House Republican leaders unveiled a new version of President Donald Trump’s large tax and spending bill. The update raises the cap on the state and local tax (SALT) deduction and includes other changes aimed at winning support from divided GOP factions.
The bill, released Wednesday night, also speeds up Medicaid cuts and removes Biden-era clean energy tax credits. These moves are designed to satisfy hardline conservatives.
A White House official said Trump strongly supports the revised bill. However, it remains uncertain if the changes will secure enough votes to pass the House, where Republicans have a slim majority and cannot afford many defections.
House Speaker Mike Johnson is pushing to pass the bill before the Memorial Day recess. A vote could happen as soon as Thursday.
Early Thursday morning, lawmakers cleared a key procedural hurdle. Nearly all Republicans backed the rules for debating the bill, while all Democrats who voted opposed it.
The updated bill raises the SALT deduction cap to $40,000 starting this year, aiming to win over Republicans from high-tax states like New York, New Jersey, and California. The deduction limit would gradually phase out for taxpayers earning over $500,000, increasing by 1% annually after this year.
Additionally, the bill creates a new limit on itemized deductions for those in the highest 37% tax bracket, which partially reduces the benefit of the higher SALT cap.
The SALT deduction limit was first imposed at $10,000 during Trump’s first term. Before that, the deduction was unlimited. GOP holdouts have pushed to raise this cap.
The bill also accelerates Medicaid work requirements to December 2026, instead of 2029, to please ultraconservatives. This deadline comes just after the 2026 midterm elections, potentially sparking Democratic criticism over cuts to health benefits for low-income families.
In a nod to hardliners, the bill bans Medicaid funding for gender transition treatments for both minors and adults. The original bill only restricted funding for minors.
The bill renames a new tax-advantaged savings account for children as “Trump accounts,” previously called “MAGA accounts.” Each American baby born in the next few years would receive $1,000 seeded into these accounts.
It also includes $12 billion to reimburse states for border security costs, a win for Texas Republicans like Senator John Cornyn, who pushed for the addition.
One provision was dropped: a plan to cut federal pensions by calculating benefits based on the highest five years of salary instead of the highest three. This change was praised by Republican Representative Mike Turner of Ohio, who called the pension cut “unfair.”
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