A sweeping Republican tax overhaul proposal, estimated to deliver double-digit percentage reductions in tax bills for average-income Americans, is drawing mounting opposition in the Senate over its accompanying cuts to health care and clean energy programs - underscoring the internal divisions complicating Republican efforts to advance a unified economic agenda.
According to a new analysis from the nonpartisan Joint Committee on Taxation (JCT), households earning between $30,000 and $80,000 would see their federal taxes drop by approximately 15 percent in 2027 under the House GOP plan. Americans earning between $15,000 and $30,000 would see an even steeper 21 percent decline - at least initially.
But those same low-income earners would see their tax bills rise sharply in later years unless extended, with increases of 12 percent in 2029 and 20 percent in 2030, the JCT found. The report attributed some of those changes to proposed reforms of the Earned Income Tax Credit (EITC), a benefit for low-income workers that Republicans argue is vulnerable to improper payments.
While the report’s topline numbers have fueled Republican claims that the proposal is middle-class focused, Democrats seized on the overall distribution of tax cuts in dollar terms, Politico reports. Taxpayers earning more than $500,000 are slated to receive an aggregate cut of about $170 billion in 2027 - nearly triple the $59 billion going to households earning $30,000 to $80,000.
The proposal has already provoked heated exchanges in the House Ways and Means Committee, where lawmakers debated the fairness and sustainability of the tax package. Democrats derided the bill as a boon to the wealthy, while Republicans pointed to new breaks for tips, overtime, and seniors as evidence of its broader appeal.
The report is not a complete picture of winners and losers under Republicans’ plans. It doesn’t include a potential deal among lawmakers to further increase the SALT cap, beyond a proposed $30,000 limit.
The report also only looks at the tax side of Republican plans, and does not account for changes in spending programs, like Medicaid. -Politico
"It's a trick," said Rep. Gwen Moore (D-WI). "You do it temporarily so you can get through the 2026 election" and "then these benefits for children and elders and workers disappear, while the tax benefits for the ultra-wealthy soar."
Senate Republicans Balk
Yet beyond the debate over tax cuts, the House plan is facing stiff resistance in the Senate for how it proposes to offset some of the revenue losses: by slashing Medicaid and rolling back key clean energy incentives passed under the Biden administration.
A Congressional Budget Office (CBO) estimate found that the House bill’s Medicaid reforms could result in 8.6 million people losing health care coverage, largely due to new work requirements, cost-sharing mandates, and restrictions on how states finance their Medicaid programs.
Several Senate Republicans voiced concern over the health care implications, especially for rural areas.
"These are working people in particular who are going to have to pay more," said Senator Josh Hawley (R-MO), referring to new cost-sharing rules. He warned that changes to provider taxes - which states use to draw federal Medicaid dollars - could reduce coverage in his state and strain rural hospitals.
"I continue to maintain my position we should not be cutting Medicaid benefits," Hawley said.
Senator Susan Collins (R-ME), said the proposed treatment of provider taxes "would be very harmful to Maine’s hospitals," echoing concerns raised by other senators from rural and Medicaid-reliant states.
Senator Lisa Murkowski (R-AK), also pointed to the disproportionate burden that Medicaid cuts would place on states like hers, calling the issue a key sticking point in ongoing Senate discussions.
Not So Fast?
In addition to health care, some senate Republicans are also wary of the House’s aggressive plans to unwind tax credits for clean energy and hydrogen development, incentives championed in the Inflation Reduction Act and credited with bringing manufacturing investments and jobs to red and purple states alike.
Senator Thom Tillis (R-NC), who faces a competitive reelection race next year, expressed concern over quickly ending climate initiatives - suggesting that the House language on energy tax rollbacks would need to be revised.
"You can’t shock the markets by doing it all at once," Tillis said of the proposed clean energy phaseouts.
Senator Shelley Moore Capito (R-WV) also flagged potential impacts to her state’s clean hydrogen initiatives, saying she would review the House’s plan to eliminate the 45V hydrogen production credit, which could affect nearly $1 billion in planned federal support for the Appalachian Regional Clean Hydrogen Hub.
The House GOP plan is expected to pass narrowly along party lines, but Senate Republicans made clear this week that the legislation will require significant changes to win broader support in the upper chamber.
"We are coordinating very closely with our House counterparts," said Senate Minority Whip John Thune of South Dakota. "We know they have to get 218 votes... but it’s likely we’ll have a Senate substitute."
As Republican leaders try to reconcile competing priorities — delivering tax relief, restraining federal spending, and maintaining political support in swing states — the path forward for the legislation remains uncertain.
"How we navigate this," said Murkowski, "is something we’re all trying to wander through."
