Congress advances budget resolution with key tax provisions
On March 14, 2025, the Senate passed a continuing resolution (CR) to extend current government funding through September 30, 2025, thereby avoiding an immediate government shutdown. This stopgap measure provides Congress additional time to negotiate and finalize a long-term budget resolution.
Prior to passing the CR, Congress’ budget resolution included $4.5 trillion in tax cuts, primarily driven by the extension of provisions from President Trump’s 2017 Tax Cuts and Jobs Act (TCJA), which are scheduled to expire at the end of 2025. Extending these provisions would cost an estimated $4 trillion over the next decade, consuming a significant portion of the overall budget.
Key tax provisions under consideration include:
- Corporate Tax Rate: Maintaining the corporate tax rate at 21% instead of the previous 35%. While this is not set to revert to the previous rate, there have been discussions about a potential further reduction to 15%, which will be a focal point in the next stage of budget negotiations.
- State and Local Tax (SALT) Deduction Cap: Currently capped at $10,000, with proposals under discussion to either expand the deduction or eliminate the cap entirely.
- R&D Amortization: The TCJA’s requirement for businesses to amortize research and development (R&D) expenses rather than immediately deduct them remains in effect beyond 2025, unless Congress takes action to repeal or modify it.
- Estate and Gift Tax Exemptions: The current exemption of approximately $14 million per individual is set to expire at the end of the year, reverting to $5 million unless extended under the reconciliation budget
This is the first of what we expect to be many updates from McDonald Hopkins’ tax attorneys, who will be closely monitoring the budget process and providing timely insights. Our team is committed to informing our clients and contacts about key developments, legislative changes, and potential impacts on you and your business. Stay tuned for strategic guidance to help you navigate the evolving tax landscape.
