The House returned to Washington, D.C., on Monday, but attention remains focused on the Senate, where Republicans are still divided over Medicaid funding and deficit reduction. These issues are central to negotiations on the so-called “One Big Beautiful Bill,” which lawmakers aim to finalize by the July 4 deadline.

However, even if the Senate passes its version of the bill, it is likely to change. Key disagreements persist between the House and Senate – particularly over Medicaid funding, clean energy tax credits, and state and local tax (SALT) deductions.

The most significant point of contention is the SALT deduction cap. The House bill raises the deduction limit to $40,000 annually for joint filers with adjusted gross incomes below $500,000 ($20,000 for single filers). In contrast, the Senate bill maintains the current cap of $10,000 ($5,000 for single filers). The Senate’s position is widely seen as a placeholder, leaving room for compromise during negotiations.

While July 4 remains the stated target for an agreement, a more realistic deadline may be the end of July, when Congress must act to raise the federal debt ceiling, which is expected to be reached in August.