House Republicans Propose $4.9 Trillion Tax Breaks with Medicaid and SNAP Cuts

House Republicans have introduced an extensive tax package totalling at least $4.9 trillion in costs, intended to extend and expand tax breaks enacted during the Trump administration. The legislative effort focuses on increasing the standard deduction, enhancing child tax credits, raising the estate tax exemption, and creating new deductions affecting tipped wages, overtime pay, Social Security benefits, and automobile loan interest. A significant feature is the tripling of the state and local tax (SALT) deduction caps for couples, though some lawmakers from high-tax states argue this is insufficient. The proposal also includes a new tax on private university endowments and a provision to revoke tax-exempt status from groups identified by the State Department as supporting terrorist activities, a move that has raised concerns about its enforcement scope.

The bill aims to address tax policy priorities reminiscent of those debated during the 2017 tax overhaul but faces scrutiny about its substantial fiscal impact and funding mechanisms. To offset the extensive tax breaks, the package proposes severe cuts to federal programs, including Medicaid and nutrition assistance programs like SNAP. Notably, Medicaid recipients would be subject to new work and community engagement requirements, verification of eligibility twice annually, and an eligibility age increase for able-bodied adults without dependents. The House Agriculture Committee's contributions suggest a $290 billion reduction in federal nutrition programs, with increased state cost-sharing and stricter work rules for able-bodied adults.

The tax relief component also proposes temporary incentives aimed at stimulating the automobile market and providing additional Social Security income deductions for seniors. However, the SALT provision remains contentious due to income thresholds limiting the deduction's benefit. Financing these tax cuts is a key challenge, leading to warnings from some GOP members about growing deficits and national debt impacts, with public remarks emphasizing the political and moral implications of cutting Medicaid.

House Republicans plan a rapid legislative push with comprehensive hearings to integrate the multiple committee proposals into a single package. The Joint Committee on Taxation indicates the revenue reductions could grow as additional tax breaks are incorporated. Concurrently, proposed cuts to green energy tax incentives signify a rollback of certain Biden-era climate policies, potentially influencing the renewable energy investment landscape.

Given these extensive changes, the Congressional Budget Office estimates a reduction in health coverage for approximately 8.6 million individuals, marking a significant policy shift in Medicaid eligibility and administration. Legislative negotiations remain dynamic, with some Republicans opposing reductions in health and energy sectors, reflecting broader debates about fiscal responsibility and policy priorities. The package represents a major forthcoming legislative undertaking likely to shape U.S. tax and social program frameworks in the near term.