Posted on May 18, 2025

The Latest On The New Tax Legislation In Congress

- Will you benefit from the new tax legislation if passed? Well, if you own a business and or make a certain threshold income, chances are that you might benefit from it.

- Those who do not own businesses nor meet a certain threshold may not benefit from it. They may actually be penalized or suffer consequences.

Feel free to contact Asher Taxation Law for further consultation or help.

The Latest On The New Tax Legislation In Congress

As of May 18, 2025, the U.S. Congress is actively deliberating the "One Big Beautiful Bill," a comprehensive tax and spending proposal championed by President Donald Trump. The bill aims to extend the 2017 Tax Cuts and Jobs Act (TCJA) provisions and introduce new tax relief measures. However, its progression has been impeded by internal divisions within the Republican Party and concerns over the nation's fiscal health.(Business Insider, Tax Policy Center)

Key Provisions of the Bill

• Extension of 2017 Tax Cuts: The bill seeks to make permanent several provisions of the TCJA, including reduced individual and corporate tax rates.
• Tax Exemptions: Proposals include exempting tips, certain overtime pay, and Social Security benefits from federal income taxes.(Tax Policy Center)
• Child Tax Credit Enhancement: An increase in the child tax credit by $500, raising it to $2,500 through 2028, with a reversion to $2,200 in 2029 adjusted for inflation.(BakerHostetler)
• State and Local Tax (SALT) Deduction Cap Adjustment: An increase in the SALT deduction cap from $10,000 to $62,000 for single filers and $124,000 for joint filers has been proposed to address concerns from high-tax states.(Business Insider)
• Defense and Border Security Funding: The bill allocates additional funds for defense and border security initiatives.(New York Post)

Fiscal Concerns and Credit Downgrade

Nonpartisan analysts estimate that the bill could add between $3.3 trillion and $5.2 trillion to the federal deficit over the next decade. These projections have raised alarms about the nation's fiscal trajectory. Moody's recently downgraded the U.S. sovereign credit rating from AAA to Aa1, citing persistent fiscal deficits and rising interest costs. This downgrade has intensified debates within Congress regarding the bill's potential impact on the national debt and economic stability. (New York Post, Reuters, Reuters)

Internal Republican Divisions

The bill's advancement has been stalled due to opposition from a faction of fiscal conservatives within the Republican Party. These lawmakers are advocating for deeper spending cuts, particularly targeting Medicaid and green energy subsidies. They argue that the proposed measures do not sufficiently offset the bill's costs and express concerns about the delayed implementation of certain reforms. (New York Post)

In response, some moderate Republicans have suggested revenue-generating measures, such as increasing the top individual tax rate from 37% to 39.6% for high earners, to make the bill more fiscally balanced. This proposal aims to generate approximately $300 billion in revenue, which could be used to protect programs like Medicaid and adjust the SALT deduction cap. (Business Insider)

Next Steps

House Speaker Mike Johnson and other GOP leaders are working to reconcile differences within the party to advance the bill. A revised version of the bill is expected to be presented for a committee vote before the Memorial Day recess. The outcome of these negotiations will significantly influence the bill's prospects and its potential impact on the U.S. economy.(New York Post, Business Insider)

• New York Post
• Reuters
• Business Insider