The House Ways and Means Committee has advanced the $3.8 trillion tax portion of a sweeping reconciliation bill, with the full House expected to vote on the package by Memorial Day. However, tax professionals should prepare clients for significant changes as Republican senators have already signaled their intention to substantially revise the legislation once it reaches their chamber.
The House bill would extend most of the expiring Tax Cuts and Jobs Act provisions scheduled to sunset after 2025, while making several client-impacting modifications. Notable provisions include increased standard deductions, adjusted individual tax brackets, and an enhancement of the passthrough deduction under section 199A from 20 to 23 percent. The legislation also restores full domestic R&D expensing and 100 percent bonus depreciation through 2029.
In a victory for some clients, the bill delivers on President Trump's campaign promises by eliminating taxes on tipped income and overtime pay, while providing a bonus deduction for seniors. However, the legislation's approach to the state and local tax (SALT) deduction remains unresolved. Currently, the bill contains a placeholder raising the SALT cap from $10,000 to $30,000 with income phaseouts beginning at $400,000, but negotiations continue with House Republicans from high-tax states seeking more favorable terms.
Senate Finance Committee Chair Mike Crapo (R-Idaho) has acknowledged "there will be a significant amount of overlap" between the chambers' approaches, but emphasized that differences will need to be reconciled in conference. Several senators have specifically targeted the temporary nature of key provisions for revision, with Senator Steve Daines (R-Mont.) advocating for permanent R&D expensing rather than the House's 2029 sunset.
"Anybody that thinks that we're just going to rubber-stamp it and pass it out needs to understand there's more work to do," warned Senate Finance Committee member Thom Tillis (R-N.C.), who expressed concerns about investment tax credits and the rollback of clean energy incentives from the Inflation Reduction Act.
Tax policy analyst Howard Gleckman of the Urban-Brookings Tax Policy Center offered a blunt assessment, stating the House bill "has got no prayer, absolutely no prayer in the Senate," citing likely resistance to Medicaid and clean energy tax credit cuts, minimal interest in SALT relief, and funding concerns.
The White House has established July 4th as the target for final passage, giving the Senate approximately four weeks to make changes and reconcile differences with the House following the anticipated Memorial Day House vote. Treasury Secretary Scott Bessent has praised the bill's movement, calling it "strong progress" toward making the 2017 Trump tax cuts permanent while putting "more money in the pockets of hardworking Americans."
Tax professionals should advise clients that while substantial tax changes are likely coming, the final package may look quite different from the current House proposal. Expectations suggest that third and fourth quarter tax planning will be a key time to explore new legislation before the end of 2025.
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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