The Senate’s version of the One Big Beautiful Bill Act tax legislation is slightly less populist than the House bill and is more in tune with the GOP’s traditional supply-side orientation.
The tax portion of the bill released by the Senate Finance Committee on Monday includes some significant changes from the House version, such as a smaller boost to the child tax credit, limitations on some of the new tax breaks called for by President Donald Trump, and permanent business investment tax breaks.
Taken together, while the Senate’s version of the tax bill includes populist and MAGA priorities, it is more in line with Republican orthodoxy than the House’s version of the bill is — a difference that will have to be reconciled in the coming weeks as the party rushes to get a bill to Trump’s desk by its self-imposed July 4 deadline.
“So the bill itself, I think, reflects the fact that the Senate is slightly less populist than the House,” Kyle Pomerleau, a senior fellow at the right-of-center American Enterprise Institute, told the Washington Examiner.
Pomerleau said that in addition to paring back some of the more populist provisions in the House, the Senate version of the legislation leans more heavily toward traditional Republican priorities.
The Senate bill permanently allows companies to immediately deduct domestic research and development costs. It would also permanently allow full expensing for new capital investment, such as factory machinery, and would restore interest deductibility to help finance investments.
The House version, in comparison, has those provisions sunsetting by 2029.
The business provisions are a key priority for the Senate and supply-siders because incentives for businesses to invest are thought to be especially helpful in boosting economic growth. In theory, they could help make the bill less costly to the Treasury because with increased growth comes increased revenue capture.
At the core of both the House and Senate versions of the One Big Beautiful Bill Act is making permanent many of the provisions in the 2017 Tax Cuts and Jobs Act, better known as the Trump tax cuts.
Alex Muresianu, senior policy analyst at the Tax Foundation, told the Washington Examiner that the Senate version of the legislation heeds more closely to the 2017 legislation, which proponents argue turbocharged growth and investment in the United States.
“I would say that it sticks to the spirit of the original Tax Cuts and Jobs Act much more than the House version,” Muresianu said. “ … this bill brings expensing for capital equipment and R&D, which, making them permanent, that substantially should improve growth.”
In addition to making the business tax provisions permanent, the Senate legislation also peels back some of the more populist House measures.
For instance, populist Republicans have increasingly advocated a bigger child tax credit in order to make life more affordable for families and spur family growth. The Senate offered a smaller child tax credit boost than the House legislation did.
The Senate legislation bumps the child tax credit permanently to $2,200 and indexes it to inflation thereafter. The House legislation, by comparison, hiked the child tax credit to $2,500, but only through 2028. It would revert to $2,000 in 2029, although it would still be indexed to inflation after that.
Populist conservatives, such as Vice President JD Vance and Sen. Josh Hawley (R-MO), have pushed for a bigger child tax credit, even as high as $5,000.
Hawley, who said he was pushing for a bigger child tax credit boost in the Senate version than what was included in the House, expressed his disappointment on Tuesday.
He told the Washington Examiner that it is a “fair assessment” that the Senate version of the tax legislation is even less populist than the House’s version. Hawley also said he was surprised that was the case.
“Oh, I’m shocked. It needs work,” Hawley said. “I mean, it pairs down the president’s tax priorities, it boosts up Green New Deal subsidies, and it defunds rural hospitals — it’s going to be interesting to run on in 2026.”
Hawley told reporters he has spoken with Trump about the Senate-side changes.
The Senate legislation also doesn’t as aggressively target colleges and universities as the House version does. Some conservatives have become increasingly hostile toward such institutions in the fallout from the Hamas attack on Israel and the belief that they have become breeding grounds for far-left political ideology.
Currently, the endowments of major universities are taxed at a top rate of 1.4% under the 2017 law.
While the Senate bill increases that, it doesn’t do so on the scale of the House bill. The Senate version would tax universities with the highest student-adjusted endowments, for instance, Harvard University, at an 8% rate. The rate would be 21% in the House version of the bill, which is in line with the corporate tax rate.
Some supply-siders have also critiqued Trump’s campaign-trail tax proposals targeting specific subsets of voters, such as no taxes on tips. The push represented a policy reversal from the long-sought Republican goal of broadening the tax base while lowering overall rates.
And while both versions of the legislation contain those tax provisions, the Senate version has more limitations.
For instance, on no taxes on tips, the Senate legislation sets a $25,000 limit for deductions for income earned as tips. The deduction also phases out at a 10% rate starting at $150,000 in income for a single filer and $300,000 for a joint filer.
There are similar limitations put on the no taxes on overtime provisions in the Senate and on the no taxes on Social Security portions of the bill.
HOW THE SENATE GOP TAX PLAN DIFFERS FROM THE HOUSE BILL
“I think the fact that they pulled back a little bit on the no tax on tips and the no tax on overtime is good,” said Stephen Moore, a Heritage Foundation economist who was an informal Trump adviser on the campaign trail. “I mean, I’m all in favor of that, but it should be really limited to just middle income, not people who are making huge amounts of money on tips and stuff.”
“We do want broad-based low rates, and I think this is more in that direction,” Moore added later during a phone call with the Washington Examiner.