Senate committees have released their portions of a Republican megabill that could have major implications for Nevada, offering tweaks that are somewhat more favorable to the state on clean energy tax credits and Supplemental Nutrition Assistance Program but harsher on Medicaid and no tax on tips. 

The tax-and-spending bill can be passed at a 50-vote threshold in the Senate so long as its provisions only pertain to spending, revenue, deficits and debt. With 53 Republican senators in the upper chamber, Senate Majority Leader John Thune (R-SD) can stand to lose three votes. 

Changes could still come in the Senate version — moderate members of the caucus have expressed concerns about the Medicaid cuts, while hard-liners worry that the size of spending cuts are insufficient. After the Senate, the House will again need to pass the amended version — where Speaker Mike Johnson (R-LA) will face similar challenges at either ideological end of his conference. 

Here are the major changes in the Senate bill:

Curbing Medicaid provider tax

The main thrust of the House version of the reconciliation bill was to cut Medicaid enrollment through the imposition of work requirements. Between 8 percent and 14 percent of the state’s Medicaid population could lose coverage, according to various estimates.

But the Senate version goes further by targeting a key source of revenue states use to afford their share of the cost of Medicaid. Nearly all states have imposed provider taxes on certain health care entities that opt in, with the revenue helping ensure the Medicaid reimbursement rate for health care services is closer to the commercial average across all insurer types.

Nevada has a provider tax on hospital revenue of up to 5.5 percent and a tax on nursing homes up to 6 percent. 

While the House version of the bill capped the maximum provider tax at 6 percent, the Senate bill sets a 3.5 percent ceiling for hospitals. The goal, for conservatives, is to cut the total federal spend on Medicaid by lowering the price of the average Medicaid payment; critics of provider taxes have described them as a financing scheme that allows states to spend more on Medicaid and thus bring in more matching funds from the federal government.

Under both versions of the bill, Nevada would have to cut its provider taxes, generating less revenue for Medicaid. It would be particularly troubling for rural hospitals, which already operate on thin if not negative margins and rely on the revenue generated from provider taxes to create parity among its Medicaid and non-Medicaid patient populations. 

Without that funding, services used heavily by Medicaid beneficiaries — including obstetrics, emergency rooms and mental health — could be cut in rural areas.

Health care advocates and budget analysts have not yet done a state-by-state analysis on the Senate bill. But a KFF analysis of Congressional Budget Office estimates in early June projected that Nevada will lose $7 billion in federal funding over the next 10 years for Medicaid under the Senate provisions.

Capping no tax on tips

The Senate Finance Committee scaled back the “no tax on tips” proposal that passed the House, offering a smaller federal deduction than the version of the bill that passed unanimously after Sen. Jacky Rosen (D-NV) introduced it in May.

While the House bill had no cap on how much a tipped employee could deduct, the Senate version sets a $25,000 ceiling.

But the Senate version allows for people at higher income levels to take advantage of the policy. The House version set a hard income cap at $160,000; the Senate’s, by contrast, phases down the benefit at $150,000 for single filers and $300,000 for joint filers, with the cap lowering by $100 for each additional $1,000 of income.

The Senate version maintains the policy’s expiration at the end of 2028 and limits the benefit to workers in traditionally tipped fields, which would be defined by the Treasury Department.

Less SNAP burden shifted to states

The Senate Agriculture Committee eased up the cuts to food assistance in the House version, which would have cut $170 million in federal funds to Nevada SNAP annually.

Republicans are planning to have states shoulder more of the cost of SNAP. Currently, the federal government covers 100 percent of benefits and 50 percent of administrative costs. The megabill makes states responsible for 75 percent of the administration costs and a portion of the benefit cost relative to each state’s error rate — the higher the rate of erroneous payments, the more a state would have to cover. 

Although the House version mandated that each state pay at least 5 percent of the benefit costs regardless of error rate, the Senate version eliminated that requirement for states with an error rate less than 6 percent. Beyond that, states would be on the hook for 5 percent of the cost of SNAP benefits if they had an error rate between 6 percent and 8 percent; 10 percent if the error rate is between 8 percent and 10 percent; and 15 percent if the error rate is higher than 10 percent.

Nevada’s error rate in 2023 — the most recent year with available data — was 6.71 percent. If the error rate remains the same, under the Senate plan, the state would be responsible for 5 percent of SNAP benefit costs as well as the additional administrative cost — a total of about $120 million. (The House version would have cost $170 million.)

If the state cannot find money for SNAP in its budget, it will either need to cut benefits or shrink the size of the SNAP rolls.

SNAP recipients are already subject to work requirements, with some exceptions, including for parents of dependent children. The House version proposed extending the work requirements to parents with dependent children older than 7; the Senate’s version set the age at 10.

The cuts would begin in fiscal year 2028, using 2027 error rates.

Mixed bag for clean energy tax credits

Nevada’s burgeoning clean energy industries — including lithium mining, battery processing, electric vehicle manufacturing and solar — were disappointed by the House treatment of clean energy tax credits, which marked the majority for a quick sunset and imposed a series of strict rules that would make remaining ones difficult to claim.

The Senate’s version is a little friendlier to clean energy — but mostly to technologies that are less prevalent in Nevada, such as nuclear, hydropower, batteries and geothermal, though the latter is growing.

The upper chamber did bring back transferability, a provision that allows companies with lengthy production timelines to capitalize on their credits by selling them. Advocates were worried that without transferability, energy projects already in the pipeline would struggle to ever come online. 

But in bad news for the lithium loop, the Senate bill would end a 10 percent tax credit for companies doing lithium processing and refining by 2034. The credit had previously been permanent.