Senate Passes $4.5 Trillion Tax Cut Bill Excluding Crypto Tax Guidelines

The U.S. Senate has advanced a major legislative package that supports key elements of President Donald Trump’s agenda, but notably excludes guidelines on cryptocurrency taxation. This approval came after extensive discussions and adjustments, but efforts to include provisions for clarity and relief on crypto transactions were unsuccessful. Despite strong advocacy for changes, attempts to modify the tax responsibilities on small-scale cryptocurrency transactions were not incorporated into the final bill.

Senator Cynthia Lummis proposed amendments to exempt capital gains taxes on minor crypto activities. However, these proposals did not gain enough support during Senate discussions. Lummis, backed by industry advocates, plans to reintroduce these tax adjustments through separate legislation to ease the tax burdens on everyday cryptocurrency use.

The Senate approved the bill in a 50-50 vote, with Vice President J.D. Vance casting the deciding vote. The bill now awaits consideration by the House of Representatives, where it is expected to face further debate. Senate Majority Leader John Thune commented, “Our efforts extend tax relief for hardworking Americans, rebuild our military, secure borders, and unleash the U.S. energy sector. Now, hopefully, everyone can rest a bit.” Treasury Secretary Scott Bessent added, “We aspire for a swift Republican action in the House, reflecting President Trump’s commitment to fortify our economy and sustain America’s global capital and innovation superiority.”

The Democratic Party has criticized the legislation, with Senator Elizabeth Warren expressing concerns that the bill rewards tech companies with significant tax incentives, potentially disadvantaging average families. Warren stated, “You’re rewarded with billion-dollar tax cuts for cozying up to Trump and Republicans. Ordinary American families will pay the price.”

Despite the criticisms, the approved bill includes substantial tax incentives and financial support mechanisms that could benefit the cryptocurrency sector. This contrasts with the broader austerity measures typically associated with Trump’s economic stance, suggesting a nuanced approach where crypto might flourish under these expansive policies.

The Senate narrowly passed a significant policy bill on Tuesday, marking a major step forward for the Republican agenda. The legislation, dubbed the "One Big Beautiful Bill Act," was approved by a vote of 51-50, with Vice President JD Vance casting the tie-breaking vote. The bill now heads to the House, which is expected to take it up as early as Wednesday morning.

The bill contains approximately $4.5 trillion in tax cuts, making permanent the income tax cuts from the 2017 tax bill that were set to expire at the end of this year. It also includes an increase in the Child Tax Credit to $2,200 per year, provided one parent has a verifiable Social Security Number. The Senate version of the bill cuts back on the amount of state and local taxes that can be written off on federal tax returns, keeping the House’s $40,000 cap but reinstating the $10,000 cap after five years. Additionally, the bill temporarily ends taxes on tips, capped at $25,000, and taxes on overtime, capped at $12,500, from 2025 through 2028. It also creates a tax deduction of $10,000 on car loan interest for new cars assembled in the United States and provides an extra tax deduction of $6,000 for seniors.

The legislation also includes significant changes to safety net programs. It imposes work requirements to qualify for Medicaid, requiring adults with children 15 and older to work. The bill reduces the Medicaid provider tax starting in 2028 to 6 percent and then phases it down to 3.5 percent over five years. It also expands SNAP work requirements for adults 18 to 64 and shifts more costs to the state, with the state cost share delayed for two years in states with the highest error rate. The bill also overhauls student loan repayments, ending some income-contingent plans and the Grad PLUS loan program, and includes a $65,000 per student cap on Parent PLUS loans. It creates two new plans for loans after July 1, 2026, one with a standard repayment and the other tying payments to a borrower’s adjusted gross income.

The bill also raises the debt ceiling by $5 trillion, the largest increase in U.S. history. The bill is expected to have significant impacts on the economy, with critics arguing that it will make the wealthiest people in America wealthier and the poorest people in America poorer, while supporters argue that it will boost the economy and create jobs.

The bill's passage was not without controversy. Colorado Democratic Sens. Michael Bennet and John Hickenlooper voted against the bill, citing concerns about the impact on health care, clean energy, and the deficit. Bennet argued that the bill would blow a "massive hole in the country’s deficit" and that past tax cuts didn’t boost the economy and cut the deficit, but rather added to it. Hickenlooper expressed disappointment with the outcome, especially with regard to clean energy and health care, and warned that the long-term consequences might not be felt until after the mid-term elections.

The bill's targeted tax incentives are expected to accelerate private investment in next-generation networks and support infrastructure deployment, job creation, and domestic energy production, particularly using fossil fuels. However, the bill also ends Pell grants to students from higher-income families and removes provisions that would have changed the federal government’s pension program. The bill also removes a controversial Artificial Intelligence provision that would have called on states to follow a 10-year “temporary” pause on AI regulations or lose out on $500 million in AI infrastructure and development funds.