Legislative Coverage: House Approves Senate Version of Budget Reconciliation Bill, Sends Legislation to President Trump for Signature

The U.S. House of Representatives today passed the Senate’s version of the budget reconciliation bill, which institutes various cost-saving Medicaid reforms, rolls back several green energy initiatives tied to the Inflation Reduction Act, reaffirms the Federal Communication Commission’s spectrum auction authority, and extends manufacturing and new investment tax credits to both individuals and businesses. The legislation will now be sent to President Donald Trump for final signature.

The House passed its initial version of the bill in late May before sending it to the upper chamber. On July 1, the Senate approved a modified version of the legislation.

Many House Republicans initially challenged the Senate’s changes to the proposal – with fiscal hawks disapproving the increased deficit spending and moderates criticizing further Medicaid cuts and expedited repeals of green energy measures. The lower chamber this afternoon ultimately approved the bill without further amendments in a 218-214 vote, with all 212 Democratic members voting against it. Two Republicans voted no.

The bill sunsets a 5% enhanced federal medical assistance percentage, or FMAP, provided to states that opt to expand their Medicaid programs, implements work requirements for Medicaid eligibility and establishes new, gradually decreasing limits on the Medicaid provider taxes that states use to help finance their programs.

The bill also reauthorizes the FCC to auction wireless spectrum and directs the commission to identify and then auction 800 MHz of spectrum in aggregate for commercial mobile and fixed broadband services within eight years.

The bill would also eliminate tax credits related to non-nuclear clean energy production and investment, only extending credit eligibility to wind and solar projects that begin construction within a year of the bill’s enactment or are put into service before the end of 2027 – a year earlier than what is inscribed in the original House legislation.

Nuclear energy tax credits, however, would not be phased out until 2036 – a significant shift from the initial House bill, which proposed a quicker phaseout.

The legislation also raises the cap on state and local tax, or SALT, deductions to $40,000 for joint filers with incomes up to $500,000. Regardless of income level, all taxpayers would still be guaranteed a SALT deduction of $10,000.