Tax policy update: Senate-approved tax reform bill key provisions and takeaways

On July 1, 2025, the Senate passed its amended reconciliation bill (H.R. 1) known as the One Big Beautiful Bill Act by a 51-to-50 vote, with Vice President JD Vance serving as the tiebreaker. The sweeping tax reform and spending bill would provide for the permanent extension of key business tax breaks and soon-to-expire individual provisions enacted under the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97).

Republican Sens. Thom Tillis (R-NC), Rand Paul (R-KY) and Susan Collins (R-ME), along with all Democratic senators, voted against the measure. Sen. Lisa Murkowski (R-AK), voted yes so as not to “kill the bill,” but has said she hopes the House will revise and send it back to the Senate.

The Senate-approved bill has been returned to the House where its amended fate remains uncertain. There are currently many vocal “no’s” amongst House Republicans, some of whom want to revise the Senate’s bill. Primary concerns include Medicaid reforms, the state and local tax (SALT) cap, how quickly some clean energy tax credits under the Inflation Reduction Act (IRA) would be phased out and the increase in the federal deficit. Republican leadership can only afford to lose three votes to successfully pass the bill.

Joint Committee on Taxation (JCT)

Senate Republicans voted to use an unprecedented method of estimating revenue effects relative to a current policy baseline. Under this method, the JCT estimates that the Senate bill would cost $715 billion – under the controversial notion that extending the expiring TCJA provisions doesn’t cost anything.

Using more traditional accounting methods, however, JCT estimates the tax measure would cost $4.475 trillion relative to a current-law baseline from 2025 through 2034, which is more than House Republicans have agreed to spend.

What’s next

House Speaker Mike Johnson (R-LA) has reconvened the House during its current recess to consider the Senate’s amended bill. A final vote on the measure is expected by Thursday, July 3, 2025. Any House changes to the Senate-passed bill would require sending it back to the upper chamber for approval or potentially to conference committee to reconcile the differences. The speaker maintains, however, that the bill will be voted on as-is to meet Republican leadership’s self-imposed deadline of sending it to the president’s desk by the Fourth of July.