Trump Tax Plan Revived: Senate Votes on $4.2T Deal Before July 4th Deadline

The Clock Is Ticking

It’s July 3rd in Washington, but the real deadline looms at midnight Saturday (1 AM Sunday in Beijing). The Senate is finalizing a $4.2 trillion tax-and-spend draft that could pass before Independence Day—thanks to Trump’s self-imposed July 4th finish line.

You know how politicians love deadlines? This one’s not symbolic—it’s strategic. And yes, I’m watching this like a hawk because if it passes, it changes how we think about fiscal policy—and even asset allocation.

A Party Divided, But Compromised

The Republican majority didn’t vote unanimously. Internal splits over cutting Medicaid and phasing out Biden-era clean energy tax credits nearly derailed everything.

But here’s the fix: they struck a temporary deal with House Republicans on something almost everyone can agree on—the SALT deduction cap.

From \(10K to \)40K? That’s a massive shift for high-tax states like NY, NJ, CA. And it lasts five years—then reverts back to baseline. Classic political theater: give big wins now, delay pain later.

Why SALT Matters (Even If You’re Not a Tax Attorney)

Let me explain this without turning you into an IRS form-filler.

SALT stands for State and Local Tax deductions. Prior to 2018, you could deduct all your state income taxes and property taxes—no cap. The TCJA capped it at $10K in 2017.

Now? They’re raising that limit to $40K temporarily. That means millions of urban professionals in pricey cities get more tax relief—especially those in New York City or San Francisco who’ve been squeezed since 2018.

This isn’t just accounting—it’s political insurance for GOP lawmakers from blue states who need re-election votes.

Green Energy Credits Under Fire?

The draft also proposes slowing down the phase-out of renewable energy tax credits introduced under Biden. Not stopping them—but slowing them down.

That tells me two things:

• Climate policy is now part of partisan poker;
• Markets will react based on timing—not whether green energy gets support eventually.

And yes—for those tracking crypto regulations—this kind of uncertainty affects long-term investment flows too.