global Tax House Passes First Major Step Toward Federal Tax Reform March 11, 2025 Attention taxpayers…the House has taken a major step toward federal tax reform, passing a budget resolution that could set the stage for some big tax changes. Here’s what could be on the horizon. *Disclaimer: As part of the President’s proposed agenda, several potential changes to tax policy have been outlined. However, it is important to note that these proposals are still in the planning stages and have not yet been confirmed by Congress or the Senate. The information presented here reflects the current direction the President is considering, and any legislative changes will require approval and could undergo modifications during the legislative process. Please keep in mind that until these proposals are officially passed into law, they remain subject to change. If you’ve been following along, you know that many tax provisions from 2017’s Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. What is the latest on this and other potential changes? Here are some key highlights. Important background Originally, the Senate wanted to introduce 2 separate budget reconciliation bills: Border security and energyTax reform President Trump and House leaders have since shifted gears to opt for “one big, beautiful bill” which combines all these issues into one piece of legislation. With the 2025 TCJA expiration quickly approaching, Congress is aiming to get this bill on the President’s desk by May 2025. What is the latest update? On February 25, 2025, the House approved a budget resolution that includes: $4.5 trillion in tax cuts (extending many of the TCJA provisions)$2 trillion in spending cuts (over the next 10 years) From here, the resolution goes to the Senate for their approval/rejection. House vs. Senate: Should tax reform come with spending cuts? Here is where the House and Senate disagree: The House supports paying for tax reform with spending cuts. Assuming the TCJA will expire as planned, they are seeking $1.5 trillion in spending cuts to help cover the cost, meaning tax cuts are only temporary rather than permanent. The Senate does not think tax reform should come with spending cuts. They want to use a current policy baseline under the assumption tax cuts will continue (without requiring spending cuts). As opposed to the House approach, the Senate’s approach could make tax provisions permanent but might lose support from House conservatives who are seeking major spending reductions. What’s next? Top policymakers are scheduled to meet with President Trump to iron out the details. In the meantime, the President has other tax priorities which include: Eliminating federal taxation of tips, overtime and social security incomeReducing corporate taxes What should businesses and individuals do in the meantime? Although so much is still in limbo, working with a tax professional to understand the potential changes and start planning for different tax scenarios is recommended. We will keep you updated as things develop.
