AS CONGRESS WORKS out its sweeping tax cut and spending legislation — the budget reconciliation bill also known as the One Big Beautiful Bill Act — the word “cuts” is being thrown around a lot. But in Massachusetts, should you expect to see cuts to the government programs you rely on?

The giant policy bill has advanced through Congress with only Republican votes. After weeks of divisive debate, the U.S. Senate passed its version of the bill 51-50 on Tuesday and sent it backt to the U.S. House. Majority Leader John Thune and House Speaker Mike Johnson are eager to get it on President Donald Trump’s desk before his July 4 deadline. 

As factions in Congress go head to head over the Senate and House versions of the bill, people in Massachusetts wonder how it will impact their lives. 

Five key pieces of the legislation that will impact Massachusetts ↓ 

Tax cuts: significant if you’re high-income

Tax cuts are one of the most talked-about items in the reconciliation bill. The Senate version of the bill looks to expand tax deductions, including raising the cap on deductions for state and local taxes (SALT, for short). Both bills extend the 2017 Tax Cuts and Jobs Act.

Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University said for most people in Massachusetts, their experience of paying taxes will largely stay the same, because the bills mostly extend 2017 tax policies. But, he said, for people earning between $200,000 and $500,000, higher deductions on their state and local taxes would constitute a significant cut. 

For tipped workers, about 2.5 percent of the US workforce, a new change eliminating taxes on tips could be a helpful cut, although it might impact fewer people than many realize. More than a third of tipped workers didn’t make enough money to pay federal income taxes last year, according to the Yale Budget Lab, and half earn less than $37,000 a year. This means they can already claim the standard deduction, and receive other tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. 

Roughly 68 percent of the tax cuts in the House version go to the richest 20 percent in the US, according to the Institute on Taxation and Economic Policy. 

While working-class families — the bottom 40 percent of earners — could expect an average tax cut of $361 in 2027 under the House proposal, the nation’s highest-income families — the top 0.1 percent — would receive an average tax cut of at least $255,670 in that year, according to the Institute. These figures don’t account for anticipated cuts to Medicaid and nutritional assistance, which could increase costs for working-class families.

Viviana Abreu-Hernandez, president of the Massachusetts Budget and Policy Center, said she worries about how these regressive taxation policies, which see low-income people contributing a disproportionate share as compared to high-income people, will impact the wealth gap in Massachusetts. This wealth gap, Abreu-Hernandez said, is already made worse by sales taxes in Massachusetts, which have an outsized impact on low-income people. 

Medicaid cuts: significant, especially for able-bodied adults

The House version of the bill proposed changes to Medicaid that could deprive 7.6 million people of health insurance. The Senate version would cut Medicaid even further.

In the Southcoast Health system that serves New Bedford, most people are on public pay programs like MassHealth. This puts the region at heightened risk.

Both bills propose work requirements for low-income, able-bodied adults on Medicaid. The Senate bill expands work requirements to the parents of older children as well. The requirement carries a heavy paperwork burden and would deny coverage at application if people could not demonstrate that they are employed, or otherwise engaged.

Josh Archambault, the Pioneer Institute’s senior fellow on health care policy, said this type of requirement would push people towards working.

But others say limited research does not indicate work requirements increase employment. And advocates worry that many would lose health care. 

“It’s not just the feds saying, ‘we won’t pay.’ You can’t pay. These people are ineligible for Medicaid. You can’t cover them,” said Horowitz, of the Center for State Policy Analysis at Tufts University. “In some ways, it’s actually a cost saving for the state. But I don’t think it’ll be treated that way. I think it’ll be treated as a disaster … but it’s not a budgetary problem, it’s a welfare problem.”

Ultimately, Horowitz said, people who lose insurance will still need medical care, and those costs may eventually trickle back to the state. Uncompensated care costs, he said, will be a problem to watch over the next few years should work requirements pass through Congress.

SNAP cuts: will mean significant changes to the state budget

The bills look to push some costs of the country’s Supplemental Nutrition Assistance Program onto the states. SNAP, or food stamps, helps pay for groceries for more than 12 percent of the country. In fiscal year 2024, one in every six people in Massachusetts relied on SNAP, over half of them in families with children.

Under the bills’ legislation, states would have to cover a potentially large portion of SNAP funding. Horowitz worries some states may not be able to do so, opting instead to drop the portion they’d have to fund. 

“Massachusetts is not that kind of state,” Horowitz said. “It’s hard to imagine a scenario where Massachusetts … doesn’t fill in the missing federal dollars. … I think that will be a top state priority.”

Still, Horowitz said, the money to cover such a large expense has to come from somewhere, meaning other state programs face cuts. 

Student financial aid cuts: uncertain — the House bill’s changes are significant; the Senate’s are not

One such area could be student financial aid — one of the key topics the House and Senate disagree on.

The House bill’s restrictions on financial aid borrowing include cuts to Pell Grants. Massachusetts Gov. Maura Healey released a statement which said the bill that passed the House would result in 42,000 Massachusetts students at public colleges and universities losing $57 million in federal financial aid annually.

Healey, positioning Massachusetts as a hub for higher education and touting the success of the state’s expanded MASSGrant Plus program, called on the Senate to reject the cuts. 

While the Senate bill does bar students from qualifying for a Pell Grant if they’ve received a full scholarship separately, it would not increase the credit hours required for full- and part-time students to receive Pell Grants. 

Pell Grants are subsidized to help low-income students pay for higher education. The House bill would change eligibility requirements, causing reductions in aid and at least 10 percent of students nationally losing their grants completely. As the bill would eliminate Pell Grants entirely for students attending college less than half-time, community colleges would see the greatest impact.

While important, Horowitz said making up for Pell Grant funding is not likely to be a priority for the state. As he sees it, if the House policies on this won out, the state would not be able to make up the funding. 

Inflation Reduction Act cuts: significant for offshore wind

Former President Joe Biden’s 2022 climate bill, the Inflation Reduction Act, offered tax credits to clean energy projects such as wind and solar energy. That gave a big boost to the offshore wind industry, which has flourished on the South Coast. The Trump administration is seeking to end IRA tax credits, with legislation in both versions of the bill furthering this aim.

As it stands, the House bill would require all energy projects receiving tax credits to begin within 60 days of the bill implementation, and be completed by 2028, before ending the credits for any other projects. The Senate version of the bill is softer on the IRA, giving projects until 2028 to begin. 

Massachusetts Sen. Ed Markey told State House News Service he was working with Republicans in the Senate to save IRA funding. Markey said he was especially focused on legislators from red states, “because 80 percent of all that funding has gone to red states in the IRA, and it’s already created 400,000 new jobs.” 

The Trump administration’s clean energy cuts could have an outsized impact on clean energy on the South Coast, and according to Kris Ohleth, director of the Special Initiative on Offshore Wind, the House cuts would only worsen those impacts. 

The IRA made it easier to manufacture for clean energy in the US, Ohleth said, but current projects aren’t safe from changes from sweeping tariffs or changing tax credit policies. 

“There’s a very small margin in profit for these offshore wind developers,” Ohleth said. “So, any half percent change in the cost of steel, or whatever it might be, will ripple through the project and potentially make the projects unfinanceable.”

As the demand for electricity soars in coming years, thanks to technology advancements like the use of artificial intelligence, Ohleth worries about the impact of slowing a “shovel ready” energy source like offshore wind, and its supply chain, for a minimum of four years. 

“It’s not just four years,” Ohleth said. “It’s four years, plus re-establishing that type of supply chain and market confidence that we are losing.”

This story was originally published by The New Bedford Light, a nonprofit community news organization in New Bedford.

Abigail Pritchard, a graduate student in journalism at Boston University, is a summer intern covering state government for The New Bedford Light. She can be reached at apritchard@newbedfordlight.org.

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