The budget resolution passed by the U.S. House on February 25, 2025, outlines a framework for up to $4.5 trillion in tax cuts over the next decade, but it’s not a detailed bill—specifics will be fleshed out later by committees like the House Ways and Means Committee. Here’s what’s known so far based on the resolution and surrounding statements:
The cornerstone is extending the 2017 Tax Cuts and Jobs Act (TCJA), set to expire at the end of 2025. This includes maintaining lower individual income tax rates (e.g., the top rate staying at 37% instead of reverting to 39.6%), doubling the standard deduction to about $14,000 for individuals and $28,000 for married couples (adjusted for inflation), and keeping the enhanced child tax credit at $2,000 per child. Extending these alone is estimated to cost over $4 trillion over 10 years, eating up most of the $4.5 trillion allowance.
Beyond the TCJA, additional cuts reflect Trump campaign promises: eliminating taxes on tips, making overtime pay tax-free, and exempting Social Security benefits from income tax. These ideas have been floated by GOP leaders like House Speaker Mike Johnson, though details—like income caps or eligibility—are TBD. For example, no-tax-on-tips could benefit service workers but might be limited to certain income levels to control costs. The Committee for a Responsible Federal Budget pegs these extras at $1 trillion to $7 trillion over a decade, depending on scope, meaning they could push the total well beyond $4.5 trillion unless scaled back or offset.
The resolution ties the $4.5 trillion ceiling to $2 trillion in mandatory spending cuts. If those cuts fall short, the tax cut amount must shrink accordingly, per the text. Republicans argue economic growth—projected at 2.6% annually—will offset some costs, though critics, including some economists, say this is overly optimistic given potential trade-offs like tariffs or immigration restrictions.
So, the plan prioritizes TCJA renewal—favoring middle- and upper-income households via rate cuts and deductions—plus targeted relief for specific groups (tipped workers, seniors), but the final mix depends on how committees balance the numbers and political pressures. Details like exact rates, thresholds, or phase-ins will emerge in the reconciliation bill later this year.