House Ways and Means Committee Releases Full Tax Bill for Markup

Following the release of the “skinny” Tax Cuts and Jobs Act (TCJA) on May 9th, 2025, the House Ways and Means has released the full version of its TCJA extension package for markup. The bill contains the same provisions as the earlier version (with a few slight changes), Trump’s tax proposals, and dozens of new “offsets” and other tax changes.

Permanent Extension and Enhancement of TCJA Provisions

The bill contains permanent extension of major components of the TCJA:

• Lower rates and reformed brackets
• Reformed family benefits
• Higher alternative minimum tax exemptions and phase-out thresholds,
• Higher estate and gift tax exemption
• Limitation and repeal of certain itemized deductions (except State and Local Tax (SALT)).
• SALT Deduction cap
• Extension of current law GILTI, FDII, and BEAT tax rates

And a handful of changes to certain TCJA provisions:

• All of the tax brackets (except the 37 percent bracket) are bumped up by an additional year of inflation.
• The standard deduction is increased by $1,000 ($2,000 for married couples filing jointly) for four years (starting in 2025).
• The SALT cap is set at $30,000 ($15,000 for married couples filing separately). The cap is phased down to $10,000 ($5,000) for taxpayers earning more than $400,000 ($200,000).
• Section 199A is broadened to include more types of business income and is increased to 23 percent (up from originally proposed enhancement of 22 percent). The limitation phase-in is also reformed.
• The child tax credit is increased by $500 for four years (starting in 2025) and adjusted for inflation going forward. Eligibility is restricted to taxpayers with Social Security numbers.
• The estate and gift tax exemption is increased to $15 million.

Temporary Extension of Domestic Business Provisions

The latest bill includes temporary extension of the domestic business provisions.

• 100 percent bonus depreciation
• repeal of research and development amortization
• reintroduction of the EBITDA interest deduction limitation

All three domestic business provisions would run for five years from 2025 to the end of 2029.

Trump Campaign Proposals

The bill also contains the major Trump tax campaign proposals:

• No taxes on tips
• No taxes on overtime
• A deduction for auto loan interest expense
• $4,000 per-person deduction for seniors

All four provisions are above-the-line deductions, meaning that taxpayers can deduct qualifying tips, overtime, auto loan interest paid and the senior deduction from their adjusted gross income. All four proposals have limitations based on income and other eligibility requirements. All four of these proposals would apply from 2025 until the end of 2028.

The Ways and Means also introduced 100 percent bonus depreciation for qualifying production structures. This is meant to provide a targeted tax cut to manufacturers.

They would also raise taxes on sports franchise owners. This provision would disallow a deduction for 50 percent of the cost of acquiring a sports franchise.

Major Offsets

The bill includes a handful of expected tax increases and many new tax increases. The largest of which are:

• IRA tax credits: The bill makes significant changes to IRA tax credits. It immediately repeals the electric vehicle and residential credits, phases-out production and investment tax credits, phases out “transferability,” and strengthens foreign entity of concern rules.
• A new limit on the tax-value of itemized deductions: For taxpayers in the top tax bracket, the maximum savings from an additional dollar of itemized deductions is capped at $0.35. This replaced the “Pease” limitation.
• Taxes on endowments and other private foundations: The bill includes the expected enhancement to the endowment tax plus changes to the unrelated business income tax (UBIT).
• Tax on remittances: The legislation introduces a new five percent tax on remittances paid by non-citizens to foreign countries.
• Retaliatory tax: A handful of taxes aimed at retaliating against foreign taxes that are deemed discriminatory such as digital services taxes, the undertaxed profits rule, and diverted profits taxes.
• Tightening eligibility and scale back certain tax credits: The bill would restrict eligibility for certain credits such as the American Opportunity and Lifetime Learning Credits, the ACA premium tax credits, and the employee retention credit.

Budgetary Effects

On net, the legislation would increase the deficit by $3.8 trillion between 2025–2034. The extension and enhancement of the TCJA provisions would reduce revenue by $4 trillion. The domestic business provisions would reduce revenue by around $100 billion and Trump’s proposals would add an additional $440 billion to the cost. The major revenue raisers would offset $1 trillion. The remaining provisions (both tax increases and tax cuts) would have net cost of $133 billion.

Correction: The original version stated that the SALT cap was set at $15,000, or $30,000 for married couples filing jointly. In fact, the cap is set at $30,000 for all filers except for married couples filing separately, who are capped at $15,000. The original version additionally stated that the cap for all taxpayers earning more than $400,000 annually was phased down to $10,000. In fact, for married couples filing separately, it is phased down to $5,000 for those earning more than $200,000.