Don't Mess With Taxes

Photo by Nataliya Vaitkevich

The House Ways and Means Committee this afternoon released its second run at the tax portion of the one, big, beautiful reconciliation bill demanded by the White House.

This latest collection of tax provisions, released in advance of the proposal’s committee markup tomorrow (Tuesday, May 13), fills in a lot of the tax holes that were apparent in the tax-writing panel’s first version, presented on May 9.

Political tax promises: Today’s measure includes many of the Trump administration’s populist policy priorities. That includes campaign promises to exempt gratuities and overtime pay from taxation.

The bill also would create a new above-the-line deduction of up to $10,000 for interest on a qualified passenger vehicle loan interest. The deduction, which could be claimed without having to itemize, would phase out for single filers with modified adjusted gross income of more than $100,000 and $200,000 for jointly filing married couples.

The latest tax proposals, however, do not eliminate the federal tax on some retirees’ Social Security benefits, a possibility Donald J. Trump floated during his second presidential campaign.

Instead, would provide a temporary enhanced standard deduction for filers age 65 or older.

The added amount for senior citizen taxpayers would be $4,000 per eligible filer with a modified adjusted gross income that does not exceed $75,000 for single taxpayers and $150,000 for those married and filing a joint tax return. The senior deduction would be available for tax years 2025 — yes, this current one — through 2028.

And on the business side, firms would see the return of expensing for domestic research and experimental expenditures.

SALT situation: In a concession to Republican members whose districts impose high state and local taxes (SALT) taxes, the measure revises the current $10,000 cap on SALT amounts that can be deducted on federal tax returns.

The SALT deduction cap would go to $30,000 ($15,000 for a married taxpayer filing a separate return). It would be phased down incrementally for taxpayers with modified adjusted gross income (MAGI) more than $400,000 ($200,000 for a married taxpayer filing a separate return) until it reaches $10,000 ($5,000 for a married taxpayer filing a separate return).

The SALT cap changes would be permanent beginning in 2026.

Increased estate tax relief: The estate tax and corresponding lifetime gift tax exemption, long-time GOP targets, would be permanently extended at the increased exemption amount of $15 million for single filers and double that for married couples, starting in 2026. The amount would be indexed for inflation going forward.

Currently, an individual can leave heirs a tax-free estate of up to $13.99 million. A married couple can protect $27.98 million from estate taxation.

MAGA political appeal: The overall presentation of the tax measures are in keeping with Trump’s Make American Great Again (MAGA) political catchphrase.

Provisions are categorized in sections of tax breaks that will Make American Families & Workers Thrive Again and Make Rural America & Main Street Grow Again.

Other parts of the bill incorporate moves the GOP says would toughen tax breaks undocumented residents could claim, as well as, in a call out to Elon Musk’s Department of Government Efficiency (DOGE), prevent fraud, waste and abuse.

You can find all the proposals in the Ways and Means Committee’s section-by-section summary. The committee also has an interactive map where you can see an overview of how the proposals would, on average, affect your congressional district.

Paying for changes still unclear: As for the key question of how to pay for the tax changes and additions?

We know now that the wealthy can breathe easier. There's no tax hike on millionaires in the measure.

But one wealthy automotive chief executive <cough>Elon Musk<cough> probably is not happy for another reason. One way the bill proposes to help offset new tax provisions' costs is to roll back several clean energy incentives enacted under the Biden administration’s Inflation Reduction Act. That includes ending the electric vehicle (EV) tax credit.

And by the way, what exactly is the full cost of the one, big, beautiful bill’s myriad tax proposals? We don’t know just yet.

The first collection of tax proposals released on May 9 would, per Joint Committee on Taxation (JCT) analysis of revenue and distributional estimates, would cost nearly $5 trillion. A JCT revenue estimate for today’s second group of tax changes has yet to be released.

UPDATE, Tuesday, May 13, 2025: The JCT score of the revised GOP tax bill says the proposal would add $5.3 trillion to the U.S. deficit over 10 years, plus an additional $900 billion in debt interest, for a total of $6.2 trillion.

The JCT panel’s estimates for last week’s proposals alone exceed the limits set by the budget resolution adopted by House Republicans last month for net tax reductions.

You also might find these items of interest:

• 24 tax deductions that don’t require itemizing
• GOP offers new tax breaks for 2026 election year filers
• House bills seek to ease tax burden of seniors and Social Security recipients

This post was corrected May 14, 2025, to reflect the GOP proposed changes to the SALT deduction.

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