House and Senate Republicans are charging toward their self-imposed July 4 deadline for passage of their multi-trillion-dollar reconciliation package, the One Big Beautiful Bill Act (H.R. 1), with Senate Majority Leader John Thune (R-SD) pledging to bring the Senate version of the bill to the Senate floor as early as Thursday this week.

Today, all eyes in Washington are on Senate Parliamentarian Elizabeth MacDonough, who is poised to advise Senators on whether several tax provisions included in the reconciliation bill and Republican’s preferred scoring method comply with the Senate’s Byrd Rule. Senate Republicans are expected to release an updated reconciliation package as early as this afternoon reflecting changes to legislative proposals based on the Senate Parliamentarian’s rulings and ongoing negotiations between House and Senate leadership.

What We Are Watching. Several factors will influence whether House and Senate Republicans can complete work on the reconciliation bill before July 4, including:

• President Trump: Following a pledge by Senate Majority Leader Thune on Monday to keep the Senate in session until the reconciliation package is passed, President Trump encouraged congressional Republicans in a post to Truth Social on Tuesday to “finish the job” and pass the reconciliation package by July 4. Shortly after the post, Speaker Mike Johnson told House Republicans “not to leave town” in preparation for the House to act on the reconciliation bill following Senate consideration. Continued pressure by President Trump will be critical for Republican leaders to persuade remaining Republican holdouts to support the package and meet their self-imposed deadline for passage.

• Current Policy Baseline: The largest question looming before the Senate Parliamentarian is whether Senate Republican’s use of a current policy baseline – which decreases the measured cost of extending expiring tax provisions from the Tax Cuts and Jobs Act – complies with the Senate’s budget rules. If the Parliamentarian finds that Republican’s preferred scoring method does not comply with Senate rules, Republican leaders may be forced to make significant changes to their tax proposals to meet their reconciliation instructions. The fiscal year 2025 budget resolution permits the Senate to enact up to $1.5 trillion in net tax cuts under the reconciliation process. According to the Joint Committee on Taxation (JCT), the Senate’s tax proposals would add approximately $440 billion to the deficit over ten years using a current policy baseline and $4.2 trillion over ten years using a current law baseline.
• State & Local Tax (SALT) Deduction Cap: House and Senate leaders continue to negotiate a compromise position on the state and local tax (SALT) deduction cap. The House proposed to increase the cap to $40,000 (compared to $10,000 under current law) for households with a modified adjusted gross income (MAGI) up to $500,000. The Senate included a placeholder proposal in their draft legislation maintaining the current $10,000 cap. A final compromise proposal is critical for final House passage of the reconciliation bill.

What’s Next? Senate Republicans are expected to release an updated reconciliation package as early as this afternoon. Leader Thune is then expected to initiate Senate floor consideration of H.R. 1 as early as Thursday. Upon bringing the bill to the Senate floor, the Senate will begin an amendment process known as a “Vote-a-Rama,” where the Senate will likely consider several hundred amendments to the reconciliation bill. Following the amendment process, the Senate will vote on final passage which only requires a simple majority under reconciliation rules.

What About the House? Should the Senate successfully pass their version of H.R. 1, the House is expected to remain in Washington next week to continue work on the reconciliation package. House Republicans will be forced to accept or reconcile differences between the House- and Senate-passed versions of the reconciliation bill, either by concurring with the Senate’s amendments or negotiating further changes with Senate leadership. Additional changes to the Senate-passed legislation by the House will require further Senate action. 

Policy and Taxation Group is the Voice for Family Offices and Successful Individuals in Washington, DC focused exclusively on the critical tax and economic policies that impact them.

Since 1995, Policy and Taxation Group has been the leading advocacy group working to reduce and eliminate estate tax, gift tax, and generation skipping transfer tax while blocking increased income tax and capital gains taxes, the creation of a wealth tax, and other hostile tax policies that punish hardworking taxpayers and success.

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