House Republicans revise Trump tax bill with higher SALT cap and Medicaid cuts

Updated Trump tax plan includes $40,000 SALT deduction cap, Medicaid work requirements, and 'Trump accounts' to win GOP support.

U.S. Speaker of the House Mike Johnson (R-LA) speaks to reporters after returning to the Capitol following a meeting at the White House, in Washington, D.C., on May 21, 2025. Photo by Anna Moneymaker/Getty Images

By Clarisa Sendy and Alana Salsabila

In a bid to unite splintered Republican factions, House GOP leaders on Wednesday unveiled a new version of the Trump tax bill, introducing sweeping changes to state and local tax deductions, Medicaid work requirements, and child savings accounts. The move signals an intensified push by House Speaker Mike Johnson to secure enough votes for passage before the upcoming Memorial Day recess.

At the center of the revised legislation is a key concession to so-called “SALT Republicans”—lawmakers from high-tax states like New York, New Jersey, and California who have long demanded relief from the federal cap on state and local tax (SALT) deductions. The updated Trump tax bill raises the SALT cap from $10,000 to $40,000, effective immediately, in an effort to sway these reluctant members.

“This is a critical update that ensures fairness for taxpayers in our districts,” one Republican lawmaker from New Jersey said in a statement, noting the provision had been a sticking point in previous negotiations.

SALT cap increase a nod to high-tax states

The increase in the SALT deduction cap marks a significant shift from President Trump’s original tax overhaul, which imposed a $10,000 limit in 2017. Under the revised plan, the new $40,000 cap would apply to the 2025 tax year and gradually phase down for individuals earning more than $500,000 annually. In subsequent years, the cap would adjust upward by 1% per year.

This move appears to be tailored specifically to win over holdouts from states that felt disproportionately burdened by the original SALT limits. “We’ve been pushing for years to fix this. It’s not a tax cut if our constituents end up paying more,” said a representative from New York, who has threatened to vote against the bill unless the deduction was restored.

Medicaid work requirements moved up to 2026

While moderates secured concessions on SALT, the Trump tax bill also caters to the GOP’s ultraconservative wing with faster implementation of Medicaid work requirements. Under the updated proposal, beneficiaries would need to meet employment conditions starting in December 2026—three years earlier than originally planned.

The revised timeline falls just one month after the 2026 midterm elections, raising the stakes for both parties. Democrats have already seized on the provision as evidence that Republicans are targeting essential health care programs for low-income Americans.

“This is a cruel, calculated move to strip health benefits from our most vulnerable citizens,” said one senior House Democrat. “It’s a page right out of the hard-right playbook.”

However, conservative Republicans praised the change as a necessary step toward fiscal responsibility. “We can’t afford to keep funding programs with no accountability,” said a Freedom Caucus member. “This puts the focus back on work and personal responsibility.”

Biden-era climate credits on the chopping block

Another significant element of the Trump tax plan is the elimination of clean energy tax breaks introduced during President Joe Biden’s tenure. The bill accelerates the phase-out of these incentives, aligning with Republican criticisms that the subsidies distort energy markets and favor select industries.

Though these changes are likely to attract broad Republican support, they also risk drawing sharp criticism from environmental groups and clean energy advocates, who view the credits as vital to combatting climate change.

“If passed, this bill would undo years of progress,” said a spokesperson for the Environmental Defense Fund. “It’s a direct attack on America’s clean energy future.”

'Trump accounts' to replace 'MAGA accounts'

Perhaps the most symbolic change in the revised Trump GOP tax bill is the rebranding of a new child savings program. Initially called “MAGA accounts,” the savings vehicles have been renamed “Trump accounts.” Under the plan, each newborn American would receive a $1,000 deposit from the federal government into one of these accounts, which would grow tax-free over time.

Republicans tout the measure as a way to promote long-term financial literacy and wealth-building, especially among lower-income families. However, critics argue the program is more political branding than substantive policy.

“Call them what you want—Trump accounts, MAGA accounts—they’re a gimmick designed to score political points,” said a Democratic member of the House Ways and Means Committee. “Meanwhile, they’re slashing health care and gutting climate protections.”

Supporters counter that the accounts could transform generational wealth dynamics. “This is about investing in America’s future, from the moment of birth,” one GOP lawmaker said.

Uncertain path forward in the House

Despite the strategic changes, it remains unclear whether the revised Trump tax bill has the votes to pass the House. With Republicans holding a narrow majority, the legislation cannot afford more than a handful of defections. Several GOP members continue to express reservations, and Democrats are uniformly opposed.

House Speaker Mike Johnson is nonetheless pressing ahead, with plans to bring the bill to a floor vote as early as Thursday. “This is a bold, forward-thinking plan that reflects the priorities of the American people,” Johnson said during a closed-door meeting with Republicans.

Political analysts note the risks Johnson is taking by pushing the legislation through before the Memorial Day break. “This is make-or-break time,” said one Capitol Hill observer. “If Johnson can’t deliver a win here, it’s going to weaken his leadership and embolden the hardliners.”

Democrats prepare for a messaging war

Should the bill pass, Democrats are already preparing to make it a central theme of their campaign messaging. From Medicaid cuts to SALT cap changes that favor the wealthy, Democratic strategists believe the legislation offers a clear contrast heading into the 2026 midterms.

“This bill gives away the game,” said one Democratic campaign advisor. “They’re giving tax breaks to the rich, cutting health care for the poor, and throwing in a vanity project for Trump. We’re ready to fight.”

Republicans, meanwhile, hope the bill can be framed as a return to the economic policies that powered growth during Trump’s first term. “We’re putting money back in the pockets of hardworking Americans,” Johnson reiterated.

As the House braces for a contentious vote, the fate of the Trump tax bill remains up in the air. But one thing is certain: the political stakes couldn’t be higher.