This week (March 17-21)

Congress: The House and Senate are out of session for a one-week recess.

This Week in Tax Policy will not be published while Congress is out.

Last week (March 10-14)

Budget reconciliation: House Ways & Means Committee Republicans met again on Wednesday, March 12 to continue discussing options for a budget reconciliation bill headlined by extensions of Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025, after meeting Monday with Treasury Secretary Scott Bessent. They are outpacing Republicans in the Senate, where Majority Leader John Thune (R-SD) previously said that any Senate vote related to the House budget wouldn't occur until at least March 24. That timeline could be extended as the two sides work out their differences, and House leaders have said the Senate might not vote in relation to the House budget reconciliation bill for another month. While House leaders want a tax bill completed by Memorial Day, Senator Thom Tillis (R-NC) said in a Politico story that the August recess may be a more realistic deadline given there is "a lot more work to do," and Senator John Cornyn (R-TX) said there is "no consensus" yet among Senate Republicans. Senator Tillis' comment was met with some pushback from House Republican leaders, who said the process should and will move faster and have shown few signs of moving in the Senate's direction on the budget resolution. Punchbowl News March 12 reported House Budget Committee Chairman Jodey Arrington (R-TX) as saying the Senate should just accept the House resolution: "Do the right, responsible and expeditious thing and just take ours." The House and Senate must agree to the same budget resolution to allow for a reconciliation bill, and while Ways & Means is meeting to sort out their bill, Senate Republicans don't appear near voting on the House resolution or striking a deal to change it. Congress is out next week, and there is no clear picture of when the House and Senate may arrive at a unified budget required to unlock the budget reconciliation process.

Lingering questions surrounding the potential tax package, particularly the use of a current law rather than current policy baseline, and with the deep spending cuts required, including $880 billion from the Energy & Commerce panel with jurisdiction over Medicaid, are preventing members from arriving at a unified budget. A broad group of Republican Senators want to make the expiring TCJA provisions permanent by using a current policy baseline that doesn't count the cost of tax cut extensions, and they are concerned that the current law baseline assumed in the House budget resolution doesn't provide sufficient space to achieve that. Members who have previously expressed reservations are clarifying their concerns. In a Bloomberg story, Chairman Arrington said some House Republicans are wary of the Senate avoiding the spending reforms called for under his budget resolution, but he is open to a current policy baseline if strictly for tax-cut permanency, and not to reduce the amount of required spending cuts. "If it keeps our framework of deficit neutrality, then I'm open to it," he said. Senate Finance Committee member Todd Young (R-IN) has expressed similar concerns, saying in a Politico story he has asked Republican leaders "how we're going to get to figure out some spending savings so that I'd be more comfortable with the current policy approach."

Senate Finance Committee Chairman Mike Crapo (R-ID) March 12 made a more detailed case in favor of adopting a current policy baseline, saying there are a multitude of other tax proposals the package must accommodate. "It's a bigger deal than everybody is focused on," Chairman Crapo said at a U.S. Chamber of Commerce event. He enumerated potential add-ons such as a Child Tax Credit expansion for those earning under $400,000 annually — which hasn't really been part of the public discussion of a GOP-only 2025 tax bill thus far — and President Trump's tax proposals, Tax Notes reported. Crapo said it is imperative that Trump tax proposals — the president in his March 4 address called for no tax on tips, overtime, and Social Security benefits, plus cutting taxes on "domestic production and all manufacturing" — be included in the package, and that there is a range of cost projections for those add-ons, depending on how they are designed. House Ways & Means Chairman Jason Smith (R-MO) and Budget Chairman Arrington have said the $4.5 trillion reconciliation instruction in the House budget allows for TCJA provisions to be extended for 8-10 years, and revenue sources could be found to pay for more tax cuts. Finance Republicans met at the White House March 13 to discuss issues surrounding the bill, and President Trump backed a current policy approach.

"If you are going to make the tax code permanent, by definition it's going to be with current policy," said Senator Steve Daines (R-MT) in a Politico report, and he affirmed that Trump is on board with the approach. There were no real breakthroughs though. Majority Leader Thune said, "I don't know that we solved anything. We got what we needed — just some kind of direction and feel for where the president wants all this to land." In separate remarks at the White House March 13, President Trump renewed his call for "one big, beautiful bill, where we put the taxes in, we put everything in," including "tremendous incentives for companies coming into our country and employing lots of people." He further said, "We've got to get that done, and that will put our country in a position like it's never been. And it's a reduction of taxes. Its tremendous incentives for companies to come from all over the world into our country … It provides for everything. It's a big, beautiful bill, and I hope we can get it approved. And that'll be next." Members including Senate Finance Committee member James Lankford (R-OK) said this week that Senate Republicans have acceded to the House approach of one big bill headlined by tax rather than border first and tax later, as was envisioned by the Senate-passed budget resolution.

Outside groups and members of Congress are expressing views for the contents of the bill. A March 7 letter to members from housing and real estate trade groups expressed "strong opposition to any proposal that would cap or eliminate the ability of a business to claim a federal tax deduction for its state and local property tax payments." And while the Inflation Reduction Act's (IRA) energy tax credits currently estimated at about $750 billion have been targeted as a source of revenue, more than 20 members said in a letter led by Rep. Andrew Garbarino (R-NY) that "any proposed changes to the tax code be conducted in a targeted and pragmatic fashion that promotes conference priorities without undoing current and future private sector investments which will continue to increase domestic manufacturing, promote energy innovation, and keep utility costs down."

International tax: Morning Tax cited Crapo as saying members await the Treasury report on options to respond to the OECD Global Tax Deal, to be delivered to the President within 60 days of the January 20 Executive Order. "Crapo said he expected good recommendations from that report, and that Senate Republicans also had a favorable view of a bill from Ways and Means Republicans that seeks to retaliate against foreign governments looking to squeeze more taxes out of American businesses. 'We are anxiously looking forward to what the president's team tells us are the steps that we need to take,' Crapo said."

Washington Council Ernst & Young's Rebecca Burch has been selected to be Deputy Assistant Secretary for International Tax Affairs at the Treasury Department. "In her new role, Burch will serve as top US delegate on tax matters at the Organization for Economic Cooperation and Development, representing the US in negotiations with other countries on global tax standards and, importantly, the international tax deal," the Daily Tax Report said regarding the expected announcement.

CRA: The House on March 11 joined the Senate in voting to repeal a Biden-era regulation (TD 10021) requiring some cryptocurrency platforms to report their customers' transactions to the Internal Revenue Service, starting with tax year 2027. The Senate approved the resolution on March 4. The resolution was offered under the Congressional Review Act (CRA), which allows the repeal of agency regulations if the resolution is acted upon within a certain time frame of the rule's publication in the Federal Register. This action represented the first time Congress has eliminated a tax rule using the CRA. The repealed final regulations governed the reporting of sales of digital assets through decentralized platforms, commonly known as "DeFi," imposing the obligation to report on Form 1099-DA. The regulations were officially published in the Federal Register on December 30, 2024.

Bill intros: On March 11, Reps. Beth Van Duyne (R-TX) and Terri Sewell (D-AL) introduced the Generating Retirement Ownership Through Long-Term Holding (GROWTH) Act (H.R. 2089) to allow individuals to defer recognition of reinvested capital gains distributions from regulated investment companies. The lawmakers said the bill "empowers Americans to create wealth by simplifying the tax code, removing penalties for reinvesting in the market, and creating tax parity for mutual funds to give individuals more freedom to build and grow their personal savings."