Quick Hit:

The House Ways and Means Committee released the full text of a 389-page tax bill on Monday that embodies key pillars of President Donald Trump’s economic agenda. The bill delivers on several campaign promises and renews many provisions from the 2017 Trump tax cuts, signaling a major legislative showdown. 

Key Details:

• The bill raises the state and local tax (SALT) deduction cap from $10,000 to $30,000, far below what moderate Republicans in high-tax states demanded.

• It permanently extends the 2017 Trump-era income tax rate reductions and includes new exemptions for tip income, car loan interest, and overtime.

• The measure rolls back several climate and energy programs from the Biden-era Inflation Reduction Act and increases the debt ceiling by $4 trillion.

Diving Deeper:

The House Ways and Means Committee formally released the legislative text of the GOP’s flagship tax proposal on Monday, a comprehensive package designed to cement and expand President Donald Trump’s economic policy framework. The bill’s unveiling sets the stage for intense intra-party negotiation and a broader confrontation with Democrats over tax policy, federal spending, and the future direction of the economy.

At the heart of the debate is the contentious state and local tax (SALT) deduction cap, originally enacted in Trump’s 2017 Tax Cuts and Jobs Act. The newly proposed cap of $30,000 is a compromise, but not one embraced by moderate Republicans representing high-tax blue states like New York, New Jersey, and California. Rep. Nick LaLota (R-N.Y.) dismissed the provision bluntly: “Still a hell no.”

These moderate Republicans had recently demanded a significantly higher cap, $62,000 for single filers and $124,000 for joint filers, before rejecting a previous $30,000 offer. Their continued resistance could threaten Speaker Mike Johnson’s ambitious Memorial Day deadline for House passage.

Trump has thrown his full political weight behind the measure. In a Monday morning post on Truth Social, the president called on Republicans to “UNIFY” behind the bill’s authors and declared, “We have no alternative, WE MUST WIN!”

The bill delivers on several promises Trump made during his 2024 campaign. It eliminates taxes on tips and overtime through 2028 and makes car loan interest payments tax-exempt during the same period. It also locks in the 2017 individual income tax brackets, preventing a hike in the top tax rate back to 39.6 percent — after Trump reportedly intervened to block that change.

Another major change includes increasing the pass-through deduction from 20 to 23 percent for businesses structured as partnerships or LLCs, a move applauded by the National Association of Manufacturers. CEO Jay Timmons said the bill “is a path to growth” for the 96% of manufacturers that operate as pass-throughs.

The bill’s critics argue it continues the same “trickle-down” economics that benefit the wealthy and corporate interests. Amy Hanauer of the left-leaning Institute on Taxation and Economic Policy claimed the bill “will further enrich the rich and not much for the rest of us.”

Further stirring the pot, the legislation rolls back significant portions of the DNC-passed Inflation Reduction Act. It claws back funding from the Department of Energy’s green loan program, guts the EPA’s climate project funding, and eliminates a grant initiative aimed at air quality in underserved communities — a clear rebuke to the Biden administration’s climate justice agenda.

The GOP bill also includes a temporary expansion of the child tax credit, increasing it to $2,500 through 2028, and revives numerous pro-business provisions from Trump’s 2017 law. These include immediate R&D expensing, bonus depreciation, and interest deductibility.