On May 14, 2025, the House Ways and Means Committee approved a 389-page tax reform proposal that would extend key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and introduce new tax breaks for individuals and businesses. The proposal also scales back a number of recent clean-energy tax credits. According to the Joint Committee on Taxation, the package would reduce federal revenue by $3.819 trillion over the next decade.

This bill is part of a larger budget reconciliation process, which allows Congress to fast-track certain tax and spending changes. Because of this process, the bill can pass the Senate with a simple majority instead of the usual 60 votes. However, only items that directly affect government spending or revenues can be included.

The next step is for the proposal to be merged into a broader budget bill by the House Budget Committee. If approved by the House and Senate, the final version would go to the President for signature and become law.

The following are the key highlights of the proposed legislation:

TCJA Extensions and Updates

• Income Tax Brackets: TCJA’s lower tax rates made permanent, with inflation adjustments.
• Standard Deduction: Increased deduction levels extended permanently, with added boosts through 2028.
• Child Tax Credit: Increased to $2,500 per child through 2028, then permanently set at $2,000 (adjusted for inflation).
• Business Income Deduction (Sec. 199A): Increased to 23%, expanded to new investment income types, and made permanent.
• Estate & Gift Tax: Exemption raised to $15 million, indexed for inflation.
• AMT Relief: Higher exemption amounts made permanent.
• SALT Cap Repeal: $10,000 cap eliminated; replaced with a more complex income-based limit.

New Tax Breaks for Individuals

• No Tax on Tips or Overtime: Above-the-line deductions for reported tips and qualified overtime wages.
• Senior Bonus Deduction: $4,000 deduction for taxpayers age 65+, phased out for higher incomes.
• Car Loan Interest Deduction: Available through 2028 for U.S.-assembled vehicles.
• 529 Plan Expansion: Includes K–12, homeschool, and credentialing expenses.
• Charity Deduction for Non-Itemizers: Restored up to $300 for joint filers (2025–2028).
• Adoption Credit: Up to $5,000 refundable.
• New “MAGA” Savings Accounts for Children: Tax-favored accounts for children under 8, with optional $1,000 government seed deposits.

Business Tax Incentives

• Bonus Depreciation: Restored at 100% through 2029.
• Section 179 Expensing: Cap increased to $2.5 million.
• R&D Costs: Amortization requirement suspended through 2029 for domestic research.
• Interest Deduction Rules: EBITDA-based limit reinstated.
• FDII & GILTI: Scheduled deduction reductions canceled.
• 1099 Reporting Thresholds: Raised to $2,000 and $20,000/200 transactions for certain forms.

Energy Tax Rollbacks

The bill would end or scale back many clean-energy tax credits earlier than scheduled, including:

• Electric vehicle credits
• Home energy upgrades
• Clean hydrogen and nuclear power
• Manufacturing and fuel production credits

The proposal still needs to pass the House Budget Committee, then move to a full vote in both the House and Senate. Because it’s part of the budget reconciliation process, it can become law with a simple majority vote in the Senate. If both chambers approve, it will go to the President for final signature.  If passed, this bill would permanently extend many TCJA tax cuts, introduce new deductions for working individuals and seniors, and significantly reduce clean-energy incentives.