Congress has agreed on a budget resolution, and drafting of a tax bill will now formally progress under reconciliation rules that allow a simple majority vote in the Senate, rather than 60 votes. The House narrowly adopted the Senate’s spending and tax cut outline on April 10, foregoing its own proposal, which passed in February.
Extension of TCJA temporary provisions and potentially other tax promises like restoring bonus depreciation and R&D expensing. President Trump’s agenda items of no tax on tips, overtime, or Social Security could also be included.
In addition, an increase to the national debt ceiling was generally agreed upon as well to cover increases resulting from tax cuts not covered by spending cuts and other pay-fors.
Spending cuts were a sticking point, with the Senate including only $4 billion in their budget versus $1.5 to 2 trillion in the House proposal. However, the Senate version includes other spending cut tactics and also used a new approach to score TCJA extensions at zero cost for reconciliation limitation purposes, even though an estimated $4.6 trillion will be added to the national debt over 10 years as a result of continued tax revenue reductions. Fiscal conservatives were holding out on agreeing to such a large deficit addition without significant spending cuts to offset it but ultimately voted in favor of moving forward with the Senate’s framework.
Next, drafting of the bill’s detailed provisions will continue and is anticipated to be revealed in the coming weeks. Tax and non-tax items such as border security, energy, and defense spending are set to be included in this potentially large reconciliation bill.
If you have any questions on these developments, please feel free to reach out to one of RubinBrown’s Tax Services professionals.
Published: 04/25/2025
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