House Ways and Means approves tax portion of big budget bill

The House Ways and Means Committee on Wednesday approved Republicans’ tax package, part of the “big, beautiful” funding bill requested by President Donald Trump. The committee voted 26-19 along party lines to approve the proposals to conclude a contentious all-night session. During the meeting, Democrats proposed a string of amendments, which Republicans shot down. The tax proposals are headed to the House Budget Committee, where lawmakers will combine them with spending-cut legislation before sending the measure to the chamber floor, possibly on Friday.

Republicans will face some opposition on the floor from among their own ranks over the state and local tax deduction. That deduction allows individuals or spouses to subtract the amount they paid in state taxes from their federal tax bill. Under the new tax package, the deduction will be capped at the current $10,000 for very high earners, with a $30,000 deduction for households earning up to $400,000 annually.

Five Republican representatives from blue states with a high cost of living have said they won’t support the tax package unless the cap is greatly increased. Republican Reps. Nick LaLota, Andrew Garbarino, and Michael Lawler of New York, as well as Tom Kean Jr. of New Jersey and California representative Young Kim, all oppose the current cap plan. But Republican budget hawks don’t want to increase the cap, given that the tax package is estimated to add $3.8 trillion through 2034 to the federal deficit, according to the Joint Committee on Taxation.

What are some other key provisions of the tax package?

• Makes 2017 income tax rates permanent

• No tax on tips or overtime through 2028

• Substantially increases the child tax credit through at least 2028

• Increases the 199A small business deduction to 23% from 20%

• Temporarily increases the standard deduction for seniors to $4,000

• Repeals electric vehicle tax credits

• Increases tax on college endowments with an exception for religiously affiliated institutions

• Requires a Social Security number for tax credits and deductions

• Bars corporations from claiming charitable deductions until donations exceed 1% of taxable income

What happened in the other budget hearing on Wednesday? Department of Homeland Security Secretary Kristi Noem testified before the House Homeland Security Committee, asking for approval of the DHS budget. Republican committee members lauded her for strong immigration enforcement measures and pointed to dramatic drops in illegal entry into the United States. But Ranking Member Bennie Thompson, D-Miss., set the tone for his party early on, saying Noem would have a hard time securing funding approval while she continued what he characterized as slash-and-burn policies. Several Democrats sparred with Noem over the deportations of child American citizens alongside their foreign-born mothers, alleging her agency acted without due process.

Dig deeper: Read my report on pro-life protections included in the budget bill.