🎧 Listen to This Article
President Trump and Congressional Republicans have been working throughout 2025 to overhaul the federal income tax system. However, the task has become increasingly complex, with significant internal disagreements within Congress slowing progress.
Key proposals include extending the 2017 Tax Cuts and Jobs Act (TCJA), exempting overtime pay from taxes, and removing the $10,000 cap on state and local tax (SALT) deductions. Other major proposals involve exempting tips from taxes, reducing taxes on U.S.-produced goods, and eliminating taxes on Social Security income. Additionally, Trump has suggested abolishing the estate tax.
However, there is growing debate on how to finance these cuts, with discussions about potentially increasing taxes on the wealthy to offset the loss of revenue. A key challenge lies in how to approach budgeting for these cuts. While the current law baseline assumes the cost of extending tax cuts, some Republicans propose using a “current policy” baseline that would treat tax cuts as permanent, effectively reducing their estimated costs.
This shift could lead to a massive increase in federal debt. Senate Parliamentarian Elizabeth MacDonough will soon decide whether the “current policy” baseline can be used for the reconciliation bill, which could impact the feasibility of President Trump’s tax reforms.
For further details, clarification, contributions, or any concerns regarding this article, please contact us at editorial@tax.news. We value your feedback and are committed to providing accurate and timely information. Please note that our privacy policy will handle all inquiries
