Senate Finance Republicans are increasingly looking to dial back key items on President Donald Trump’s tax policy wish list. And it’s pitting them against the architect of the House-passed tax legislation, Ways and Means Chair Jason Smith — and potentially even the White House.
The rub is this: The House version of the megabill would restore tax incentives for research and development, business equipment and debt interest through 2029, which Trump has indicated he supports. But Senate Republicans are dead-set on making them permanent, a proposition that would likely add hundreds of billions in more red ink to the legislation.
To offset that cost, GOP senators are looking to water down other tax provisions they believe aren’t as “pro-growth.” Those policies include “no taxes on tips,” “no taxes on overtime” and tax relief for seniors — all proposals Trump touted on the campaign trail and collectively boast a price tag of roughly $230 billion, according to the Joint Committee on Taxation.
Smith is warning senators to tread carefully in challenging Trump’s desires.
“I think that the United States Senate will not want to scale down the president’s priorities. No tax on tips, no tax on overtime are two of his top priorities,” the Missouri Republican told reporters Monday. “Are there some tweaks that they can do to it that I would recommend? Yes, and I have recommended.”
But some Senate Republicans who sit on the Finance panel have made clear they have their own ideas. When POLITICO asked Sen. Ron Johnson whether he believes “no tax on tips” or “no tax on overtime” are pro-growth, he gave a terse “nope.”
“They’re making a case to increase the labor supply,” the Wisconsin Republican told POLITICO. “I would just extend the current tax law.”
Sen. Thom Tillis (R-N.C.) has likewise been pushing to make changes to both policies, telling POLITICO Monday that “no tax on overtime” should be rewritten to ensure it only applies to people working over 40 hours a week.
Meanwhile, House Republicans are hoping to tweak some language in their bill they believe the Senate parliamentarian will identify as non-compliant with the budget reconciliation process. They’ll do so by using a procedural maneuver within the Rules Committee that won’t require the chamber to take a standalone vote on a revised measure, five people told POLITICO.
House Republican leaders expect a report on the potential Senate problems Tuesday morning, though Majority Leader Steve Scalise acknowledged they may not have the full list before the Rules hearing scheduled for later Tuesday.
“I don’t think there will be any big surprises,” Speaker Mike Johnson added Monday, “but that’s part of the process.”
What else we’re watching:
— Rescissions heads to Rules: The House Rules Committee is scheduled to vote on the White House’s rescissions package at 2 p.m. Tuesday, paving the way for a floor vote by Thursday. Johnson and Scalise are confident they can appease members’ concerns about clawing back money Congress has already greenlit and slashing funding for the PEPFAR program and public media.
— Crypto vote imminent: Senate Majority Leader John Thune wants to pass landmark cryptocurrency legislation this week that would create new rules for dollar-pegged digital tokens. He teed up the stablecoin bill for another procedural vote as soon as Wednesday.
— Trump admins on the Hill: A slew of Trump administration officials will testify before various House and Senate committees Tuesday on the president’s fiscal 2026 budget requests for their agencies. That includes Defense Secretary Pete Hegseth, Joint Chiefs of Staff Chair Gen. Dan Caine, NIH Director Jay Bhattacharya, CIA Director John Ratcliffe and Energy Secretary Chris Wright.
Jordain Carney, Jasper Goodman, Meredith Lee Hill and Jennifer Scholtes contributed to this report.
