Congress is back in session for almost all of June. Though Republicans’ attempts to advance a sweeping tax and spending package through reconciliation is taking center stage, a host of other items are moving forward on Capitol Hill.
2025 Tax Reform
On May 22, the House of Representatives passed their version of Republicans’ reconciliation bill by a vote of 215-214-1, with two Republicans joining all Democrats in voting no and one Republican voting “present.”
The House bill passed after several days of tumultuous negotiations with SALT caucus and House Freedom Caucus (HFC) members, two factions of the Republican party that have very different priorities. The resulting agreement strikes a very delicate balance — one where each group claims to be at the absolute limit of what they can support.
For more details on the House-passed reconciliation package, see:
- Tracking Tax Reform: A Closer Look at the Ways and Means Tax Framework
- Tracking Tax Reform: House Passes Tax Bill with Amendments
Since returning to the Capitol on June 2, Senate committees have been working through their version of the reconciliation bill. While the upper chamber is not expected to completely overhaul the bill, senators, including Senate Majority Leader John Thune (R-SD), have been vocal about their desire to make changes.
Thune is also working with a slim majority — he can’t lose more than three votes, or the measure will fail. Several small groups of senators are advocating for various outcomes including:
- Additional spending cuts
- The restoration and/or more gradual phaseout of Inflation Reduction Act (IRA) credits, ensuring there are no cuts to Medicaid benefits
- Making business tax provisions permanent
Appeasing all these groups, any of which could tank the bill if they were to band together and vote against it, is sure to be a difficult task.
Senators are also constantly being reminded by Speaker Mike Johnson (R-LA), SALT caucus and HFC members that any changes the upper chamber makes would also have to pass through the House before the bill could become law.
Stay tuned: Our Tax Policy team will continue to bring you updates and insights as the reconciliation process unfolds.
Trade Policy
The uncertainty surrounding trade policy continued to escalate in late May when, in a 24-hour period:
- A three-judge panel of the Court of International Trade (the CIT) found that Trump exceeded his authority when imposing tariffs under the International Emergency and Economic Powers Act (IEEPA). The government immediately filed for a stay of the order, which would keep the tariffs in place while the Justice Department appeals the ruling.
- D.C. District Court Judge Rudolph Contreras also found the tariffs imposed under IEEPA to be unlawful and issued a preliminary injunction, staying the decision for 14 days to provide time for appeal. This stay is now indefinite, pending appeal.
- The U.S. Court of Appeals for the Federal Circuit issued a temporary, administrative stay of the CIT’s decision.
Because of these stays, the tariffs authorized under IEEPA currently remain in place. Affected businesses should closely monitor for new developments. For more information, read Trade Policy Uncertainty Heightened as Federal Court Blocks Emergency Tariffs.
The government’s Section 232 tariffs were not impacted by either ruling and remain in place.
- Section 232 Tariffs in Place: Vehicles and vehicle parts remain subject to 25% tariffs (though some temporary offsets are available). Steel and aluminum tariffs increased from 25% to 50%, effective June 4.
- Ongoing Section 232 Investigations (May Result in Tariffs): Timber and lumber, copper, semiconductors, pharmaceuticals, medium and heavy-duty trucks and parts, processes critical minerals and derivatives, and commercial aircraft and jet engines are all under investigation.
If tariffs are impacting your business, visit Navigating Continue Trade Policy Uncertainty and reach out to our International Tax Team.
Government Funding
In the May 2025 Tax Policy Review, we discussed government funding and the Trump administration’s “skinny budget” request. Over the last month, several developments have taken place, including:
- House Appropriations Chair Tom Cole (R-OK) released an ambitious appropriations markup schedule.
- The Office of Budget and Management (OMB) released a Technical Supplement that included more detail on several budget requests, including a proposal to slash IRS funding by 20%, from $12.3 billion to $9.8 billion.
- OMB director Russell Vought indicated he won’t send the full budget request until Republicans pass the reconciliation bill.
Congress must pass the twelve appropriations bills (individually or grouped) or a continuing resolution (CR) before the end of the fiscal year to avoid a government shutdown.
Rescissions Package
On June 3, the White House sent a long-awaited rescissions request to Capitol Hill. The package requests Congress revoke $9.4 billion in previously appropriated funding, including $8.3 billion in foreign aid and $1.1 billion in public broadcasting.
Rescission packages are subject to special procedures — they do not require a committee markup and are filibuster-proof, meaning they only need a simple majority to pass each chamber. However, Congress only has 45 days to approve the rescission request from the date it is received.
The House is expected to pass the bill without changes. The Senate isn’t likely to act until they have completed and passed their initial reconciliation bill. The package could also undergo some changes in the upper chamber, as Senate Budget Committee Chair Susan Collins (R-ME) has expressed concern about some of the provisions.
The package’s $9.4 billion total represents just over 0.5% of the government’s $1.6 trillion appropriated discretionary funding. Speaker Johnson indicated to Punchbowl News he expects multiple rescission packages this year.
The X Date
The Congressional Budget Office (CBO) issued the May 2025 Monthly Budget Review, which estimated “if the debt limit remains unchanged, the government’s ability to borrow using extraordinary measures would probably be exhausted between mid-August and the end of September 2025."
See our May 2025 Tax Policy Review for a more detailed discussion of the X date.
IRS Commissioner
Today, the Senate confirmed former Rep. Billy Long (R-MO) to serve as Commissioner of the Internal Revenue Service (IRS). Long takes over the IRS at a critical time for the agency as it adjusts to a significantly reduced headcount (almost 25% of IRS employees have departed since the beginning of the year), a shrinking budget, and the possible implementation of tax changes from the Republicans’ reconciliation bill.
Democrats are particularly critical of Long. They argue he is unqualified and often cite his involvement with the troubled Employee Retention Credit and nonexistent "tribal tax credits".
Long will be the sixth IRS commissioner to serve in the role this year. The previous commissioner, Danny Werfel, resigned effective January 20, 2025, after Trump signaled his intention to fire him. In the intervening five months, the role has been filled by four different interim leaders.
Your Guide Forward
Cherry Bekaert’s Tax Policy group is committed to bringing you information on the latest tax developments and opportunities.
Tax Policy Update Webinars
On June 11, 2025, Cherry Bekaert hosted the Tax Policy Update: Q2 Webinar. If you weren’t able to attend, please review the webinar recording.
Our Tax Policy Update: Q3 Webinar will be on August 27 from 12 – 1 P.M. EST. Invitation to follow.
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