The House Budget Committee has voted along party lines (21-16) to advance a budget resolution that would allocate $4.5 trillion primarily for extending the 2017 Tax Cuts and Jobs Act (TCJA) provisions and implementing additional tax reforms. The resolution is expected to reach the House floor by February 24, with Ways and Means Committee Republicans prepared to begin drafting legislative text shortly thereafter.
The package's fiscal framework assumes a net cost of $4 trillion for the TCJA extension, leaving room for additional tax cuts. Republicans project that pro-growth policies will generate $2.6 trillion in additional revenue through assumed 2.6% annual GDP growth, significantly higher than the Congressional Budget Office's 1.8% estimate. The resolution includes $1.5 trillion in spending cuts as offsets, though Republicans aim to reach $2 trillion in cuts through mandatory spending reductions.
Independent analysts, including the Committee for a Responsible Federal Budget and the Bipartisan Policy Center, estimate the resolution would add $3.3 trillion to deficits over 10 years. This projection accounts for the $4.5 trillion tax package and $300 billion in additional spending for defense and border security, partially offset by the proposed $1.5 trillion in cuts.
Key considerations for practitioners include the potential extension of individual TCJA provisions set to expire after 2025. The Tax Foundation estimates that without extension, 62% of households would face tax increases. The package may also address President Trump's proposals to eliminate taxes on tips and overtime, though funding constraints could limit these initiatives.
The resolution faces several hurdles before becoming law. The Senate Budget Committee has approved a narrower $342 billion resolution focused on defense, border security, and energy, creating a reconciliation challenge between chambers. Additionally, some House Republicans from high-tax states are demanding relief from the $10,000 SALT deduction cap, while others express concerns about deep spending cuts to programs like Medicaid.
Ways and Means Committee member Blake Moore (R-Utah) indicates the committee could move quickly on drafting legislation, suggesting some provisions may receive permanent status while others could face shorter timelines. Practitioners should monitor developments as the resolution moves to the full House, where Republicans must navigate their slim 218-215 majority to advance the package.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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