House Republicans passed a major tax cut and spending bill, a significant win for President Donald Trump and Republican leadership. The measure, which would implement much of Trump’s second-term agenda, now goes to the Senate for consideration.
The House voted early Thursday to pass the $4 trillion reconciliation bill, 215 to 214. No Democrats joined Republicans in voting for the legislation, dubbed by Trump and Republicans the “one big, beautiful bill.” Two Republicans, Reps. Thomas Massie (R-KY) and Warren Davidson (R-OH), voted against the bill, while a third, Rep. Andy Harris (R-MD), voted present, citing deficit concerns.
Two Republicans didn’t vote: Reps. Andrew Garbarino (R-NY) and David Schweikert (R-AZ).
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The House passage came after months of negotiations between various factions within House Republicans, who have been jockeying for various — and at times contradictory — concessions from leadership. The slim House majority gave these factions outsize bargaining power, as they were able to withhold their votes in exchange for legislative changes.
House Speaker Mike Johnson (R-LA) mediated among the groups, meeting with them multiple times inside his office over the last weeks. He fulfilled an ambitious timeline of having the legislation passed through the lower chamber by Memorial Day, a self-imposed deadline that irritated many GOP fiscal hawks, who accused leadership of jamming a subpar project through the ranks.
The centerpiece of the legislative bill is an extension of the individual tax cuts included in the 2017 Tax Cuts and Jobs Act. However, it also contains other policies Trump promised during his campaign, such as cutting taxes on tips and on overtime income. Additionally, it allocates new funding for border security and national defense.
Republicans pushed hard to advance the bill quickly in the past few weeks. The Ways and Means Committee markup, for example, went for 17 hours, while the Energy and Commerce Committee’s hearing dragged on for more than 26 hours.
The Rules Committee, which handled alterations to the bill, dragged on for over 21 hours. After leadership and Freedom Caucus members met with the White House at 3 p.m. on Wednesday, Republicans emerged with a deal to finally get holdouts on board.
After two days of sleep-deprived House lawmakers working through the night, votes for final passage didn’t begin until after 6:45 a.m. Thursday.
“My friends, it quite literally is again, ‘Morning in America,’ isn’t it?” Johnson quipped ahead of the vote in a nod to former President Ronald Reagan’s campaign of a new dawn ahead.
Still, House passage is only half of the equation. Republicans passed the legislation through reconciliation, a legislative process that allows bills to bypass the filibuster and pass with only a simple majority in the Senate. The bill now heads to the Senate, where it is expected to face more push-and-pull deliberations from upper chamber Republicans arguing it goes too far or not far enough.
Tax cuts take center stage in GOP legislation
The legislation extends the lower individual tax rates that have been in place since 2017. It keeps the top marginal rate at 37%, as Republicans rejected Trump’s idea of allowing a higher tax rate for very high-income earners. The bill also permanently increases exemptions to the estate tax. It boosts the child tax credit to $2,500 through 2028 and then indexes it to inflation.
The biggest point of contention on the tax side of things was what to do with the $10,000 cap on state and local tax deductions that was created by the 2017 overhaul. The so-called SALT caucus of Republican lawmakers in high-tax states such as New York and California played hardball for weeks, threatening to tank the bill unless they got major concessions on lifting that cap, a political priority for their blue districts.
Ultimately, the $10,000 cap was lifted to $40,000, with a $500,000 income cap. Lawmakers such as Reps. Mike Lawler (R-NY) and Nick LaLota (R-NY) rebuffed the Ways and Means Committee’s initial offer of $30,000, which passed out of the committee.
The SALT Republicans didn’t shy away from critiquing leadership during negotiations, and Lawler openly hit at Ways and Means Chairman Jason Smith (R-MO).
“The chair should be reminded that he wouldn’t have a f***ing gavel without the members of the SALT caucus,” Lawler said.
Raising the SALT cap disproportionately benefits the wealthy in blue states, and most rank-and-file Republicans, especially those from low-tax states, would prefer it not to be hiked. However, they voted to do so in the context of passing the overall tax cuts legislation.
Another notable omission is that the bill does not end the carried interest “loophole,” as Trump called for.
Carried interest is a kind of income that some investment firms earn while managing investors’ money. It is taxed at the rates on investment income, but critics say it should be taxed at the higher rates that apply to labor income.
Throughout the legislative process for the bill, Democrats have accused Republicans of neglecting the working and middle class while handing the wealthy big tax cuts. That was the same line of attack that Democrats used against the 2017 bill.
The 2017 overhaul, though, did cut taxes across the income spectrum. The Tax Policy Center, a left-leaning organization, estimated that two-thirds of Americans got a tax cut from the bill. The lowest quintile of earners saw their tax rates effectively reduced to 0%.
Notably, the White House and some leading Republicans have argued that the massive legislative vehicle will not add to the deficit, in large part because the economic growth spurred by its passage will offset those fiscal losses.
For instance, White House press secretary Karoline Leavitt said Monday that the legislation “does not add to the deficit,” and the chairman of the White House Council of Economic Advisers argued that the bill, “along with other administration policies,” will “produce healthy revenues because of a growing economy.”
Still, outside budget experts have said the tax plan would add trillions of dollars to the deficit, and the growth would not come close to offsetting that hit. Despite that, Republicans such as House Budget Committee Chairman Jodey Arrington (R-TX) have argued that it will not.
“We’re not going to see the deficit go up. It will go down, but it will be modest, and it will need us to do more,” Arrington said on Wednesday. He also noted that the tariffs imposed by Trump will bring in revenue.
Trump stepped in to broker peace
Johnson faced resistance from two vocal, opposing factions during the reconciliation process: fiscal hawks, who were pushing for deeper Medicaid reform and spending cuts, and the centrists, who threatened to vote against the legislation if it cut too much from federal assistance programs such as Medicaid or the Supplemental Nutrition Assistance Program, often called food stamps.
Arguments over SALT, Medicaid, and Inflation Reduction Act energy credits often left the party at a standstill, forcing Trump to weigh in with multiple social media posts and personal conversations. He called on GOP holdouts to stop being “grandstanders” and pass his agenda.
But it wasn’t enough, with the legislation temporarily stalling out in the House Budget Committee last week when Reps. Ralph Norman (R-SC), Josh Brecheen (R-OK), Andrew Clyde (R-GA), and Chip Roy (R-TX) voted against it. That resulted in a few more concessions from GOP leadership, including an earlier effective date for both Medicaid work requirements and IRA credits repeals.
The bill eventually passed out of the Budget Committee, with all four Republican critics voting “present.” However, the work was far from over, as members of the SALT Caucus warned leadership they would not budge until there was a cap they could accept.
Trump arrived on Capitol Hill on Tuesday, with leadership hoping it would put the right amount of pressure on holdout GOP lawmakers. The president called for unity and told Freedom Caucus members simply, “Don’t f*** with Medicaid.” He also told SALT Republicans to back down and accept the $40,000 cap, four-year sunset offer on the table.
But his speech failed to sway holdouts. Members such as Lawler and LaLota said they were still ” no’s ” after leaving the meeting with the president. Freedom Caucus Chairman Andy Harris (R-MD) said he was a “hard no” and didn’t think Trump’s remarks were enough to get enough votes for the bill to pass.
WILL THE GOP TAX CUT PAY FOR ITSELF?
After talks broke down late Tuesday into Wednesday, Trump once again stepped in and called leadership and Freedom Caucus members to the White House. A deal was struck, calling for the increased SALT cap and pushing the effective date for Medicaid work requirements to Dec. 31, 2026, and 2028 for some IRA energy credits.
The GOP’s manager’s amendment also deleted language to sell federal lands in Nevada and Utah, changed “MAGA” savings accounts for children to “Trump accounts,” and removed a federal requirement that firearm suppressors must be registered.