Domestic Policy Bill
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Ashley Wu, Andrew Duehren, Brad Plumer, Tony Romm, Margot Sanger-Katz and
Republicans are racing to deliver a sprawling domestic policy package for President Trump that cuts taxes, boosts spending on the military and immigration enforcement and slashes social safety net programs to help pay for it.
The House passed its version last month and senators released their latest draft just after midnight on Friday, hoping to tee up votes in the Senate in the coming days. There are big differences between the two chambers’ bills, and Republican leaders have toiled to resolve their disputes about critical pieces to keep the package on track. The measure must pass the Senate and then win final approval in the House to clear Congress.
Here is a look at some of the key provisions in the bill and major differences.
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Many of the tax cuts President Trump signed into law in 2017 are set to expire at the end of the year. Republicans in both chambers want to extend and expand on those tax cuts, but they differ on how to do that.
Standard deduction
Both bills would raise it above its current level of $15,000 ($30,000 for couples), with adjustments for inflation each year.
House
Adds $1,000 ($2,000 for couples), from 2025 through 2028.
Senate
One-time, permanent boost of $750 ($1,500 for couples) in 2025.
Child tax credit
The maximum credit is currently $2,000 per child. Both bills would index the credit’s size to inflation and then make an additional increase.
House
Temporarily increases it to $2,500, starting in 2025 through 2028. Both parents need a Social Security number.
Senate
Permanently increases it to $2,200 in 2026. Only one parent needs a Social Security number.
Estate tax
Estates worth less than $14 million are currently exempt, but this threshold is set to drop to $7 million next year.
House
Permanently exempts estates worth less than $14 million. Increases to $15 million ($30 million for couples) in 2026 with adjustments for inflation each year.
Senate
Same as House.
State and local tax deduction
The current amount of state and local taxes that can be written off on federal tax returns is $10,000, but some House Republicans in high-tax states have pushed to significantly increase the cap.
House
Raises cap to $40,000, increasing every year until 2033. The size of the cap decreases for people making more than $500,000 per year.
Senate
Same as House, but reinstates the $10,000 cap in 2030.
Deduction for business owners
Many businesses pass earnings directly onto their owners, who then pay individual income taxes on the businesses’ profits. The current deduction is 20 percent and both bills make the deduction permanent.
House
Increases it to 23 percent.
Senate
Keeps it at 20 percent.
Tax breaks for corporations
Both bills revive the ability of companies to deduct full cost of certain investments and research projects in one year rather than spreading them out over time.
House
Tax breaks, from 2025 through 2029.
Senate
Tax breaks are permanent.
Mr. Trump also campaigned on a number of tax cuts and has pushed Republicans to include measures core to his policy agenda.
Additional deduction for seniors
Both bills create an addition to the standard deduction for Americans 65 and older, from 2025 through 2028. The deduction would decrease for those who earn more than $75,000 a year ($150,000 for couples).
House
Adds $4,000.
Senate
Adds $6,000.
No tax on tips
Both bills create a new tax deduction for income from tips from 2025 through 2028.
House
No cap. Only applies to those who make less than $160,000 a year.
Senate
Deduction capped at $25,000 and decreases for those making more than $150,000 a year ($300,000 for couples).
No tax on overtime
Both bills create a new deduction for overtime premium pay from 2025 through 2028.
House
No cap. Only applies to those who make less than $160,000 a year.
Senate
Deduction capped at $12,500 and decreases for those making more than $150,000 a year. (For couples, the deduction is limited to $25,000 and the income cutoff is $300,000.)
No tax on car loan interest
Both bills create a new $10,000 deduction for interest payments on car loans.
House
The deduction decreases for those making more than $100,000 a year ($200,000 for couples), and the vehicle must go through final assembly in the United States.
Senate
Expands the House’s rules by requiring that the car be new in order to claim the deduction.
Trump account
In both bills, babies born between the start of this year and the end of 2028 receive an investment. The Trump administration is pursuing several options to encourage Americans to have more children.
House
$1,000 deposit in a new tax-advantaged “Trump account.”
Senate
Same as House.
Tax on university endowments
Certain universities’ net investment income is currently taxed at 1.4 percent. Both bills seek to substantially raise this threshold.
House
Increases up to 21 percent.
Senate
Increases up to 8 percent.
Charitable contribution deduction
Both bills allow taxpayers who take the standard deduction to deduct charitable donations. Historically, only those who itemize have been able to claim this deduction.
House
Allows deduction up to $150 ($300 for married couples), from 2025 through 2028.
Senate
Allows deduction up to $1,000 ($2,000 for married couples), starting in 2026 with no expiration.
To offset Mr. Trump’s desired tax cuts, both bills propose steep cuts to health care and food assistance benefits for low-income Americans.
Medicaid: Work requirements
Both bills impose a work requirement on most adults in order to qualify for benefits. States would also be required to check recipients’ eligibility twice a year instead of once.
House
Requires most adults without children to document 80 hours of work or prove they qualify for an exemption.
Senate
Expands the House’s work requirement to include adults with children who are 15 and older.
Medicaid: Provider taxes
Both bills limit strategies that states have developed to tax medical providers as a way to draw extra federal money into their budgets.
House
Freezes the amount of money states can raise.
Senate
Reduces the maximum amount that states that expanded Medicaid under the Accordable Care Act are allowed to raise to 3.5 percent of medical bills from 6 percent for most medical providers.
Affordable Care Act
Both bills make it harder to sign up for coverage or to qualify for tax credits to pay for it.
House
Imposes more rules to qualify for federal subsidies, including additional paperwork. Those with coverage may have to pay for a larger share of the costs.
Senate
Includes fewer restrictions for enrolling, but is largely similar.
Food stamps
Both bills impose a work requirement on most adults in order to qualify for benefits and shift some costs from the federal government to states starting in 2028.
House
Requires proof of work from most adults, including those with children over the age of 6, to qualify.
Senate
Walks back some of the House’s work requirement, applying it to most adults with children 14 and older. The method for shifting costs to the states is different, too. Some states may not pay at all, depending on their error rates.
Mr. Trump also campaigned on rolling back tax credits for clean energy contained in the Inflation Reduction Act of 2022. Both bills do this, but the Senate has proposed a more gradual phase-out for certain technologies.
Wind and solar tax credits for businesses
Both bills sharply phase out tax credits for companies that build large-scale wind and solar power plants.
House
Projects must start construction within 60 days after the bill’s enactment and be operational by the end of 2028 to receive tax breaks.
Solar leasing companies are ineligible.
Senate
Projects must be operational by the end of 2027 to receive tax breaks.
New wind and solar projects also face additional taxes if their supply chains are connected to China.
Other low-carbon electricity credits for businesses
Both bills phase out tax credits for companies that build other new sources of low-emissions power like nuclear reactors, geothermal plants or battery storage.
House
Battery, geothermal or other low-carbon electricity projects must start construction within 60 days after the bill’s enactment and be operational by the end of 2028 to receive tax breaks.
But businesses building new nuclear reactors could qualify for the credit as long as they begin construction before the end of 2028.
Senate
Nuclear, geothermal or battery projects qualify for a full tax credit if construction begins before the end of 2033, before phasing out completely in 2036.
Residential energy tax credits
Both bills end tax credits for rooftop solar, electric heat pumps and other energy-efficient home devices.
House
Ends tax credits at the end of 2025.
Senate
Same as House.
Electric vehicle tax credit
Both bills end a $7,500 tax credit that helped reduce the cost of electric vehicles.
House
Ends the tax credit at the end of 2025.
Senate
Ends the tax credit by Sept. 30, 2025.
Tax credits for companies that produce clean hydrogen fuels
House
Companies must begin construction by the end of 2025 to claim credits.
Senate
Companies must begin construction by the end of 2027 to claim credits.
Tax breaks for factories that make clean energy components like electric cars or solar panels
Both bills terminate credit for wind power components after 2027.
House
Excludes most companies from claiming the credit if their supply chains are connected to “foreign entities of concern,” which include China.
Senate
Retains the House’s restrictions, but narrows its definition for whether a company is tied to a “foreign entity of concern.”
Rescinding IRA funds
Both bills rescind an estimated $5 billion in unobligated funds from certain programs included in the IRA.
House
Also repeals the programs.
Senate
Does not repeal the programs altogether.
Mr. Trump put immigration at the center of his political agenda and both chambers are prioritizing it. The House would steer about $175 billion toward immigration enforcement and border security. It also adds about $150 billion in new military spending.
Border wall
Both bills provide funds to build the border wall and related infrastructure, as well as improve Customs and Border Protection facilities.
House
Provides $46.5 billion for border wall and $5 billion for CBP facilities.
Senate
Same as House.
Customs and Border Protection personnel
Both bills provide funds to hire and train new CBP staff, along with retention and signing bonuses.
House
Provides $4.1 billion for hiring and training new CBP staff and $2 billion for retention and signing bonuses.
Senate
Same as House.
Immigration detention facilities
House
Provides $45 billion.
Senate
Same as House.
Immigration and Customs Enforcement personnel and operations costs
Both bills fund hiring more ICE staff, transportation costs for removals and improvements to ICE facilities.
House
Provides $27.3 billion.
Senate
Provides $29.8 billion.
Boosting immigration courts
Both bills provide funds to the Justice department.
House
Provides $3.3 billion for immigration-related matters, including hiring more immigration judges and prosecuting drug trafficking as well as crimes involving undocumented immigrants.
Senate
Provides the same amount as the House, but specifies some additional uses.
Military readiness
Both bills provide funding to expand stocks of spare parts, to improve infrastructure of military depots and shipyards, and to expand capacity of Special Forces.
House
Provides $11.5 billion.
Senate
Provides $16.3 billion.
Munitions
Both bills provide funding to expand America’s arsenal of munitions and expand production of critical minerals.
House
Provides $20.4 billion.
Senate
Provides $25.3 billion.
Shipbuilding
Both bills provide funding to expand and improve America’s naval fleet.
House
Provides $33.7 billion.
Senate
Provides $29.1 billion.
Air and missile defense
House
Provides $24.7 billion.
Senate
Provides $24.4 billion.
Christine Zhang contributed reporting.
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