Senate narrowly advances Trump’s tax and spending megabill

The initial procedural vote on the One Big Beautiful Bill Act was 51-49, offering a stark preview of the difficulties party leaders face in getting the measure passed into law.

Senate Majority Leader John Thune. The Senate narrowly voted to advance President Donald Trump’s tax and spending megabill. Picture: AP Photo

The GOP-controlled Senate voted Saturday (Sunday AEST) to advance President Donald Trump’s tax and spending megabill despite some Republican defections, narrowly clearing one hurdle but offering a stark preview of the difficulties party leaders face in getting the measure passed into law.

The initial procedural vote on the One Big Beautiful Bill Act was 51-49, with most Republicans in favour and all Democrats opposed. GOP senators Rand Paul (R., Ky.) and Thom Tillis (R., N.C.) broke with their party to vote against the bill. The revised text of the 940-page Senate bill had been released late Friday night.

More than three hours into the vote, the tally was stuck at 47 in favour and 50 opposed. Vice-President JD Vance rushed to the Senate to be in place to cast a tie-breaking vote. Senators Rick Scott of Florida, Mike Lee of Utah, and Cynthia Lummis of Wyoming were holding off on voting.

Shortly before 10.30pm (local time), Senator Ron Johnson (R., Wis.) – who had earlier voted “no” – Senator Lee and Senator Lummis went back into the office of Senate Majority Leader John Thune (R., S.D.). “We’re working hard, in good faith,” Senator Johnson said. Just after 11pm., Senators Lee, Lummis and Scott voted yes, with Senator Johnson switching his vote to join them.

The close vote offered a preview of the coming challenges and pressures. On Truth Social, Mr Trump tore into Senator Tillis over his vote, saying he wanted to find a Republican to challenge him for his seat in 2026. The senator “is making a BIG MISTAKE,” Mr Trump said.

US President Donald Trump with Vice-President JD Vance. Picture: AFP

Senator Susan Collins (R., Maine) voted to support moving ahead with the measure, though she said she hasn’t decided on whether to support the final bill. The depth of the cuts to Medicaid and clean-energy programs contained in the bill and the size of the deficits it creates are among the major sticking points.

Senator Lisa Murkowski (R., Alaska) voted to advance the measure Saturday night after nearly an hour of discussion with party leaders on the Senate floor.

The new version offers a more generous deduction for state and local taxes – known as SALT – through 2029 than the previous Senate iteration. It gives states more time before lowering the ceiling on the so-called provider taxes used to enhance state Medicaid budgets and in turn attract federal matching funds.

The revised bill would also cut off tax credits for electric vehicles, solar and wind projects more quickly than the initial Senate version, in a blow to companies hoping their Republican senators could do more to shield them from an effort to roll back spending on EVs and renewable energy. It would impose a new excise tax related to the use of certain foreign components in renewable projects.

Senator Thune is aiming to drive the bill through the Senate in time to send it back to the House for an up-or-down vote and put it on Mr Trump’s desk by a self-imposed July 4 deadline.

Broadly, the bill remains the same: a combination of permanent tax-cut extensions, new tax cuts, border and military spending along with spending cuts on Medicaid and nutrition assistance that represent the core of Mr Trump’s agenda. The House bill would increase budget deficits by $US2.4 trillion over a decade, and the Senate version could lead to bigger deficits once it is tallied up, according to the Committee for a Responsible federal budget.

Senator Paul opposed the bill because it increases the debt ceiling. Senator Johnson, a spending hawk, doesn’t view the new cuts as sufficient to reduce the country’s budget deficit. Senator Tillis has said the Senate’s Medicaid cuts go too far, and the latest clean-energy changes also move the bill away from his preferences.

US Senate Majority Leader John Thune walks to the Senate floor following a meeting with Senate Republicans on Saturday. Picture: Getty Images

Senator Josh Hawley (R., Mo.) said his state would get increased Medicaid funding for the next few years and that he would fight in subsequent legislation to make sure that the postponed cuts in this bill don’t actually take effect.

Senators Hawley and Collins had wanted funds to support the rural hospitals harmed by the changes to state Medicaid financing arrangements. Republicans proposed roughly $US25bn over five years.

Senator Collins has also floated letting the top income-tax rate revert to its pre-2017 level of 39.6 per cent at some high income level.

Senate passage wouldn’t automatically get approval in the House, which narrowly passed a different version last month. Some House Republicans indicated that they still had objections to key provisions. Rep. David Valadao (R., Calif.) said on social media that he opposes the deeper Medicaid cuts in the Senate version.

Changes to SALT cap In the new version of the Senate text, the state and local tax deduction cap would start at $US40,000 for 2025, with phasing out starting after income reaches $US500,000. Both amounts would climb slightly through 2029 and then the cap would go back to $US10,000.

That is an attempt to placate blue-state House Republicans who want the $US40,000 cap while limiting the price tag and addressing GOP senators who want a lower cap. The bill also would remove previously proposed limits on closely held businesses’ ability to avoid the cap with state-blessed workarounds, in a win for dentists, accountants, manufacturers and others.

The bill retains a version of a novel tax credit for private-school vouchers that had run into procedural problems.

The provision to hike taxes on colleges’ annual investment income has new language exempting schools with fewer than 3000 students from an endowment tax. The exemption gives some relief to small colleges, which had been lobbying for changes. The exemption also appears to exempt Hillsdale College, a small, conservative Christian school in Michigan.

The clean-energy changes respond to complaints from conservatives and Mr Trump that Republicans didn’t quickly end tax incentives created or expanded by Democrats in the 2022 Inflation Reduction Act. Tax credits for new, used and commercial electric vehicles would all end September 30, faster than under the House version or the prior Senate version.

Wind and solar projects would qualify for tax credits only if placed in service by the end of 2027. That is faster than the prior version that allowed projects to qualify based on their construction start date.

Hydrogen projects would get more time before expiration – something sought by Senator Shelley Moore Capito (R., W.Va.). The bill would allow metallurgical coal suitable for use in steelmaking to be eligible for a critical minerals tax credit.

Elon Musk, the world’s richest person and former Trump adviser, said on X that the bill is “insane and destructive” and gives “handouts to industries of the past while severely damaging industries of the future.” Musk is the CEO of electric-car maker Tesla.

The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country!

Utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future. https://t.co/TZ9w1g7zHF

— Elon Musk (@elonmusk) June 28, 2025

Senator Lee said Saturday he would drop a controversial provision that would sell off some public lands, saying the constraints of the process wouldn’t let him include enough limits on who could buy it. Other Republicans were rallying against the idea and said they had enough votes to kill it.

Provider taxes change On provider taxes, the rate that states charge hospitals would gradually decline to 3.5 per cent from 6 per cent currently in the states that expanded Medicaid under the 2010 Affordable Care Act. But the rate wouldn’t start declining until 2028, one year later than in the Senate’s prior version. For the 10 states that didn’t expand Medicaid, provider taxes would be frozen in place as of the date of enactment. The changes don’t apply to nursing homes or intermediate-care facilities.

The revised bill gives extra benefits to Alaskans, whose interests are being defended by Senator Murkowski and fellow Alaska GOP senator Dan Sullivan. He called the changes a “home run” for his state.

Among the changes: a more generous tax deduction for Alaska Native whaling captains. It gives a more generous federal Medicaid matching rate to Alaska by factoring in the higher cost of living in both that state and Hawaii – the other noncontiguous state. It also gives Alaska some room to minimise cuts to federal food-nutrition programs.

The Wall Street Journal