2025 Budget Resolution Update: Tax Implications

On February 13, the House Budget Committee, voting 21-16 along party lines (Republicans in favor and Democrats opposed), passed a 2025 budget resolution. The bill does not expressly reference the Tax Cuts and Jobs Act of 2017 (TCJA), but the figures it contains support a permanent extension of the TCJA.

Also figured into the bill are $2 trillion in savings over 10 years, paid for in part by a repeal of the Inflation Reduction Act (IRA), passed in 2022 under the Biden administration, which means elimination of the green energy tax credits and the remainder of $80 billion in new Internal Revenue Service funding provided under the IRA. The bill does not support other tax breaks that President Trump or members of Congress have promoted, including a repeal of taxes on tips, overtime pay, and Social Security benefits, and changes to the limits on the state and local taxes deduction. The House was not in session the week of February 17, but further action on the bill is expected when it returns the week of February 24.

Early on February 21, the Senate passed a fiscal year 2025 budget resolution that focuses on defense and border security and would allow for an increase in the federal deficit of up to $515 billion over 10 years. The resolution passed despite criticism earlier in the week by President Trump of the Senate’s “two-bill” approach (i.e., a budget resolution that does not deal with the TCJA or other tax matters and saves those matters for a later bill).

Congress has until March 14 — when the current continuing resolution expires — to act on the fiscal year 2025 budget. Thus, much action is anticipated and will be closely watched in the coming three weeks.

For a list of tax proposals that could most significantly affect companies and investors, see our article “Tax Reform and the Trump Administration."

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