Tax Update: House Delays Action on Bill
May 6, 2025
Republicans delayed the rollout and consideration of key elements of the reconciliation legislation, including hearings on tax policy legislation and changes to Medicaid.
Why it matters: The House leadership still wants to pass a bill by Memorial Day, yet competing priorities among members of Congress and the White House are proving to be challenging.
By the numbers: The tax-writing House Ways and Means Committee was originally planning a markup on May 7, but that has been delayed to, at least, the week of May 12. Reports indicate lawmakers are close on many issues, but still have to agree on several key issues:
- SALT: Raising the individual state and local tax (SALT) deduction cap, currently $10,000, is still under debate. New York, New Jersey, and California Republicans have made raising this cap their “red line.” With a five-vote majority, they have enough votes to tank any bill without SALT relief.
- Business SALT Cap: Colloquially known as B-SALT or corporate C-SALT, this provision has been under active consideration in House discussions. No details have emerged on what specifically would be covered, but conflicting reports indicate it would be pared down or potentially not included.
- Clean Energy Tax Credits: House Republicans have been targeting Inflation Reduction Act (IRA) tax programs as a way to reduce spending or offset some of the new tax cuts. But a group of 21 Republicans sent a letter in March urging leadership that any changes be “targeted and pragmatic” with a mind to future private-sector investment. Another group of 38 House Republicans sent a letter last week asking for a full repeal of the credits.
- White House Priorities: While the President made no taxes on tips, overtime, and social security key campaign priorities, the White House continues to offer additional items. Last week, the White House told congressional leaders it would seek immediate and full expensing treatment for factory construction, both the buildings and the equipment.
The big picture: The many loose ends on the tax front may contribute to a delay, but House leaders remain confident of meeting a May deadline. Challenges remain, however.
- The brewing fight on Medicaid, which Democrats are focusing their energy on highlighting, is raising political alarms for some Republicans and even the White House.
- Deficit hawks in the House continue to saber-rattle on spending cuts. Rep. Chip Roy (R-TX) and 20 House members sent a letter urging a number of “meaningful reforms” to Medicaid.
- The Senate is not planning to mark up legislation, but it will likely have a heavy hand in moderating taxes or cuts once a bill passes the House.
- The debt ceiling deadlines continue to loom over the entire legislation. Treasury is expected to clarify the “X date” in the next week or two.
Contact David McCarthy (dmccarthy@crefc.org) with any questions.