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White House Considers Allowing Top Marginal Income Tax Rate to Revert to Pre-TCJA Levels: According to a single report, the Trump administration is considering letting the top income tax rate and the expanded bracket expire in the tax bill being developed in Congress. The Tax Cuts and Jobs Act, (TCJA, Pub. L. 115-97) decreased the top individual rate to 37% and increased the threshold for the related tax bracket. Without an extension, top earners would see more income taxed again at a top rate of 39.6%. The administration reportedly is considering the proposal to make way for President Trump’s campaign tax priorities to eliminate the federal taxation of tip income, overtime pay and Social Security benefits, and in response to messaging from congressional Democrats, who have alleged that Republicans are open to weakening social safety net programs such as Medicaid in order to finance tax cuts for high-income, high-wealth taxpayers.
Budget Update – House, Senate Republicans Reportedly Close to Compromise: According to reports of discussions between House and Senate Republican leaders, congressional Republicans are aiming to move forward with a budget plan that sets different budget targets for each chamber, with reconciliation instructions varying significantly. Reports suggest the House committees would continue to target approximately $2 trillion in spending cuts, whereas Senate committees would be tasked with finding approximately $3 billion in spending cuts. This two-track strategy ostensibly would provide the Senate with more flexibility to pursue spending cuts, although doubts have already started to emerge that the Senate approach may not satisfy fiscal hawks in the House Republican Conference concerned about U.S. government spending. If ultimately successful, the strategy would allow the Senate to consider an amendment to the House-passed budget resolution later this week, with a “vote-a-rama” expected before week’s end.
CBO Projects Debt Ceiling Will Be Reached in August or September: In a statement on March 26, the Congressional Budget Office (CBO) projected that the United States would reach its debt ceiling and risk defaulting on its debt in August or September 2025, should lawmakers fail to raise or suspend the debt limit. The report further clarified that, should the government’s borrowing needs increase in the coming months, then the Treasury Department’s resources “could be exhausted in late May or sometime in June, before tax payments due in mid-June are received or before additional extraordinary measures become available on June 30.”
Thune Presses Estate Tax Repeal as Part of Tax Package: In a Senate floor speech on March 26, Senate Majority Leader John Thune (R-SD) advocated for repeal of the estate tax to help farmers, ranchers and the U.S. agriculture industry, stressing that eliminating the tax will help ensure that “no farmer or rancher has to worry about whether the family farm or ranch will be able to stay in the family after they pass.” Thune’s long-standing proposal would go beyond extension of the expanded personal exemption from the estate and gift tax—often referred to as the “death tax”—which was included in the Tax Cuts and Jobs Act (Pub. L. 115-97) and will revert to approximately half the current exemption amount (i.e., $13.99 million) at the end of 2025 without further action by Congress.
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