US Senate Republicans proposed changes to Trump’s tax and spending bill, making some business tax breaks permanent while limiting state and local tax deductions. 

US Senate Republicans have introduced their version of President Donald Trump’s tax-cut and spending bill on 16 June 2025, which closely aligns with the legislation recently passed by the House.

The new version of Trump’s tax cut and spending bill, also called the “big, beautiful” tax bill, makes some business tax breaks permanent while limiting the deduction for state and local income taxes.

The two versions of the bill in the Republican-controlled chambers of Congress could complicate leaders’ goal of passing it, before the self-imposed 4 July deadline. The Senate must still debate and approve the bill before the two Republican-led chambers can reconcile their differences. Only then can it be sent to Trump for his signature, making it law.

On 28 May 2025, Trump announced plans to negotiate parts of the bill, citing mixed feelings about some provisions.

The key differences between the two bills are as follows:

Temporary Vs. Permanent Tax Cuts

According to the Congressional Budget Office, a House bill is projected to add USD 2.8 trillion to the national debt over the next decade. It includes tax cuts that mostly expire after a few years, while the Senate version proposes making some of those tax breaks permanent.

State And Local Tax  (SALT) Deduction

The House plan raises the state and local tax deduction cap from USD 10,000 to USD 40,400 in 2026, while the Senate plan keeps the USD 10,000 cap.

Retaliatory Tax (Section 899)

The House and Senate both propose allowing the US to tax residents, businesses, and entities from countries with “unfair foreign taxes.” The Senate plan would start in 2027, a year after the House plan.

Clean Energy Projects

Both the House and Senate versions would roll back clean-energy incentives from President Biden’s 2022 Inflation Reduction Act (IRA); however, the timeline is different.

The House bill limits tax credits for wind, solar, and clean energy projects to those operational by 2028. Projects started 60 days after the bill’s enactment are excluded, even if completed before 2028.

The Senate bill would phase out the credit for wind and solar projects by 2027 and for hydro, nuclear, and geothermal projects starting in 2033.

Tax-free Tips

Both chambers allow a deduction for tipped income through 2028. The Senate caps it at USD 25,000, while the House sets no limit.

Earlier, the US House Ways and Means Committee passed the One, Big, Beautiful Bill (Act) on 22 May 2025. This bill makes the 2017 Trump tax cuts permanent, offers additional tax relief for working families and small businesses, and encourages investment and manufacturing in America.