Executive Summary

• The House Ways and Means Committee has released and will soon mark up its portion of the “one, big, beautiful bill” that addresses the expiring provisions of the Tax Cuts and Jobs Act, and the new tax policies proposed by President Trump during his presidential campaign, among other items.
• The Joint Committee on Taxation estimates the bill would increase federal borrowing by $3.7 trillion over the fiscal year (FY) 2025–2034 budget window, about $800 billion below the maximum $4.5 trillion of new borrowing allowed during the same period under the FY 2025 budget resolution.
• The bill also includes a $4-trillion increase in the debt ceiling.

What’s in the Ways and Means Tax Bill?

The House Ways and Means Committee has released and will soon mark up its portion of the “one, big, beautiful bill” that addresses the expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) and the new tax policies proposed by President Trump during his presidential campaign, among other items. The Joint Committee on Taxation estimates the bill would increase federal borrowing by $3.7 trillion over the fiscal year (FY) 2025–2034 budget window. The FY 2025 budget resolution adopted by Congress allows the Ways and Means Committee to draft reconciliation measures that increase federal borrowing by up to $4.5 trillion through FY 2034, so the bill as currently written would boost borrowing by about $800 billion less. The table below and the discussion that follows outline the provisions in the Ways and Means Committee’s bill.

A Closer Look at the Ways and Means Committee’s Tax Bill

Sources: House Ways and Means Committe and Joint Committee on Taxation.

Numbers may not sum due to rounding.

On the individual side, the bill would make permanent the Tax Cut and Jobs Act’s (TCJA) reduced individual income tax rate structure of 10, 12, 22, 24, 32, 35, and 37 percent and would maintains the use of the chained Consumer Price Index (chained CPI) for the annual cost-of-living adjustment (COLA), though it would add an additional year of inflation into the calculation of the COLA for the 10, 12, 22, 24, 32, and 35 percent tax brackets. It would also make the TCJA’s increased standard deduction permanent and maintain the use of the chained CPI for the annual COLA. For tax years 2025–2028, the bill would increase the standard deduction by an additional $1,000 for singles, $1,500 for heads of households, and $2,000 for couples. It would make permanent the TCJA’s repeal of personal exemptions and the doubled Child Tax Credit (CTC) of $2,000 per child. For tax years 2025–2028, the bill would increase the CTC to $2,500 per child. The bill would increase the state and local tax (SALT) deduction cap from $10,000 to $30,000 for taxpayers earning less than $400,000 per year. The cap would phase down by 20 percent for income above $400,000 until it reaches $10,000.

The bill would also make permanent the Section 199A deduction that allows eligible individuals, trusts, and estates to deduct a percentage of their qualified business income (QBI) from their taxable ordinary income. Under the TCJA, the maximum deduction is 20 percent of QBI; the Ways and Means bill would increase the maximum deduction to 23 percent of QBI. The TCJA’s increased estate and gift tax exemption would be enhanced and made permanent. For 2026, the exemption amount would be $15 million for ($30 million for couples) and would be indexed annually for inflation. Like the TCJA, the bill would maintain the individual Alternative Minimum Tax (AMT) but make permanent the TCJA’s increase in the AMT exemption and the income levels at which the AMT exemption phases out.

In addition, the bill would permanently repeal the Pease limitation and replace it with an overall limit on itemized deductions of 35 cents per dollar and extends the $750,000 mortgage interest deduction, the limit on casualty loss deductions, and the repeal of other miscellaneous itemized deductions. It would also permanently increase or modify employer-provided child care, paid family and medical leave, and adoption tax credits.

During the 2024 presidential campaign, candidate Trump proposed a series of new tax breaks and the Ways and Means bill would codify them in legislative form. The bill would eliminate taxes on qualified tips, overtime pay, and car loan interest through 2028. It would also provide a $4,000 deduction for seniors with a modified adjusted gross income up to $75,000 ($150,000 for couples).

The bill would create a temporary tax credit through 2029 for charitable contributions to tax-exempt organizations that provide scholarships to K-12 students and a temporary tax deduction through 2028 for charitable cash contributions up to $150 ($300 for couples) for non-itemizers. In addition, it would create a new type of savings account called Money Accounts for Growth and Advancement (“MAGA accounts”) and a MAGA accounts contribution pilot program for newborns.

On the business side, the bill would extend 100-percent bonus depreciation through 2029, allow for full expensing of research and experimental costs through 2029, permanently increase the cap on the deductibility of business interest expenses, extend the deduction for foreign-derived intangible income and global intangible low-taxed income, and extend the base erosion minimum tax amount. It would also allow for 100-percent deductibility of the cost of certain new factories, certain improvements to existing factories, and other structures through 2028.

The bill would also repeal or phase out many of the Inflation Reduction Act’s green energy tax credits, remove taxpayer benefits for illegal immigrants, modify eligibility for and recapture of Affordable Care Act premium tax credits, modify the tax treatment of investment income at private colleges and universities, and enforce remedies against extraterritorial taxes. These changes would all generate savings that would offset the tax cuts contained elsewhere in the bill.

Finally, the Ways and Means bill would increase the debt ceiling by $4 trillion. This is necessary given a recent letter from Treasury Secretary Scott Bessent stating that the federal government will exhaust all of its extraordinary measures, which have kept the federal government from hitting its $36.1 trillion debt ceiling, by August and will no longer be able to issue new debt.