What a week in Washington! On February 25, 2025, the House narrowly passed its fiscal year 2025 budget resolution with a 217-215 vote, marking a critical first step toward a sweeping reconciliation package. This “one big, beautiful bill,” as dubbed by President Trump, aims to tackle tax cuts, border security, defense, and energy policy in a single legislative effort. With the Senate pushing its own two-bill strategy, negotiations are heating up, and the stakes couldn’t be higher for taxpayers and businesses alike. Here’s what we are watching as this unfolds.
A One-Bill Victory With a Catch
The House’s razor-thin victory wasn’t without drama—Speaker Mike Johnson rallied nearly every Republican to secure the win, overcoming internal debates over spending and deficits. The resolution greenlights $4.5 trillion in tax cuts over a decade, $300 billion for border, energy, and defense priorities, and a $4 trillion debt limit hike. However, two adopted amendments add complexity: Congress must find $2 trillion in cost savings to offset these expenditures. If they fall short, the tax cuts will shrink proportionally—a challenge for fiscal conservatives and moderates alike.
This one-bill approach contrasts with the Senate’s preference for a two-bill plan: one for border, energy, and defense (with urgent funding pleas from Trump officials), and a second for taxes. Senate leaders like Majority Leader John Thune and Finance Committee Chairman Mike Crapo insist on permanent 2017 Tax Cuts and Jobs Act (TCJA) extensions—a $4.7 trillion proposition—while House conservatives float their own two-bill backup. Reconciling these visions will require creative math, whether through tariff revenues, Department of Government Efficiency (DOGE) savings, or a current policy baseline tweak.
What’s on the Tax Horizon?
The tax portion of this package remains fluid, but key priorities are emerging. Extending the 2017 TCJA, including fixes like the R&D amortization remedy, tops the list—a retroactive fix to at least January 2025 is in play, though industry continues to push for 2024 relief. President Trump’s campaign promises—no taxes on tips, overtime, Social Security benefits, and new “Made in America” incentives—could also feature, though their $4.5 trillion cap may force tough choices. Senate leaders dream of permanent cuts, but a sunset around 2033 could offer runway without triggering rate hikes.
Elsewhere, the House Ways and Means Committee (HWMC) is poised to rescind digital asset reporting rules today, February 26, 2025—a likely win with bipartisan support. Medicaid and clean energy tweaks are on the table too, but Congress has a knack for turning challenges into opportunities.
Beyond Taxes: Funding and Deadlines
The reconciliation package isn’t just about taxes. House Budget Committee Chairman Jody Arrington’s framework, debated today, proposes $1.5 trillion in mandatory spending cuts across agriculture ($230B), energy and commerce ($880B), education ($330B), and more. These offsets aim to balance the $4.5 trillion tax cuts and $300 billion in new spending, but not all Republicans are sold—negotiations will refine this plan.
Meanwhile, a March 14 government funding deadline looms. Republicans and Democrats are hashing out a continuing resolution (CR) to avoid a shutdown. With the Trump administration eyeing Impoundment Act changes, a compromise—perhaps short of a full-year CR—seems likely to keep operations humming.
What’s Next?
The House’s vote clears a hurdle, but the road ahead is winding. The Senate’s two-bill momentum and the House’s one-bill push must converge into a single, identical package to leverage reconciliation’s 51-vote Senate threshold. Expect weeks of committee hearings, floor votes, and horse-trading—possibly stretching into late 2025. For businesses and individuals, this could reshape tax planning, from R&D credits to personal deductions.
We’re tracking every twist—stay tuned for updates by week’s end or early next week. In the meantime, consider reaching out to your congressional representatives to voice support for a one-bill approach or prioritize R&D fixes in any Senate two-bill plan. At our firm, we’re here to help you navigate what’s coming. Questions? Let’s talk.
