3 days ago
In last-minute dealmaking, the Senate passed Republicans' tax and spending bill. Here's how it impacts New England
Inside the chamber, legislative staffers spread papers before the parliamentarian, the Senate's procedural
referee, who was making judgment calls on whether the freshly cut deals hand-written into the bill complied with the rules.
In the end, the
last-minute changes
were enough to win over the key Republican holdout, Alaska Senator Lisa Murkowski, who cast the decisive 50th vote allowing Vice President JD Vance to break the tie.
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'This is probably the most difficult, and agonizing legislative 24-hour period that I have encountered,' Murkwoski, who has served since 2002, told reporters after the vote. 'And I've been here quite a while, and you all know I've got a few battle scars.'
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'The big, beautiful bill,'
The bill, which is full of key Trump priorities, makes significant changes that could impact New England. Broadly, it would extend tax cuts from Trump's first administration, especially for high earners, make massive investments in immigration enforcement and defense, and cut more than $1 trillion in federal benefits.
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Here are the key elements:
Medicaid
The bill would establish new work requirements for
able-bodied,
childless adults on Medicaid, a provision Republicans say would reduce waste, fraud, and abuse. Democrats say past experience shows
A Joint Economic Committee Democratic
Democrats and some Republicans have warned the cuts could have
More than 60 percent of nursing home residents in New England pay using Medicaid, and roughly one in three children in New England are covered by Medicaid or CHIP,
Lawmakers on both sides of the aisle also worry that Medicaid cuts could have devastating effects on hospitals already operating on narrow margins. A $50 billion stabilization fund for rural hospitals was added to the bill at the urging of Maine Republican Senator Susan Collins and others. But Collins, saying fund wasn't enough, voted against the bill along with Republican Senators Thom Tillis of North Carolina and
Rand Paul of Kentucky
Massachusetts Senator Ed Markey
The new work requirements will take effect for 2027, and the limits on state taxes for providers would kick in starting in 2028.
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SNAP
The bill would also enact work requirements to the Supplemental Nutrition Assistance Program, sometimes called food stamps, that could result in people losing benefits. Nearly 2 million New Englanders are enrolled in SNAP, including more than 1 million in Massachusetts. For the first time, the bill would impose work requirements on adults who have children,
The bill would also increase the states'
cost
for administering the program and require them to foot some of the bill for benefits if their rate of incorrect payments—either too high or too low—exceeds 6 percent. That would impact every state in New England except Vermont based on last year's error rates, though the bill would be based on data for this year and next. The provision takes effect in 2028.
That measure was the focus of much of the last-minute dealmaking with Murkowski, whose state has the highest error rate in the country at 25 percent. Under the deal she struck, states with a more than 13 percent rate of mistaken payments would get an extra year before new requirements kick in. This could benefit some New England states, although error rates change yearly. In fiscal year 2024, Massachusetts' error rate was over 14 percent. The year before, however, Massachusetts was under 10 percent and Maine was at nearly 13.5 percent.
College endowment tax
The Senate bill includes a significant increase in the federal tax on the investment income private colleges and universities make from their endowments, which will hit Harvard and some other top New England institutions.
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It's the
The levy on net investment income would rise from 1.4 percent to 4 percent next year for institutions with at least 3,000 students and an endowment of between $750,000 and $2 million per student. The tax would jump to 8 percent for institutions with larger endowments such as Harvard.
Individual taxes
The main focus of the bill is permanently extending the expiring individual tax cuts enacted by Republicans in 2017 during Trump's first term. That legislation lowered tax rates across the board and nearly doubled the standard deduction.
But the individual and some targeted business tax cuts were temporary; if they expired at the end of this year as scheduled, Americans would face a tax increase.
Trump and Republicans have hammered that point in pushing the Senate tax bill. It also includes limited temporary deductions for tips and overtime income, as well as a $6,000 deduction to offset Social Security taxes for people over 65 years old, with lower levels for higher-income individuals.
The White House Council of Economic Advisors has estimated that extending and expanding the tax cuts will lead to a major boost in wages and take-home pay compared to letting the 2017 tax cuts expire.
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The Senate bill also includes a temporary new tax break for some people in Massachusetts and other high-tax states by raising a 2017 cap of $10,000 on the state and local tax deduction, known as SALT, to $40,000 this year for people with annual incomes less than $500,000. The cap reverts back to $10,000 in 2030.
Green energy credits rollback
The bill takes aim at Democrats' signature tax legislation from 2022 and would reverse many tax credits aimed at spurring renewable energy and energy efficient upgrades.
A last-minute change removed a provision that would have further taxed wind and solar energy projects, but the Senate legislation still ends tax credits that helped Americans make changes to their homes like solar panels and heat pumps at the end of this year. It also ends tax credits for buying electric vehicles at the end of September. The bill also phases out tax credits for renewable energy
projects that haven't begun construction by 2027.
The legislation could
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Tal Kopan can be reached at
