• Republicans propose raising pass-through deduction to 22% and making TCJA rates permanent.
  • Initial draft leaves out SALT cap adjustments and millionaire tax bracket, with more provisions expected by May 13.
  • Bill heads to Ways & Means Committee markup as GOP races against 2025 sunset deadline.

GOP Tax Framework Takes Shape

House Republicans released the first draft of their sweeping tax package late Thursday, delivering on President Trump's promise to extend and expand the 2017 Tax Cuts and Jobs Act before key provisions expire in 2025. The 56-page discussion draft includes several immediate wins for businesses but punts on contentious issues like state and local tax deductions.

The proposal would boost the qualified business income deduction for pass-through entities from 20% to 22%, a move the National Association of REALTORS® called "critical for Main Street businesses" in a statement obtained by reporters. It also seeks to lock in current individual tax rates permanently and nearly double the estate tax exemption to $15 million.

What's Missing - And Coming Soon

Notably absent from the initial text is any modification to the $10,000 SALT deduction cap, despite intense lobbying from lawmakers in high-tax states. Three Republican staffers familiar with the negotiations confirmed the issue remains "in play" for the final package, with one predicting "some form of compromise" would emerge during committee markups next week.

The draft also excludes Trump's floated 25% millionaire tax bracket and contains no provisions for tip income tax elimination - though Ways & Means Chair Jason Smith (R-MO) told reporters these elements would be added before Tuesday's markup session. "We're building this plane while flying it," one tax lobbyist remarked on condition of anonymity.

Political Calculus

With the TCJA's individual provisions sunsetting after 2025, Republicans face mounting pressure to act before November's elections. The Joint Committee on Taxation estimates letting the cuts expire would raise taxes by $3.5 trillion over a decade. "Failure isn't an option," said Rep. Vern Buchanan (R-FL), though Democrats have already dismissed the plan as "tax welfare for yacht owners."

As lawmakers scramble to finalize additional provisions by Monday's deadline, all eyes remain on whether the package can maintain unity between Midwestern moderates seeking SALT relief and fiscal hawks determined to avoid adding to the deficit. Early trading Friday saw S&P 500 futures edge up 0.3% as markets reacted to the business-friendly measures.