Medicaid cuts, no taxes on tips and overtime: What's in the Trump-backed Senate megabill?

USA Today

6 hours ago

Big changes are ahead for Americans if the Trump-backed bill becomes law. Republicans are trying to pass it by a self-imposed July 4 deadline.
WASHINGTON − High-income earners, waiters and waitresses could soon see greater tax breaks locked in under a bill backed by President Donald Trump that's on track for votes this weekend in the Republican-led Senate. People who rely on Medicaid access and funds for federal food aid would come out on the short end of the stick under the plan, too.
There's plenty more that could affect the lives of everyday Americans inside the Senate's latest 940-page version of the Trump-backed megabill that emerged near midnight and which Republicans are scrambling to turn into law ahead of a self-imposed July 4 deadline. It's still unclear if the GOP will have enough votes when the debate begins around 2 p.m. EDT on June 28 on the president's biggest second-term priority for the Republican-led Congress.
Supporters are emphasizing the chief engine of the Senate's proposal - extending Trump's 2017 tax cuts - and significant boosts to military and border security spending. They are also proceeding despite needing to remove sections of their bill that didn't meet the Senate's unique rules that would have repealed student loan relief and environmental regulations, restricting federal judges' powers and the Trump administration's efforts to bulk up immigration enforcement.
More: Could Trump fail on tax bill? Why going 'big' doesn't always work out as planned
"If you like higher taxes, open borders, a weak military and unchecked government spending, this bill is your nightmare," Sen. Lindsey Graham, R-South Carolina, chairman of the Budget Committee, said in a statement.
Graham's team did have to make several adjustments in recent days. Certain Medicaid-related proposals were also left on the Senate cutting room floor. But other reforms − including new work requirements for able-bodied Americans − survived a complex review process and are now on deck for approval in the upper chamber.
The Trump administration 'strongly supports' the Senate version of the bill, in a White House Office of Management and Budget statement June 28.
'President Trump is committed to keeping his promises, and failure to pass this bill would be the ultimate betrayal," the statement said.
Democrats are not on board with the legislation that Trump and Republicans have dubbed the "big, beautiful bill." Sen. Richard Blumenthal, D-Connecticut, said the president's legislative agenda looks more like a "big, ugly betrayal" because it gives tax breaks to wealthier Americans while cutting services to low-income people.
"I am dedicated and determined to fight these kinds of changes that really impact adversely everybody in Connecticut and the country," Blumenthal said in a June 27 video posted to X.
Senate Majority Leader John Thune, R-South Dakota, has been working behind the scenes to whip his members into a consensus. He's got support from Trump, who has spent days putting public pressure on any GOP senators considering defection. But it's still far from clear if Thune and Trump will be successful.
Here's a closer look at what's in the Senate bill as the weekend floor debate gets underway.
Medicaid and SNAP
Medicaid, which provides health insurance to more than 71 million low-income Americans, has been a regular point of contention for both chambers grappling with the legislation.
After the House narrowly approved big changes to the program that would save at least $625 billion − and potentially cause 7.6 million Americans over the next 10 years to lose their health insurance − the Senate sought even deeper cuts.
Senate Parliamentarian Elizabeth MacDonough axed a handful of changes from the Senate bill, including prohibiting coverage for non-citizens and barring funds for gender-affirming care. The upper chamber's legislation maintains new work requirements and increased eligibility checks.
The Senate plan seeks to force able-bodied adults to work 80 hours per month until age 65 to qualify for benefits, but it does include exemptions for parents or guardians of children under 14 and those with disabilities.
Reforms to SNAP, another federal aid program long known as "food stamps," were sifted through the Senate's review process.
MacDonough initially rejected Senate Republicans' attempt to push costs onto states. But the parliamentarian gave them the go ahead after Senate Republicans did some tweaking to the language that included giving states more time before they start paying.
The latest version would also give Alaska and Hawaii temporary exemption from the cost-sharing and able-bodied requirements for up to two years, if the Agriculture secretary finds the two states are making a "good faith effort" to comply with the requirements. Many view the offer as a way to keep Alaska's two GOP senators, particularly Sen. Lisa Murkowski, in support of the overall bill.
Extending Trump's 2017 tax cuts
The heart of the legislation is an extension of the big tax cuts that Trump passed in 2017, which are set to expire on Dec. 31, 2025. The highest earner would continue to be taxed at a 37% rate under the bill, instead of 39.6% if the tax cuts expired. For individuals making between $9,525 and $38,700, they would continue to be taxed at 12%, instead of the 15% rate that would kick in if the legislation doesn't pass.
More: How much will Trump's tax bill save you? Gains could vary by income.
The 2017 law made other big changes to tax policy that will remain in place under the Senate bill, including doubling the child tax credit from $1,000 to $2,000 and nearly doubling the standard deduction. Other provisions in the 2017 tax law that affect both individuals and businesses will remain.
'This bill prevents an over-$4 trillion tax hike and makes the successful 2017 Trump tax cuts permanent, enabling families and businesses to save and plan for the future,' Sen. Mike Crapo, R-Idaho, said in unveiling the bill language.
No taxes on tips, overtime
Addressing one of Trump's most high-profile 2024 campaign promises, tipped employees like waiters and hairstylists would be able to claim a new tax deduction for tips through 2028, as could workers who are paid overtime wages.
More: Americans are tired of tipping. Experts say no tax on tips could make things worse.
The Senate kept this measure from the House version of the bill, but added on a $25,000 per year cap for the deduction and weakened the tax break for individuals whose income is above $150,000 or married couples making more than $300,000 combined.
$5 trillion debt limit increase
The Senate version looks to raise the nation's debt limit by $5 trillion, which is expected to aggravate fiscal hawks who were already concerned about the House bill, which projections say would raise that limit by $4 trillion.
Including the language in this overall bill would give the federal government the OK to pay for programs that Congress has already authorized.
Billions for U.S. military and 'Golden Dome' defense
One area Republicans didn't spare an expense is defense spending, which some MAGA allies had suggested was "too much" in the lead up to the legislation's unveiling.
More: Trump pushes $175 billion 'Golden Dome' missile defense plan
The proposal injects roughly $150 billion into the military, including $9 billion for service members quality of life such as housing, healthcare, childcare and education. Another $1 billion is earmarked for border security, which Republican committee members have said will help carry out the president's immigration and "counter-drug enforcement" plans.
One of the larger expenditures is $25 billion allotted for an initial investment in a "Golden Dome" missile defense shield that Trump promised will be fully operational by the end of his term in 2029.
Green energy roll-backs
A handful of moderate senators had pushed for a gentler approach to rolling back green energy tax credits passed under former President Joe Biden.
The Senate's proposal heeds their call, slowing the phase-out of multiple clean energy provisions that the House had sought to eliminate more quickly.
Billions for the border, deportations
The Senate held onto the massive increase in funding for the Department of Homeland Security, increasing the department's budget by roughly $150 billion – which would more than double its current funding.
The bill authorizes $45 billion for new immigration detention centers. Under the DHS umbrella, U.S. Immigration and Customs Enforcement already operates more than 160 detention centers around the country. Many are full, as the Trump administration ramps up arrests of immigrants.
Another $27 billion would go to fund the administration's mass deportation campaign, including to pay for 10,000 more deportation agents. ICE currently has about 6,000 deportation agents.
At that funding level, the current administration "will be poised to dramatically expand community arrests and expand cooperation with state and local law enforcement agencies," according to an analysis by the American Immigration Council, which advocates for immigrant rights.
The Trump administration's border czar, Tom Homan, said without additional money, "it's going to be a hard road" to achieve the president's goal of deporting 1 million immigrants this year.
"We have a lot of people to look for, a lot of people to arrest, a lot of national security threats we know are in this country," Homan said during a White House press conference June 26. "We need to find them. We need more money to do that. We need more agents to do that."