Lawmakers on the House Ways and Means Committee are set to mark up the mammoth portion of Republicans’ budget reconciliation instructions: extending President Donald Trump’s tax policies at the cost of at least $5.8 trillion.
Under the $5.8 trillion budget resolution, Ways and Means can allocate $4.5 trillion to implement tax cuts, provided it finds $2 trillion in savings.
The draft bill extends key portions of the 2017 Tax Cuts and Jobs Act, which is set to expire at the end of the year. It also boosts the standard deduction for individuals from $15,000 to $16,000 and ups married couples’ standard deduction from $30,000 to $32,000.
Under the committee’s plan, the child tax credit, which currently maxes out at $2,000 after Trump doubled it via the TCJA, would climb to $2,500, but both parents would need a social security number to claim it.
The Qualified Business Income deduction, which allows eligible American business owners to deduct up to 20% of their qualified business income, would also be renewed and increased to 22%. Small business advocates have urged Congress to keep the policy, which affects about 26 million Americans.
“Seven years ago, the Trump tax cuts sparked an economic boom and provided needed relief to working families,” Chairman Jason Smith, R-Mo., said. “Pro-family, pro-worker tax provisions are the heart of President Trump’s economic agenda that puts working families ahead of Washington and will create jobs, grow wages and investment, and help usher in a new golden age of prosperity.”
Notably, the bill also fulfills two of President Donald Trump’s campaign promises by eliminating taxes on tips and overtime. Those would expire in 2028.
The measure also increases the debt ceiling by $4 trillion.
But some Republican lawmakers have objected to another portion of the bill that raises the state and local tax, or SALT, deduction cap from $10,000 to $30,000 for single and joint filers. The SALT deduction allows itemizing taxpayers to deduct certain property, income, or sales taxes paid to state and local governments.
To help offset some of the lost revenue from the deduction increases, the legislation also hikes taxes on private foundations and on university endowments, excluding religious schools.
“This tax package is a direct response to what the American people demanded at the ballot box: lower taxes, more freedom and an economy that works for them,” Ways and Means Committee Vice Chair Vern Buchanan, R-Fla., said Monday. “While Democrats push for the largest tax hike in American history, House Republicans are delivering real relief for all Americans.”
