Off the Record, On the Issues with John

Senate GOP advances $3.3T tax bill with extended cuts and deep program reductions, sparking backlash.

By John Alexander, DakCU Director of Legislative & Regulatory Affairs

Senate Republicans have advanced legislation to extend many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) alongside dozens of new provisions, following broadly similar legislation put forward by House Republicans. Any comprehensive tax legislation is going to have its wrinkles, and the “One, Big, Beautiful Bill” is no different. We have previously published estimates of the budgetary, economic, and distributional effects of the House legislation and the Senate legislation, and this post will dive into the good, the bad, and the ugly of the Senate’s.

House Bill Comes First, Senate’s bill is now, what’s the problem?
House Republicans first offered a plan to keep key parts of the 2017 tax law and added their own changes. They ran numbers on how it affects the budget, the economy, and who pays more or less. Next, Senate Republicans put forward their own version—called the “One, Big, Beautiful Bill”—which also extends expiring 2017 tax cuts and adds dozens of new breaks.

The Good
The Senate bill makes permanent popular 2017 features: instant write-offs for new equipment and research, a higher cap on business interest deductions, today’s individual tax rates and bigger standard deduction, the $10,000 SALT cap, and $15 million estate-tax exemptions. It also locks in new international rules, so companies avoid big year-end tax jumps. To pay for these guarantees, it scales back green-energy credits (raising ~$500 billion) and tightens health-insurance premium subsidies (saving ~$1 trillion).

The Bad
Lawmakers added over $350 billion in narrow breaks like deductions for overtime pay and tips, a special senior deduction, and auto-loan interest write-offs that favor some groups over others. The 20 percent “pass-through” deduction for small businesses stays (and even grows in the House version), costing $700–$800 billion and tilting benefits toward certain owners. They also kept niche credits (credit-union and low-income housing), missing a chance to simplify and pay for broader relief.

The Ugly
Instead of cutting paperwork, the bill piles on complexity. New carve-outs come with strict IRS rules. Energy credits still need confusing wage and “foreign entity” tests. It creates a new “Trump Account” savings plan just like 529s or HSAs but with extra limits and penalties and adds a small charity-donation credit. More credits mean more forms and IRS guidance for almost no extra value.

Big Cost and Cuts to Safety Nets
House members warn that the Senate’s changes drive the ten-year cost up to about $3.3 trillion almost $1 trillion more than the House plan and force $1 trillion in cuts to Medicaid and SNAP. Those cuts could strip health coverage and meal support from millions of vulnerable Americans, even as wealthier households keep generous child-tax credits and senior deductions.

Rushed Process and Backlash
All this is moving fast. Senators held last-minute mark-ups and aim for a vote during holiday travel and bad weather. The House Freedom Caucus threatens a filibuster, calling the changes “flawed” and “insufficient.” A few defections could kill the whole package.

“We thank Senators Thune, Rounds, Hoeven, and Cramer for standing up for credit unions and the members we serve by preserving the credit union tax exemption in yesterdays’s passage of H.R. 1. In times of economic uncertainty, access to safe, affordable financial services is more critical than ever. We are especially grateful for the leadership of Senate Majority Leader John Thune. His continued advocacy sends a powerful message that he stands with working families, small businesses, rural communities, teachers, veterans, and so many others who rely on their local credit union.”
— Jeff Olson, President/CEO, Dakota Credit Union Association

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