WASHINGTON — House Republicans unveiled their long-awaited tax framework that is central to Donald Trump’s agenda, fulfilling several of the president’s key campaign promises while also extending current tax cuts due to expire by the end of the year.
Also included are expansions of the child tax credit and the adoption credit.
The 389-page framework released on Monday afternoon outlines tax cuts and corresponding tax hikes for certain groups, which will later be combined with other policies on energy, border and national defense as part of Trump’s massive reconciliation package. The tax cut extensions proposed in the Ways and Means Committee proposal would cost nearly $5 trillion, according to early estimates — which is higher than the current budget allows.
Some of the most significant tax cuts in the bill include the elimination of taxes on tips, taxes on overtime and taxes on auto loan insurance. The bill would also include more tax relief for middle- and low-income seniors.
The framework, officially dubbed the “One, Big, Beautiful Bill,” would make some of the tax cuts originally passed in Trump’s Tax Cuts and Jobs Act of 2017 (TCJA) permanent before they expire at the end of the year. In doing so, the bill halts an estimated $1,700 tax increase for working families that would kick in if the tax cuts were not extended.
The bill would temporarily increase the child tax credit by $500, raising it from the $2,000 set in TCJA to $2,500.
The legislation would also increase access to the adoption tax credit, which helps to offset some of the costs of adoption such as court and attorney fees, travel expenses and other costs that are directly related to the “legal adoption of an eligible child,” according to the Internal Revenue Service.
Rep. Moore pushed to expand child and adoption tax credits
Utah Rep. Blake Moore, R-Utah, has pushed to make those tax credits more accessible by removing income barriers and making current adoption tax credits fully refundable.
“Even before joining Congress, I have been committed to supporting and engaging with the adoption community in Utah,” Moore said in a statement last month. “In learning more about their priorities and challenges, it is clear that many families cannot adopt due to financial barriers.”
In turn, the framework would pare away at other tax breaks. For example, the bill would hike endowment taxes for colleges and universities.
The endowment tax would increase from 1.4% to 7% for universities with endowments ranging from $750,000 to $1.25 million per student; up to 14% for schools with endowments ranging from $1.25 million to $2 million per student; and up to 21% for endowments higher than $2 million per student.
Religious schools would be exempt from those taxes.
The Ways and Means Committee is set to mark up the framework on Tuesday, and GOP leaders hope to advance the proposal that night or early Wednesday morning. However, there are a number of tax deductions that must still be negotiated.
One of the most complicated matters still being hashed out is how much to expand federal deductions for state and local taxes paid, also known as SALT. While the issue does not affect most Republican lawmakers, there are several in blue-majority states who have made it a crucial issue — even going so far as to threaten final passage if a higher deductible is not included.
During a closed-door meeting on Monday, Republican leaders offered to increase the current deduction cap to $30,000 — up from the current $10,000 limit — and incorporate a new $400,000 income limit. Those parameters were included in the original bill text, but it’s not clear if New York Reps. Elise Stefanik, Mike Lawler, Nick LaLota and Andrew Garbarino will bend.
Lawler told Bloomberg TV late Monday that the latest version does not “adequately address” the SALT cap.