Over the last several days, House Republican leadership has been actively engaged in negotiations with holdout groups, including a handful of Republican SALT Caucus members and numerous House Freedom Caucus (HFC) members.
Where Does the Bill Go After the House Budget Committee?
After a reconciliation bill clears the House Budget Committee, it moves to the House Rules Committee. The Rules Committee has the authority to modify the package to incorporate any agreements reached between House Republican leadership and the holdouts and prepare it for consideration on the House floor.
Why Are There Still Ongoing Negotiations?
The version of the bill that cleared the House Budget Committee on Sunday, May 18, 2025, (detailed in Tracking Tax Reform: A Closer Look at the Ways and Means Framework) didn’t have enough support to pass the Rules Committee, much less a floor vote.
What Are the Sticking Points?
SALT Caucus members have been advocating for a more generous cap on state and local tax (SALT) deductions, while HFC members are generally pushing for additional spending cuts — specifically an accelerated phaseout of Inflation Reduction Act (IRA) credits and various changes to Medicaid.
Once the Package Passes the House Rules Committee, Is It Expected To Pass a Floor Vote in the House of Representatives?
If the groups of holdouts are satisfied with the changes made to the bill in the Rules Committee, it does have a chance of passing on the House floor. However, Speaker Mike Johnson (R – LA) is working with a very tight margin — he can only lose three votes if all members of the House are voting.
Recent Updates
May 22, 2025
Early this morning, the House voted 215 – 214 to pass the reconciliation bill. It now moves to the Senate, where it will likely be revised.
For more information on Republicans’ next steps in the reconciliation process, see Tracking Tax Reform: The Reconciliation Process.
May 21, 2025
The House Rules Committee convened to finalize the bill for a floor vote. After the announcement of a SALT compromise and several dramatic hours of negotiations with HFC members, the committee successfully advanced the bill along with a manager's amendment that incorporated the following tax changes:
- Inflation Reduction Act (IRA): Certain IRA credits were further altered by the amendment:
- The Clean Electricity Production Credit (45Y) and Clean Electricity Investment Credit (48E) would both have strict phaseout timelines for projects: They would need to begin within 60 days of enactment and be placed in service by December 31, 2028. Transferability would be maintained during that period.
- Zero-Emission Nuclear Power Production Credit (45U) would no longer phaseout; instead, it would terminate after 2031. Transferability would be maintained during that period.
- International Changes: The legislative text contained several changes applicable to multinational enterprises:
- Global Intangible Low-Taxed Income (GILTI): New rate of 49.2% (from current 50%) as of 2026
- Foreign Derived Intangible Income (FDII): New rate of 36.5% (from current 37.5%) as of 2025
- Base Erosion and Anti-Abuse Tax (BEAT): New rate of 10.1% (from current 10%) as of 2025
- State and Local Taxes: Under the amendment, the SALT cap would be increased to $40,000 per taxpayer ($20,000 for married filing separately or married filing separately) with an income limitation of $500,000 ($250,000 for married filing separately), effective in 2025. Amounts would increase annually by 1% through 2033, then hold steady thereafter. The phaseout would be 30% of the amount by which a taxpayer’s modified adjusted income exceeds the limitation.
- Other Individual Changes: There were several other notable changes that would impact individual taxpayers, including:
- Limitation on Itemized Deductions: The package proposes an even more complex phaseout than the original bill. Effectively, taxpayers would reduce their itemized deductions by:
- 5/37th of the lesser of (A) their SALT deduction or (B) the amount by which their taxable income (before itemized deductions) exceeds the start of the 37% tax bracket, and
- 2/37th of the lesser of (A) their itemized deductions other than SALT or (B) the amount by which their taxable income (before itemized deductions) exceeds the start of the 37% bracket and their SALT deduction
- Alternative Minimum Tax (AMT): The increased AMT exemption and phaseout thresholds would remain permanent but would now be tied to 2025 for indexing inflation purposes.
- Money Account for Growth and Advancement (MAGA) Accounts: Would now be called Trump Accounts.
- Limitation on Itemized Deductions: The package proposes an even more complex phaseout than the original bill. Effectively, taxpayers would reduce their itemized deductions by:
May 20, 2025
President Trump visited Capitol Hill to lobby House Republicans, urging them to stop advocating for special interests (SALT and Medicaid reform specifically) and advance the reconciliation bill as quickly as possible.
Your Guide Forward
To learn more about how these proposed changes could impact your business or individual tax situation, reach out to a knowledgeable Cherry Bekaert tax advisor.
As Congress navigates a potential tax reform bill, Cherry Bekaert will continue to bring you the latest developments and insights.
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