[UNITED STATES] Debate has officially begun on the House Republicans’ sweeping tax legislation, with analysts closely monitoring which of former President Donald Trump’s campaign pledges will make it into the final version.
The House Ways and Means Committee, which oversees tax policy, released the full draft of its segment of the bill on Monday afternoon. Lawmakers began deliberations on the proposed provisions Tuesday.
The bill’s release comes amid heightened political tensions, with Democrats criticizing the GOP’s approach as disproportionately benefiting corporations and high-income earners. Meanwhile, Republicans argue that the proposed changes will stimulate economic growth and provide relief to middle-class families. The outcome of these negotiations could have significant implications for the 2024 election cycle, as both parties seek to leverage tax policy as a key campaign issue.
The bill’s initial text incorporates several of Trump’s key proposals, including extending existing tax cuts, exempting tips from taxation, and making overtime pay tax-free. Rather than reducing Social Security taxes, the plan offers an additional $4,000 deduction for older Americans.
Noticeably absent from the draft, however, are two other Trump-backed measures: a higher tax rate for top earners and the elimination of the so-called “carried interest loophole.” These omissions suggest potential battles ahead as the bill moves through committee.
The absence of these measures has drawn criticism from progressive groups, who argue that the bill misses an opportunity to address income inequality. “This is a giveaway to the ultra-wealthy while leaving working families behind,” said one advocacy group spokesperson. However, some conservative analysts counter that targeting high earners could stifle investment and job creation, a long-standing GOP argument in tax policy debates.
Significant changes could still be made before a final committee vote.
According to preliminary estimates by the Joint Committee on Taxation, the current version of the GOP bill carries a 10-year cost of approximately $3.7 trillion—below the $4.5 trillion cap Republicans have set. That gap could allow lawmakers room to introduce or expand other priorities during ongoing negotiations.
“It’s really important for any additional tax cuts to be paid for,” said Shai Akabas, vice president of economic policy at the Bipartisan Policy Center, adding that budget constraints will likely shape the final provisions.
Two key areas to watch as the debate progresses:
SALT Deduction Limit a Flashpoint in Negotiations
With the GOP holding only a narrow majority in the House, the deduction for state and local taxes—commonly referred to as SALT—has become a central issue in tax discussions.
Originally capped at $10,000 under the 2017 Tax Cuts and Jobs Act (TCJA), the SALT limit is set to expire after 2025 unless Congress acts.
The House GOP’s latest proposal would raise the SALT cap to $30,000 for most filers, with a phaseout beginning at a modified adjusted gross income of $400,000. Some lawmakers are pushing for an even higher cap, a possibility given the bill’s current budget headroom.
Expansion of Child Tax Credit on the Table
Republicans are also seeking to broaden the child tax credit—an effort that gained bipartisan support in a House-passed bill earlier this year.
Under the TCJA, the child tax credit was temporarily doubled from $1,000 to $2,000 per child under 17, while expanding eligibility. These provisions are set to expire at the end of 2025.
Advocates for low-income families have urged lawmakers to make the child tax credit fully refundable, ensuring that the poorest households can benefit even if they owe little to no federal income tax. While the current GOP proposal includes some inflation adjustments, critics argue it falls short of addressing the needs of the most vulnerable children.
The GOP’s draft proposal would increase the credit to $2,500 per child through 2028, provided both parents have a Social Security number. The refundable portion of $1,400—available even to families with no tax liability—would be indexed to inflation.
But critics argue the proposal doesn’t go far enough. “It does nothing for the 17 million children who currently don’t get the full $2,000 child tax credit because their families’ incomes are too low,” said Chuck Marr, vice president for federal tax policy at the Center on Budget and Policy Priorities.
As committee debates continue, further revisions are expected before the bill reaches the House floor.
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