In a significant setback for President Donald Trump’s domestic agenda, five House Republicans joined Democrats on Friday to block a comprehensive tax and spending package in the House Budget Committee, citing concerns that the bill does not include deep enough spending cuts to offset its tax reductions. The unexpected defeat has thrown the GOP’s legislative agenda into disarray as leaders scramble to salvage the legislation before a planned Sunday revote.

The massive 1,116-page legislation, formally titled the “One Big Beautiful Bill Act,” failed in the House Budget Committee on a 16-21 vote, with Republicans Chip Roy of Texas, Ralph Norman of South Carolina, Josh Brecheen of Oklahoma, Andrew Clyde of Georgia, and Lloyd Smucker of Pennsylvania joining all Democrats in opposition.

Smucker switched his vote from yes to no on Friday as a procedural move. 

At the heart of the conservative objection is a demand for more substantial spending reductions and earlier implementation of Medicaid work requirements. The bill already proposed nearly $800 billion in cuts to Medicaid, but the conservative holdouts want work requirements for aid recipients to begin immediately rather than on January 1, 2029, as the bill proposes.

The bill, as currently structured, would require states to deny Medicaid coverage to able-bodied Americans not working at least 80 hours per month. This provision alone has generated significant controversy, with the Congressional Budget Office estimating that at least 7.6 million people could lose health coverage as a result of the Medicaid changes.

The comprehensive bill includes provisions to make the 2017 tax cuts permanent, eliminate taxes on “qualified” tips and overtime earnings, allocate over $46 billion for construction of a southern border wall, provide $4 billion to hire additional border agents and customs officers, and increase defense spending by $150 billion.

To offset these costs, the legislation proposes not only Medicaid cuts but also reductions to Biden-era green energy tax incentives. According to the Joint Committee on Taxation, the tax cuts alone would cost approximately $3.5 trillion over a decade.

The bill would also eliminate the $200 tax on gun silencers that has existed since 1934, prohibit Medicaid funds from going to Planned Parenthood, and allow the Trump administration to remove tax-exempt status from nonprofits it deems supportive of terrorism.

President Trump expressed frustration with the Republican holdouts, writing on social media: “We don’t need grandstanders in the Republican party. Stop talking and get it done”

Speaker Johnson faces a complex balancing act as he attempts to salvage the legislation. With a narrow 220-213 Republican majority in the House, he cannot afford to lose more than a handful of votes. While conservative members demand deeper cuts, more moderate Republicans from competitive districts worry that severe reductions to Medicaid and other social programs could alienate their constituents ahead of the 2026 midterm elections.

The GOP leadership has scheduled a revote for Sunday evening, giving Johnson the weekend to negotiate changes with the conservative holdouts without losing support from moderates.

The House reconciliation bill represents a significant fiscal policy shift that would reshape federal taxation and spending priorities. According to nonpartisan analysis, the bill is projected to add approximately $3.3 trillion to the federal debt through 2034-potentially rising to $5.2 trillion if temporary provisions are extended.

The bill uses the special budget reconciliation process, which allows passage with a simple majority in the Senate rather than the typical 60-vote threshold.

Tax Changes That Would Affect Most Americans

Individual and Family Tax Provisions

The bill would make permanent key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) that are scheduled to expire after 2025, while also introducing new tax benefits:

• Extended individual tax rates and an increased standard deduction ($16,000 for single filers, $24,000 for heads of household, and $32,000 for joint filers through 2028).
• Enhanced Child Tax Credit from $2,000 to $2,500 per child until 2028, with social security number requirements for eligibility. This deduction increase helps middle-income filers but expires in 2028, unlike permanent estate tax cuts.
• Special deductions for tips and overtime pay for eligible workers through 2028, with limitations for highly compensated employees.
• Enhanced deduction for seniors with an additional $4,000 standard deduction for taxpayers age 65+ through 2028, subject to income limitations.
• No tax on car loan interest for qualifying vehicle purchases through 2028, with a $10,000 cap per year.
• Creation of “MAGA Accounts” (Money Accounts for Growth and Advancement) for children under 8, allowing tax-advantaged saving for future education, homebuying, and small business expenses. While accessible to all, high-income families can maximize contributions ($5,000/year) and tax-free growth, amplifying wealth-building advantages over generations.

Estate Tax and Business Provisions

The bill would permanently increase the estate and gift tax exclusion to $15 million for individuals and $30 million for couples. This exclusively benefits the top 0.1% of households, as only estates exceeding the current $13.6 million threshold (2024) are subject to federal estate taxes. Billionaires with large estates would see the most significant tax savings.

For businesses, key provisions include:

• Expanded Pass-Through Deduction from 20% to 23%, benefiting business owners who pay taxes on their individual returns. This disproportionately aids top earners, as pass-through income is concentrated among the wealthiest 5% of taxpayers.
• Extended full and immediate expensing for equipment and machinery costs through 2029.
• Enhanced business deductions for research and development, interest expenses, and other business costs.

Healthcare Impacts

The bill contains significant changes to healthcare programs that could affect millions of Americans:

• New Medicaid work requirements would require “able-bodied adults” to complete at least 80 hours monthly of work, education, or service to maintain eligibility.
• Congressional Budget Office (CBO) estimates suggest these changes could result in 8.6 million people becoming uninsured by 2034.
• Healthcare industry leaders warn that the “magnitude of the proposals” constitutes “a devastating blow to the health and well-being of our nation’s most vulnerable citizens and communities”.

Education Reforms

The reconciliation bill proposes substantial changes to federal student aid and education policy:

• Elimination of subsidized undergraduate loans and the GradPLUS loan program effective July 1, 2026.
• New borrowing limits for undergraduate ($50,000 lifetime) and graduate ($100,000, plus undergraduate amounts) students.
• Tax credit for contributions to scholarship-granting organizations to fund K-12 education expenses, with $5 billion in annual funding from 2026-2029.
• Expanded 529 education savings accounts to cover additional K-12 expenses including curriculum materials, books, tutoring, and educational therapies.

Energy and Environmental Provisions

The bill would significantly alter federal energy and climate policies:

• Rescission of unobligated funds from numerous climate and clean energy programs established by the Inflation Reduction Act of 2022.
• New annual registration fees for electric vehicles ($250) and hybrid vehicles ($100) to be deposited in the Highway Trust Fund.
• Expanded oil and gas leasing on federal lands, including reinstating lease sales in the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska.
• Retention of methane emissions charges while repealing financial assistance provisions for methane emissions reduction.

Immigration and Border Security

The bill includes substantial changes to immigration policy and funding:

• Approximately $151.3 billion for immigration and border enforcement across multiple federal agencies.
• Increased fees for legal immigration pathways, including asylum applications, work permits, family reunification, and humanitarian protections like Temporary Protected Status.
• New fees that could make legal immigration “a pay-to-play system” that puts legal pathways out of reach for many people.
• For example, an asylum applicant might pay at least $6,450 in filing fees during a 5-year wait for adjudication.

Infrastructure and Community Development

The bill would redirect funding for several infrastructure and community programs:

• Repeal of up to $3.1 billion in funding for projects to reconnect communities divided by transportation infrastructure.
• $12.5 billion for air traffic control modernization, including tower replacement, radar systems, and telecommunications infrastructure.
• New investments for the U.S. Coast Guard to support border security and national security missions.