WASHINGTON — Moments before the Senate began its final votes to pass Republicans’ sweeping tax and spending legislation Tuesday morning, Republican West Virginia Senator Jim Justice drove his motorized scooter around in an effort to stay awake after the chamber’s all-nighter.
He was aware of a last-minute deal, but not exactly what was in it.
“I really don’t know,” he said. “But we’ll find out here in just a few minutes.”
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 handwritten 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.
“This is probably the most difficult and agonizing legislative 24-hour period that I have encountered,” Murkowski, 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.”
“The big, beautiful bill,” as President Trump dubbed it, now goes back to the House, which will try to approve the Senate’s version and send it to the president by his July 4 deadline.
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.
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 more red tape causes people to lose coverage. It also would cap how much states are able to tax providers to help pay the state’s share of coverage, which could dramatically hit their budgets.
A Joint Economic Committee Democratic analysis estimates that the bill could cost more than 700,000 people in New England their coverage, including more than 325,000 in Massachusetts.
Democrats and some Republicans have warned the cuts could have cascading effects on other sectors of the health care system.
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, according to the health policy nonprofit KFF.
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 the 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 released an analysis that warned the bill put five New England hospitals at risk of closure, including Baystate Franklin Medical Center in Greenfield, Mass.
The new work requirements would take effect for 2027, and the limits on state taxes for providers would kick in starting in 2028.
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, according to the food policy outlet Food Fix.
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 deal-making 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.
It’s the latest salvo in Trump’s and Republicans’ targeting of elite universities, particularly Harvard.
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.
In their 2017 tax law, Republicans instituted the 1.4 percent excise tax on schools with more than 500 students and endowments of more than $500,000 per student. It was the first federal endowment tax, and the nonpartisan Tax Foundation said that 56 institutions paid about $380 million in 2023.
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. Nonpartisan analyses of the bill have shown the biggest benefit, though, will be to the wealthiest Americans. According to the Institute on Taxation and Economic Policy, Massachusetts residents earning more than $1.12 million per year would get an annual tax cut of $83,570, and those earning less than $27,100 would get a cut of $80.
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 cost states thousands of jobs, critics warn, and potentially impact New Englanders’ energy bills. Senate Democrats released an analysis that said their Inflation Reduction Act provisions reduced New England energy bills by $420 to $1,700 annually, including $600 to $1,390 in Massachusetts. Collins also cited these provisions as reasons she opposed the legislation.
Tal Kopan can be reached at tal.kopan@globe.com. Follow her @talkopan. Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him @JimPuzzanghera. Sam Brodey can be reached at sam.brodey@globe.com. Follow him @sambrodey.