The Republican legislative balancing act now shifts to the Senate.

Senate Majority Leader John Thune (R-South Dakota) said this week House Republicans would like to see as few changes as possible to the sweeping tax and spending package (H.R. 1) the House passed by a single vote this morning. But he was quick to add that the Senate will have its say as it aims to get the massive reconciliation package a step closer to becoming law.

“The Senate will have its imprint on it,” said Thune.

Indeed, GOP senators have their own demands, and the package will have to survive the chamber’s complex rules — a historically time-consuming process.

Byrd Rule issues

The reconciliation process allows tax and spending legislation to pass with a simple majority, but the bill still needs to survive the Byrd Rule — named after the late Sen. Robert Byrd (D-West Virginia), known for his mastery of parliamentary procedure. It prevents lawmakers from tucking non-budgetary provisions into the legislation.

“The committees are working closely to try and identify potential Byrd problems ahead of time,” Thune said.

The Senate parliamentarian makes calls on challenges against provisions in the bill and whether they survive the “Byrd Bath.” Democrats plan to aggressively use the rule to challenge items they believe don’t satisfy the Byrd standard. Once the package makes it to the floor, senators will be prepared for a marathon vote-a-rama on amendments.

GOP senators hope the advance work will help keep the measure moving, but a look at the history of the chamber’s experience with big bills shows it will likely be a lengthy process.

For the reconciliation bills enacted since 1980, the time between adoption of a budget resolution and enactment of the reconciliation bill ranges from 28 to 385 days, with a 152-day average, according to the Congressional Research Service. The Senate passed the Democrats’ 2022 sweeping reconciliation legislation with changes roughly nine months after the House passed it.

Independence Day target

“It will take longer than expected just because it is arduous and it’s designed to be that way,” Sen. Mike Rounds (R-South Dakota) said. “It would be great to get it out before the Fourth of July break.”

Majority Whip John Barrasso (R-Wyoming) said the Senate Finance Committee has been meeting since last summer and “have some ideas that may or may not be in the House bill.” Barrasso said he’ll work with every member of his conference, calling Trump and Vice President JD Vance persuasive members of the whip team as well.

Congress didn’t clear Republicans’ 2017 tax overhaul until December of that year, Barrasso said, but this bill faces a tighter deadline because it includes a debt ceiling hike. The borrowing limit could hit as soon as August.

Sen. John Hoeven (R-North Dakota) said the message to Senate Republicans right now is to work with committees of jurisdiction.

“Whatever committee you’re on, work with your chairman on your committee, is really where we’re at,” Hoeven said.

Thune originally proposed moving the measure in two parts, but Trump wants his agenda rolled into a single package, which the House dubbed “The One Big Beautiful Bill Act.” Sen. Ron Johnson (R-Wisconsin) is still advocating for the previous approach.

Asked when the Senate could get it done, Johnson said, “We are so far away from an acceptable bill, it’s hard to say.”

“I think we could move very quickly if we split it into two.”

Next steps

If the Senate amends the reconciliation legislation, the House would need to vote on the amended legislation or they would need to be reconciled in a conference committee. That’s likely to lead to more challenges, given the tight margins in the House.

Rep. Chip Roy (R-Texas), one of the most vocal conservative hardliners who ended up supporting the bill, acknowledged Senate changes are coming and suggested tough negotiations lie ahead between the chambers.

“We’ll give them some flexibility, they gotta work their will, but somewhere between us and the Senate and the White House, there’s gonna be some red lines and those will be public pretty soon,” Roy said.

Subsidies for clean power would end years earlier in a giant tax and spending bill narrowly passed by the Republican-led House of Representatives early Thursday, driving down shares of solar companies including Sunrun Inc.

It now moves to the Senate, where key Republicans have already balked at some of the House’s plans. Some wanted longer transition times before the latest House bill cut those even further.

The House bill is “worse than feared” for clean energy, analysts at Jeffries said in a research note Thursday. They added, however, that “we don’t expect this to last into Senate draft.”

Shares of Sunrun fell 44% in early trading Thursday. SolarEdge Technologies Inc. sank 17%.

The revised text released Wednesday night marked an extended effort to win over Republican dissidents, including fiscal hardliners who wanted deeper cuts to a series of tax credits created under former President Joe Biden’s signature climate law.

The revisions would include ending technology-neutral clean electricity tax credits for sources like wind and solar starting in 2029 and requiring those projects to commence construction within 60 days of the legislation becoming law. The initial version proposed by House Republicans had a longer phase-out time, allowing many of the credits to exist until 2032.

“They would probably amount to a hard shutdown of the IRA,” said James Lucier, managing director at research group Capital Alpha Partners, referring to Biden’s Inflation Reduction Act. “The initial version of the Ways and Means bill gave investors some hope they could live under the old regime for another couple of years, but now no more.”

The House bill would also hasten more stringent restrictions that would disqualify any project deemed to benefit China from receiving credits. Under the new version, those restrictions, which some analysts have said could render the credits useless for many projects, would kick in next year.

At the same time, the revised bill would restore “transferability” of a nuclear production tax credit, which would allow a project sponsor to sell tax credits to a third party, according to a summary of the changes. It also lengthens the amount of time the credit remains in place by allowing projects that have started construction but aren’t yet operating to be eligible to receive them, the summary said.

The new bill also would keep the tax credits for advanced nuclear projects and expand existing plants if construction starts by the end of 2028. It also would phase out a consumer tax incentive of as much as $7,500 for the purchase of electric vehicles.

The changes would come on top of limitations on the energy credits that were estimated to save $560 billion in cuts in Inflation Reduction Act spending and could cripple the clean energy industry. 

The legislation is the centerpiece of President Donald Trump’s second term agenda. However it faces a delicate path to become law, and may still be altered further. 

Alaska Republican Senator Lisa Murkowski and three colleagues have vowed to defend the credits and called for a “targeted, pragmatic approach.” 

“I am watching right now to see how far the House goes,” Murkowski said in an interview on Tuesday.

President Donald Trump’s signature tax bill narrowly passed the House Thursday morning, advancing a sprawling multitrillion-dollar package that would avert a year-end tax increase at the expense of adding to the U.S. debt burden.

The bill now heads to the Senate, where groups of Republicans are pressing for extensive change. Lawmakers plan to vote on approval by August. The bill includes a $4 trillion increase in the U.S. debt ceiling, which the Treasury Department forecasts could otherwise force a default as soon as August or September, adding urgency to the timeline.

The 215-214 House vote, with one abstention, was met with cheers from Republicans in the chamber. It followed a furious offensive by Trump, who visited the Capitol to rally Republicans, worked lawmakers by phone late into the night and summoned holdouts to the Oval Office. His budget office released a statement branding any GOP lawmaker who failed to support the package guilty of the “ultimate betrayal.”

Trump took a victory lap on his social media platform Truth Social Thursday morning, calling the One Big Beautiful Bill Act the “the most significant piece of Legislation that will ever be signed in the History of our Country!”

“Now, it’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE! There is no time to waste,” Trump said.

House Speaker Mike Johnson and his lieutenants went through rounds of negotiations steps from the House floor to balance the demands of lawmakers from high-tax states pressing for an increase in the state and local tax deduction. Hardline conservatives insisted on deeper spending cuts and vulnerable swing-district Republicans were wary of slashing Medicaid.

The measure would avoid a blow to U.S. growth just as the economy struggles with the impact of the steepest tariff increases in almost a century, though it’s expected to add hundreds of billions a year to the deficit.

It would extend Trump’s first-term tax cuts due to expire Dec. 31, along with new tax relief including raising the limit on the deduction for state and local taxes to $40,000 and temporarily exempting tips and overtime pay from taxes.

Cuts to safety-net programs such as food stamps and Medicaid health coverage for the poor and disabled could worsen economic inequality even as wealthy Americans gain the largest share of tax cuts. 

Deficits driven by the tax cuts also risk exacerbating bond investors’ concerns about the ballooning U.S. debt, highlighted by Moody’s decision to downgrade the U.S. government’s credit rating.

Democrats vowed to make House Republicans pay a price in next year’s midterm elections, casting the measure as a Robin Hood-in-reverse effort to take from the poor and give to the rich.

“The GOP tax scam will hurt working families the most while delivering massive tax breaks for billionaires like Elon Musk,” said House Minority Leader Hakeem Jeffries of New York.

Republicans counter that their voters will be energized by enactment of Trump’s top legislative priority for the year and reward them politically. 

Spending cuts

Ultraconservative Freedom Caucus members were able to insert new language in the bill that would dramatically speed up the end of clean energy tax credits passed under the Biden administration, which would generally have to be put into service before 2029 and would have to be well under way within 60 days of the bill’s enactment. The hardliners also were able to move up the start date for new Medicaid work requirements to December 2026 from a 2029 start in the initial version of the package.

The acceleration of new Medicaid work requirements could become an issue in the midterm elections — which fall just one month earlier — with Democrats eager to criticize Republicans for restricting health benefits for low-income households.

Johnson was also able to strike an elusive deal with lawmakers from high-tax states on the state and local tax deduction. The deal would raise the $10,000 cap to $40,000 for individuals and joint filers starting this year, with a phase-out for those making more than $500,000 per year. The cap would increase by 1% a year for 10 years.

Other sweeteners were added for states like Texas, which would be the main beneficiary of $12 billion in reimbursements for state border security expenses incurred in recent years. And GOP leaders eliminated a provision that would have cut federal pensions by basing benefits on the highest five years of salary rather than the highest three, in a move cheered by Republican Representative Mike Turner of Ohio, who called the pension cut “unfair.”

The package also imposes tax increases on targets of Trump’s ire such as Harvard University and immigrants. Private universities with large endowments per student would pay a 21% tax on net investment income, up from the current rate of 1.4%. Immigrants would face a new levy on transfers of money to foreign countries.

The bill would boost military spending by $150 billion and add $175 billion for immigration enforcement, both top Trump priorities. It also includes numerous other provisions affecting health care, energy production and manufacturing, reorienting the government away from climate change concerns in favor of fossil fuels.

That includes the elimination of most EV tax credits, including for market leader Tesla, by the end of 2025, replaced by a tax break for auto loan interest for U.S.-built vehicles, a move championed by Trump and Ohio Senator Bernie Moreno.

Late changes to the bill even included changing the name of new savings accounts for babies born in the next few years, to be seeded with $1,000 from the government. It’s now “Trump” accounts instead of “MAGA” accounts.

Republican senators have said they will press for substantial changes before approving the package.

A number of Senate Republicans want to make permanent tax cuts that are now temporary under the package, especially breaks benefiting businesses. Some GOP senators have warned against any cuts to Medicaid. Others have pushed for far deeper overall spending cuts.