Senate Republicans are not planning drastic changes to the White House’s tax priorities despite talk of stripping them out of President Donald Trump‘s “big, beautiful bill.”
Senate Majority Leader John Thune (R-SD) said Tuesday that he expects “no tax on tips” and other exemptions Trump promised on the campaign trail will stay in the megabill, though he acknowledged the Senate may tweak some provisions to satisfy the concerns of tax writers.
Republicans could narrow a new tax break for car loan interest or, according to one senator’s proposal, lower the income cap for service workers qualifying for the tips exemption.
“We intend to address a number of those issues, which I think, as you know, were also addressed in the House bill,” Thune told the Washington Examiner.
“Obviously, they were big priorities for the president, and as you said, things he campaigned on. So, I would expect to see a number of those campaign commitments adhered to in the legislation,” he added.
In his Tuesday press conference, Thune reiterated that Republicans plan to keep those provisions in the Senate bill.
For months, the White House has been pressuring Republicans to find room for Trump’s tax priorities through reconciliation, the budget process that allows them to sidestep the filibuster. The House ultimately settled on a $235 billion compromise that sunsets the exemptions once Trump leaves office in 2029.
Senate Republicans have additional priorities that could inflate the bill’s cost, including the permanent extension of business tax credits, raising the distinct possibility that Trump’s tax breaks could get squeezed out.
Sen. Lindsey Graham (R-SC), Budget Committee chairman, told Semafor on Tuesday that the tax exemptions could be tackled in a second reconciliation bill at a later date.
However, even House Republicans see that scenario as unlikely. Rep. Jason Smith (R-MO), Ways and Means Committee chairman, told the Washington Examiner he would be surprised to see an overhaul.
“If they’re tweaking it to improve it, I think that’s a great idea, and I believe that that’s all that they would do,” he said. “I would be hopeful that the Senate would not tweak the president’s priorities in a negative way that would harm workers and families, so I think any tweaks they’ll do should be to the benefit.”
Republicans have been wary of Trump’s new tax exemptions, warning they unevenly apply to workers and could have unintended consequences on the labor market.
As recently as a week ago, Sen. Thom Tillis (R-NC), another tax writer, proposed dropping “no tax on tips” out of the bill entirely. He suggested it could move on its own, noting that similar legislation passed on the Senate floor unanimously last month.
Still, Senate Republicans have basically settled on perceived improvements to the exemptions as Trump seeks to make good on campaign promises meant to bring working-class voters over to the GOP.
In a statement, the White House said it was committed to “passing pro-worker, pro-growth tax cuts” in the megabill.
Tillis hopes to lower the income threshold below $160,000 for the tips provision. For a separate exemption on overtime pay, he wants to ensure it only applies to those working 40 hours or more a week.
Sen. Bernie Moreno (R-OH), a former luxury car dealer, shared a proposal with Finance Committee members that would narrow the exemption for car loan interest to new automobiles that are made in America.
“The last thing we want to do is drive up the price of used cars, which is what that would do,” Moreno said of the House-passed exemption.
Moreno relayed his proposal directly to Trump, while Tillis told the Washington Examiner he planned to use a trip on Air Force One to discuss the tax portion of the bill with the president. On Tuesday, Tillis traveled with Trump to Fort Bragg, a military base in his home state of North Carolina.
The tax portion of the bill is expected to be one of the last pieces to fall into place as the Senate amends the House version that passed in May, with controversial provisions such as the SALT deduction still under negotiation.
Senate tax writers are considering a less generous cap on the deduction, which allows taxpayers to write off state and local taxes, despite blue-state Republicans threatening to revolt if the limit goes below $40,000 a year.
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Thune has stayed in close contact with the White House ahead of a floor vote, expected before the July 4 recess, and plans to meet with Trump for a second time this week.
He also traveled to the White House last week, joining Chairman Mike Crapo (R-ID) and other members of the Finance Committee.
Rachel Schilke contributed to this report.