited amendments, each requiring a vote. Once the Senate approves the legislation, it must then proceed to the House for a vote before reaching the President’s desk for signing.
Central to the bill are substantial tax cuts, deemed essential by Republicans due to an impending tax increase when existing tax breaks implemented during Trump’s first term are set to expire this December. The proposed legislation includes approximately $4.5 trillion in tax reductions, intending to permanently retain current tax rates and brackets. Additionally, it proposes temporary new tax incentives that align with Trump’s campaign promises, including no taxes on tips, overtime pay, deductions on certain automotive loan interest payments, and a $6,000 deduction for older adults earning up to $75,000 annually. The child tax credit would see a modest increase from $2,000 to $2,200, though low-income families may not receive the full benefit.
Moreover, the bill proposes raising the cap on state and local tax deductions, known as SALT, to $40,000 for a five-year term—a significant interest for high-tax states like New York. Business-related tax reductions abound, allowing firms to immediately write off the full cost of equipment and research expenses. While wealthiest households are projected to see a $12,000 increase in benefits, the poorest citizens could face a $1,600 annual loss, as estimated by the nonpartisan Congressional Budget Office (CBO). Middle-income taxpayers stand to gain between $500 and $1,500 in tax relief.
In terms of border and national security, the bill allocates around $350 billion for Trump’s security initiatives, including $46 billion toward constructing the U.S.-Mexico border wall and $45 billion for 100,000 migrant detention beds. The bill supports hiring 10,000 new Immigration and Customs Enforcement officers with substantial signing bonuses and aims for a comprehensive deportation plan targeting 1 million removals annually. States aiding federal immigration enforcement could access a new $10 billion grant fund. Immigration fees will be increased to support these efforts.
The defense sector benefits from the proposed budget, with billions directed toward ship building and munitions, in addition to an increase in the quality of life for military personnel. A substantial $25 billion investment is slated for the Golden Dome missile defense system and additional funding is earmarked for border security.
To partially offset the cost of these tax cuts and increased spending, Republicans propose reducing funding for Medicaid and food assistance programs aimed at the poor, endeavoring to tailor these safety net programs for their originally intended recipients and eliminate inefficiencies. Included in the package are new work requirements necessitating adults on Medicaid and food stamps to work at least 80 hours a month, a requirement extended to older adults and parents of children over 14. Medicaid users would also face a new $35 co-payment for services.
CBO estimates suggest more than 11.8 million Americans would become uninsured by 2034 if enacted, and an additional 3 million would fail to qualify for food stamps. To counter reduced Medicaid funding, a newly proposed $25 billion Rural Hospital Transformation Program seeks to alleviate the impacts on rural healthcare providers, appealing to undecided Republican senators and Congressional supporters.
On environmental policy, the bill proposes sharp rollbacks to tax incentives aimed at expanding clean energy projects involving wind and solar energy, originally championed in President Joe Biden’s 2022 climate policy. The potential fallout may peril America’s renewable energy industries, warned Democratic Senator Ron Wyden. And the bill introduces new taxes for wind and solar projects utilizing an excessive share of Chinese components.
Additional tax reform elements concern replacing expiring electric vehicle purchase incentives, expanding a production tax credit for critical materials like metallurgical coal, and creating Trump Accounts for children’s savings, with an initial Treasury deposit of $1,000. Additionally, the legislation removes a $200 tax on certain firearms accessories and plans the establishment of a National Garden of American Heroes, a personal ambition of Trump.
Despite claiming future deficit reductions, the Democrats challenge the Republicans’ approach to excluding existing tax cuts from new costs, accusing their opponents of “magic math” tactics. According to the CBO, this legislative package carries a near $3.3 trillion increase in federal deficits from 2025 to 2034, yet Republican senators argue differently, calculating potential long-term reductions by altering baseline assumptions. Critics, including nonpartisan fiscal watchdogs and Democratic lawmakers, assert that the Republicans’ strategy evades transparency.