House Passes FY 2025 Budget Resolution
On April 10, the House of Representatives, by a party line vote of 216-214, approved the fiscal year (FY) 2025 budget resolution that was amended by the Senate on April 5. The vote sets the stage for the enactment of tax cuts, immigration, military spending, energy policy legislation and other aspects of the Trump Administration's agenda. The approval of the budget framework by both chambers of Congress unlocks the reconciliation process, allowing the GOP-controlled Senate to bypass the 60-vote filibuster threshold and pass by a majority vote spending, tax and debt limit bills.
How Much Will It Cost?
Many tax measures in the Tax Cuts and Jobs Act (TCJA) were made temporary to comply with budget reconciliation requirements that prohibit increases to the deficit beyond 10 years. Extending TCJA and adding new provisions — such as exemption on tip income, overtime and Social Security provisions — has been estimated by the Congressional Budget Office to increase the federal deficit by $6 trillion over 10 years. The Joint Committee on Taxation has estimated the cost of extending TCJA over 10 years to be $4.6 trillion. In the recently adopted FY 2025 budget resolution, the GOP believes that scoring the extension of the TCJA provisions should be done by comparing it to the status quo; in other words, because we currently have the TCJA provisions in place, extending them does not incur any additional expense. Historically, scoring a tax bill starts with the assumption that it has expired and then determines the cost of reinstating it. This change would significantly reduce or eliminate the cost of the TCJA extension.
What Happens Next?
Approval of the budget resolution unlocks the first phase of the resolution process. Congressional committees in the House and the Senate, including tax-writing committees, will likely begin the process of crafting legislation that adheres to the instructions contained in the budget resolution after returning from a two-week spring recess. Both chambers must agree on the substance of legislation and approve identical legislation before sending it to President Trump for enactment. Congressional leaders hope to send a completed bill to the president before Memorial Day.
Note that the two chambers of Congress remain far apart regarding the amount of deficit reductions needed to ensure there are enough votes to pass priority legislation. This would include making permanent the business and individual tax provisions under the expiring TCJA (instead of the more typical method of enacting tax legislation passed using a resolution, where the provisions would sunset after 10 years) and many other priority items. The adopted budget resolution establishes a minimum floor of $4 billion in spending cuts. The House budget resolution passed in February directed $1.5 trillion in spending cuts. While this may seem an insurmountable gap, to address possible complications, House Speaker Mike Johnson (R-LA) publicly committed on Apr. 10 to include at least $1.5 trillion in cuts. Senate Majority Leader John Thune (R-S.D.) quickly expressed an alignment with the House in terms of budget savings.
CBIZ will continue to monitor tax legislative developments and provide updates and analysis. Please contact a member of our NTO Team if you would like further information or assistance.
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