Comprehensive Tax Legislation Package Moves through the House

UPDATED 5/23/25

On May 22, 2025, the House narrowly passed its budget reconciliation bill, introducing several key changes to the tax provisions initially approved by the House Ways and Means Committee. (see details below) A comprehensive list of all tax-related amendments is available in a recent Journal of Accountancy article.

Among the most notable revisions is a significant adjustment to the State and Local Tax (SALT) deduction cap. In the original version of the bill, the SALT deduction cap was set to increase from $10,000 to $30,000, with a phase-out beginning at $200,000 in modified adjusted gross income (MAGI) for single filers and $400,000 for joint filers.

However, the amended version passed by the House includes the following provisions:

• The SALT cap would rise to $40,000 per household ($20,000 for single filers)
• The phase-out threshold increases to $250,000 for single filers ($500,000 for joint filers)
• Both the cap and the phase-out thresholds would increase by 1% annually from 2026 through 2033
• After 2033, the cap and thresholds would be locked in at the 2033 level.

The bill now moves to the Senate, where further changes are expected. Stay tuned as negotiations continue.

House Ways and Means Committee Approves Comprehensive Tax Legislation Package

On May 14, 2025, the House Ways and Means Committee approved a comprehensive package of tax provisions aimed at extending and modifying several key elements of the Tax Cuts and Jobs Act of 2017 (TCJA). The proposed legislation, which will be incorporated into a broader budget reconciliation bill, addresses key expiring tax cuts and introduces new tax policies impacting both individual taxpayers and businesses. The bill now moves to the House Budget Committee for the next step in the legislative process. A summary of the bill as it was passed by Ways and Means follows.

Extensions of TCJA Provisions

The proposed legislation seeks to extend many of the TCJA provisions that are scheduled to expire at the end of 2025, including:

• Permanent extension of the individual and corporate tax rates implemented under TCJA
• Permanent extension of the increased standard deduction amounts introduced by TCJA
  • The TCJA nearly doubled the standard deduction for all individual filing statuses for tax years beginning after 2017
  • The proposed legislation would maintain these higher deduction amounts, with ongoing adjustments for inflation
• Permanent extension of the expanded child tax credit originally implemented under TCJA
  • The proposed legislation allows eligible taxpayers to continue claiming the increased credit
• Permanent extension and expansion of the Qualified Business Income (QBI) deduction
  • The proposed legislation increases the deduction from 20% to 23% of qualified business income, subject to phase-out limitations
• Increase to the state and local tax (SALT) deduction cap
  • The proposed legislation raises the cap from $10,000 to $30,000 for single filers with income below $200,000 and joint filers with income below $400,000

New Policy Initiatives

In addition to extending existing provisions, the proposed legislation introduces several new tax policy initiatives. Some of the major provisions include:

New Above-the-Line Deductions for Individual Taxpayers

• Deduction for Qualified Tip Income  (effective for tax years beginning after 2024 and ending after tax year 2028)
  • Taxpayers who receive qualified tip income would be eligible for a new above-the-line deduction equal to the amount of tips reported on their individual tax return
  • Although the tip income must still be reported as taxable income, this provision allows for a dollar-for-dollar deduction, effectively eliminating any tax liability associated with those tips
• Deduction for Overtime Pay (Non-Highly Compensated Employees)
  • A similar above-the-line deduction would be available for overtime wages earned by non-highly compensated employees
  • Under the Fair Labor Standards Act, an employee is considered “highly compensated” in 2025 if they:
    • Earn more than $151,164 annually, or
    • Own more than 5% of the business during the current or prior year
  • Overtime wages must be reported on Form W-2 and included on the tax return to claim the deduction
  • Like the tip deduction, this provision would result in no federal tax liability on the qualifying overtime income
• Deduction for Auto Loan Interest
  • Taxpayers may also qualify for a new above-the-line deduction of up to $10,000 per year for interest paid on an auto loan purchased after 2024
  • In addition to other requirements, the final assembly of the qualifying vehicle must occur in the United States
  • This deduction would be phased out for:
    • Single filers with a modified adjusted gross income (MAGI) over $100,000
    • Joint filers with MAGI over $200,000

Expanded Deductions and Incentives for Businesses

• 100% Bonus Depreciation
  • A revision to the current bonus depreciation statute allowing businesses to claim 100% bonus depreciation on eligible property acquired after January 19, 2025
  • Under current regulations, bonus depreciation is set to be completely phased out beginning in tax year 2027
• Section 179 Expensing Limits
  • The Section 179 deduction limit would increase to:
    • $2.5 million for qualifying property
    • Phase-out threshold raised to $4 million
• Deduction for Domestic R&D Expenses
  • A reinstatement of the deduction for domestic research and experimental expenses incurred after tax year 2024 through tax year 2029
  • Under current regulations, taxpayers are required to capitalize and amortize these expenditures over a five-year period
  • This provision would suspend this regulation and allow taxpayers the choice of amortizing or deducting these expenses as incurred

Final Thoughts

Additional details about the proposed legislation can found in a recently published Journal of Accountancy article. The bill remains in the early stages of approval process, and further revisions are likely. We will continue to monitor developments and provide updates as more information becomes available. If you have any questions or would like to discuss how these proposed provisions may impact you, please contact your GYF Tax Executive at 412-338-9300.

Ange Costanzo provided research and writing assistance for this post. Ange joined GYF in 2023 after completing the MAcc program at Duquesne University. He serves the firm’s corporate and individual clients, preparing tax returns and assisting with other tax projects.