Senate Narrowly Passes Trump’s Tax Bill. Get Ready for a Fight in the House.

President Donald Trump’s signature tax and spending bill extends $3.8 trillion in individual tax cuts, while establishing new breaks for corporations, tips, and overtime. (Getty Images)

President Donald Trump’s signature tax and spending bill took a major step forward on Tuesday as the Senate passed a bill extending $3.8 trillion in individual tax cuts, while establishing new breaks for corporations, tips, and overtime.

The Senate passed the bill by a vote of 51-50, with Vice President JD Vance casting the tie-breaking vote, after a marathon session of votes on amendments and last-minute efforts to win over Republican holdouts, including doubling the size of a fund meant to help rural hospitals hurt by Medicaid cuts. The final bill also struck an excise tax on wind and solar projects that industry executives had warned would devastate the industry.

GOP Senators Thom Tillis (N.C.), Susan Collins (Maine), and Rand Paul (Ky.) voted against the bill.

The bill faces an uncertain future in the House of Representatives, which will now race to a vote in an attempt to get the bill to Trump’s desk by July 4. Some GOP moderate House members have already expressed reservations about the Senate bill’s cuts to Medicaid, while fiscal hawks have decried the overall cost of the bill. Republicans can lose only three votes in the House and still pass it along party lines.

Speaker of the House Mike Johnson (R., La.) immediately after the vote said GOP House lawmakers would work quickly to pass the bill by July 4th.

“The American people gave us a clear mandate, and after four years of Democrat failure, we intend to deliver without delay,” Johnson said in a statement.

The House Rules Committee is set to meet this afternoon to consider the bill, setting it up for a potential vote on the House floor on Wednesday.

To meet the July 4 deadline, House lawmakers will have no option but to to accept the bill the Senate passed without changes. Similar to what GOP leadership faced in the Senate, Johnson can only lose three votes in the House and still pass the bill along party lines. The House version of the bill in May passed by only one vote, with one GOP lawmaker abstaining.

It’s far from clear that Johnson yet has the support he needs. At various points, House fiscal hawks have threatened to tank the Senate-passed bill over its increased costs relative to the House version, and House GOP moderates have threatened to vote against it for making deep cuts to Medicaid.

As it stands, the bill extends the individual tax cuts originally passed in 2017 during Trump’s first term, while creating new cuts for tips, overtime, and seniors. It makes permanent deductions for business interest and some investments sought by corporations, while adding work requirements to Medicaid and cutting care for some illegal immigrants. It also phases out some green energy credits created by President Joe Biden’s Inflation Reduction Act.

The Congressional Budget Office expects the bill to add about $3.3 trillion in the national debt over the coming decade. Senate lawmakers on Monday voted to adopt a “current-policy baseline,” a procedural move that made extending the 2017 tax cuts appear to cost nothing, even though the CBO had said that would actually add $3.8 trillion to the federal debt.

With no time for further back-and-forth with the Senate before July 4, Trump and House leadership will put intense pressure on the various GOP factions to pass the bill as-is.

The effort will be all-the-more difficult because the Independence Day deadline is artificial. The bill is being used to increased the debt ceiling. Treasury Secretary Scott Bessent has said that the U.S. will be at risk of defaulting in August if the ceiling isn’t raised, making the true deadline for passing a bill later in July.

To get the votes necessary to pass the bill, the Senate at the last minute stripped out some controversial provisions. Senators earlier Tuesday voted overwhelmingly to strip out a moratorium on regulating artificial intelligence, which for the next decade would have nixed some funding for states that passed and enforced AI regulation.

The moratorium was supported by AI companies and the White House, which argued that forcing AI to comply with a patchwork of state regulations would slow innovation and make it easier for competitors in China to gain the upper hand. Detractors had said the provision could have in effect left the technology with no guardrails for years.

Trump was cheerleading the bill on social media Monday evening, posting opinion pieces and news articles in support on his Truth Social site. He also said early Tuesday that failing to pass the bill “means a whopping 68% Tax increase, the largest in history!!!”

Write to Brian Swint at brian.swint@barrons.com and Joe Light at joe.light@barrons.com