Senate GOP Releases Tax Plan, With Some Key Changes From House Version

The Senate Committee on Finance released its version of the expansive Republican Party tax bill on Monday, expanding on senior deductions while omitting the proposed expansion of health savings accounts. 

The bill calls for raising the U.S. debt limit by $5 trillion, up from the House version increase of $4 trillion. That and other differences between the House and Senate versions of the bill could present roadblocks to passage and make Republicans’ self-imposed deadline of July 4 for Senate passage uncertain. The House version of the bill narrowly passed, and the Senate bill could afford only three defections, as Republicans hold a 53 to 47 majority in the Senate.

The Senate bill is largely the same as the version that cleared the House last month, focusing on the extension of 2017 tax cuts and cutting Medicaid.

What’s in

Endowment Tax: The endowment tax proposal remains in the Senate bill but has been scaled back. Excise tax rates would hold steady at the current rate of 1.4% for private universities with an endowment-per-full-time-student ratio between $500,000 and $749,999. For those with an endowment of $750,000 to $1.99 million per student, the tax would rise to 4%. It would max out at 8% for universities exceeding $2 million in endowment assets per full-time U.S.-based student. The House version of the proposal went up to a 21% tax.

Senior Deductions: The Senate has kept the House’s work-around solution that essentially serves to satisfy President Donald Trump’s promise to not tax Social Security benefits. The new version would sweeten the stakes by raising the tax deduction for Americans aged 65 or older to $6,000 from $4,000 per eligible filer if their gross income is $75,000 or lower ($150,000 for married couples filing jointly). The deduction would be allowed for tax years 2025 through 2028, as proposed in the House version.

Student Loans: The Senate bill removes a requirement that a student loan payment must be made before January 1, 2026, to qualify as educational assistance. It also includes extensions for 529A college savings plans remain in the Senate bill as worded in the House version.

Section 899: Known as Section 899 or the “revenge tax,” the provision intended to raise taxes on foreign investments in the U.S. also remains in the Senate tax bill but has been pared down. The Senate’s version would cap the tax increase on foreign countries to 15%, down from the House proposal of 20%. The new version would also delay its implementation until 2027, compared with the House version’s 2026 start date.

Third-Party Litigation: This new provision, not seen in the House version, creates new tax rules for outside investors who fund lawsuits in exchange for a cut of the winnings. It imposes a high tax on their profits, removes favorable tax treatment—like capital gains—and requires law firms or parties to withhold part of any payout to cover taxes. It applies to deals starting in 2026 and also includes rules to prevent loopholes.

Trump Accounts: Originally called “MAGA Accounts” before a late switch to “Trump Accounts,” the proposal would create new, tax-exempt investment accounts meant to benefit children. The Senate version closely resembles the House proposal that allows $5,000 in contributions annually, which beneficiaries could later use to purchase homes, start a business or pay for an education. It also would offer a pilot program providing a one-time $1,000 government payment into accounts for U.S. citizens born from 2025 through 2028.

What’s Not

HSA Expansion: The Senate balked at including the House’s proposed expansions of health savings accounts, expansions that—among other things—would have allowed individuals who make less than $75,000 per year to contribute an additional $4,300 yearly into their HSA, indexed for inflation, while allowing married couples making up to $150,000 per year to contribute an additional $8,550. The additional amounts would have phased out for individuals making at least $100,000 annually and families making at least $200,000 yearly.

Private Foundation Tax: The Senate’s tax bill does not include a tiered tax hike on private foundations, which was proposed by the House. The House’s provision would have capped the tax at 10% of realized gains for foundations with at least $5 billion in assets.

The committee will need to vote on the bill to advance it further.