Republicans stuff new tax cuts into their megabill, hoping voters will take note

Republicans are using their domestic policy megabill as an opportunity to pile on new tax breaks in hopes of quickly juicing people's tax refunds, the economy and their political fortunes ahead of next year's midterm elections.
Their plan would spend more than $200 billion on tax cuts this year, in addition to simply extending tax cuts enacted in 2017 that are set to expire at the end of this year and would likely go unnoticed by most taxpayers.
An enlarged Child Tax Credit, a supersized break for state and local tax (SALT) deductions and a slew of other goodies would be made retroactively available for this tax year so that people can claim them when they file their tax returns next spring. Businesses too would receive a bevy of backdated tax cuts.
Almost two-thirds of filers are in line to receive, on average, an extra $1,200 next year, the nonpartisan Tax Policy Center figures, though that could be pared back by the Senate. Republicans are already touting the coming benefits to voters, though they risk being eclipsed by complaints from Democrats that the wealthy would see much bigger tax cuts and that people at the bottom of the income ladder would receive little while being hurt by cuts in spending on programs like Medicaid.
The add-ons are intended to address a major, if sometimes overlooked, political problem for Republicans when it comes to this year's tax debate: They're mostly just extending temporary provisions that people have been using for years. If that's all they did, many people wouldn't see much change in their tax bills.
With the new provisions, Republicans are trying to ensure voters can feel a quick jolt to their personal finances. At the same time, lawmakers are also trying to use the legislation to offset the expected hit to the economy from President Donald Trump's trade wars.
'We want to see the impact of these provisions as quickly as possible,' said Rep. Lloyd Smucker (R-Pa.), a tax writer.
The strategy comes with some downsides.
For one thing, the additional tax cuts are increasing the bill's cost, no small thing amid the mounting focus on government debt. A plan to raise the cap on state and local tax deductions to $40,000, from $10,000, would cost $33 billion in 2025 alone, TPC says. Some Senate Republicans, calling the provision too expensive, are now trying to ratchet that back to $30,000.
It's also hardly a sure thing the plan will actually pay political dividends — Republicans never got much credit from voters for the tax cuts that flowed from their original Tax Cuts and Jobs Act. Polling at the time showed many people didn't believe their taxes had gone down.
The plan would also put a lot of pressure on Treasury and the IRS, which have faced significant staff cuts, because they would have to quickly sort out the details of how the provisions would work so that people can claim them.
That's partly why Republicans are rushing the legislation through Congress, in addition to the need to hike the debt limit, which is also included in the package.
'One of the reasons we've got to get everything done by July is so there's time to get information to people and there's time to be able to get the guidance documents out from the IRS, because that's going to take them months,' said Sen. James Lankford (R-Okla.), a tax writer.
Republicans are trying to get legislation to Trump's desk by their July 4 recess, though lately they've been warning that deadline could slip.
The effort has left some observers wondering if Republicans might send checks to millions of taxpayers as downpayments on the tax savings, like they did after former President George W. Bush's tax cuts.
That would draw public attention to the new tax cuts, and Trump has periodically teased the idea of sending voters some sort of tariff-related payment. But Republicans say there are no plans for checks.
Aside from increasing the child credit and sweetening the SALT deduction, Republicans plan to boost the standard deduction by $2,000 for couples. They're also creating a string of new breaks: a $10,000 deduction for auto-loan interest, a $4,000-per-person deduction for seniors, a $300 break for people who give to charity, deductions for overtime pay and income from tips, and a new tax-preferred investment account for children.
Most people would see their taxes go down under the GOP plan, with those in the middle of the income spectrum receiving an average of $830, the Tax Policy Center says. Low-income people projected to benefit would get relatively little, about $250, and the top 20 percent of earners would get about $2,500.
Those averages, though, obscure the fact that benefits would vary widely, even among taxpayers with similar incomes, because so many of the new breaks are narrowly targeted at specific groups.
Raising the SALT cap to $40,000 would save someone in the top 1 percent of earners about $4,000, TPC estimates. Parents with two kids would see an additional $1,000 from the child credit increase. The auto-loan interest deduction would be worth as much as $1,200 to a couple making $50,000.
Altogether, tax cuts for individuals would run about $140 billion this year, according to TPC.
Meanwhile, businesses would get retroactive breaks for research, investment and interest expenses, as well as a new break for building factories — which would cost a combined $57 billion through the fiscal year that ends in September, the official Joint Committee on Taxation says.
In order for people to claim all of the new benefits, they'll need to know the nitty gritty of how they're supposed to work, and it will be up to the administration to sort that out.
The legislation orders Treasury, for example, to come up with a list of occupations that would be eligible for Trump's new tip deduction. The deduction for auto-loan interest would be reserved for vehicles that had 'final assembly' in the U.S., with a complex rule for how that would be determined. Employers will surely have lots of questions about how business breaks are supposed to work as well.
'Every business is going to say, 'What does this mean?'' said Lankford. 'So the earlier we can get this done, the greater the economic effect that can happen this year.'

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

USA Today

23 minutes ago

• USA Today

US bombs Iran: Trump's gamble: Nuclear threat ended? Or the start of 'endless war'?

It's Donald Trump's war now. The decision to bomb Iran revealed the conflict between some of the president's fundamental impulses. The highest hope of President Donald Trump's bombing of Iran: A rogue nuclear program that had defied a half-dozen of his predecessors has finally been destroyed. The deepest fear: Just four years after the chaotic withdrawal from Afghanistan ended America's longest war, the United States is now enmeshed in another war in a volatile region, with perilous and uncertain consequences. "Our objective was the destruction of Iran's nuclear enrichment capacity and a stop to the nuclear threat posed by the world's No. 1 state sponsor of terror," Trump said in a late-night announcement in the East Room on June 21, interrupting Americans' Saturday night plans with news that B-2 bombers had dropped the world's most powerful conventional bombs on three sites considered crucial to Tehran's nuclear program. "Iran, the bully of the Middle East, must now make peace." Watch Trump's address to the nation after US bombed Iranian nuke sites More: US on 'high alert' for Iran retaliation, says nuke program 'obliterated' That's the calculation behind "Operation Midnight Hammer," anyway − that despite its initial bluster, Tehran will be forced to abandon its nuclear program. But Trump acknowledged there were other possibilities. "Remember, there are many targets left," he said, surrounded by a solemn-looking trio of advisers − Vice President JD Vance, Secretary of State Marco Rubio and Defense Secretary Pete Hegseth. "If peace does not come quickly, we will go after those other targets with precision, speech and skill." A war between Trump's fundamental impulses The White House debate over whether to launch the bombers put at odds some of Trump's most fundamental impulses. One is his fervent opposition in all three of his presidential campaigns against "forever wars," including the costly and controversial conflicts in Iraq and Afghanistan. His "America First" agenda reflects a determination to focus less on places like Ukraine and more on challenges close to home. Though most Republican congressional leaders praised the president for the decision, some people prominent in the MAGA movement did not. "This is not our fight," Georgia Rep. Marjorie Taylor Greene complained on social media. "Every time America is on the verge of greatness, we get involved in another foreign war." On the other hand, Trump is also famously impatient with problems that have frustrated standard solutions. Witness, for instance, his willingness to press the limits of the law in identifying and deporting millions of undocumented immigrants. The lengthy efforts at negotiation with Iran, like much of diplomacy, seemed unlikely to reach the sort of dramatic and decisive conclusion he favors. The bombing of Iran also reflects his alliance with Israeli Prime Minister Benjamin Netanyahu, who argues that Iran's nuclear program poses an existential threat to his country. For the prime minister, achieving his decades-old dream of destroying that program is the stuff of legacy. It's the stuff of Trump's legacy, too − a powerful message for a president who cannot run for the Oval Office again. Netanyahu struck that chord. "Congratulations, President Trump," he said in Tel Aviv. "His leadership today has created a pivot in history that can help lead the Middle East and beyond to a future of prosperity and peace." Congressional leaders notified as planes headed home For better or worse, this will be Trump's war. For one thing, he didn't seek the approval of Congress, which under the Constitution has the right to declare war, though the president has broad authority to order the use of military force. The War Powers Act, passed after President Richard Nixon's secret bombing of Cambodia during the Vietnam War, requires presidents to notify Congress and limits the length of deployments. After the U.S. bombers had left Iranian airspace, the administration immediately notified congressional leaders, Hegseth told reporters at a Pentagon briefing early June 22. Virginia Sen. Mark Warner, the top Democrat on the Intelligence Committee, said Trump had risked dragging the United States into a long war "without consulting Congress, without a clear strategy, without regard to the consistent conclusions of the intelligence community, and without explaining to the American people what's at stake." Those will be the elements of the debate ahead, in echoes of the Iraq War. How serious was the Iranian nuclear threat? And how will voters weigh the stakes and the cost? In Istanbul, Iranian Foreign Minister Abbas Araghchi accused Trump of having "deceived his own voters" by launching a strike despite his campaign promises. The U.S. administration holds "sole and full responsibility for the consequences of its actions," he said. But he didn't specify whether Iran would retaliate against U.S. forces in the region. Hours after the bunker-buster bombs were dropped, Iran launched a new round of missiles toward Israel. On June 23, the foreign minister plans to meet with Russian President Vladimir Putin, an ally but one who has his own war to fight.

Newsweek

25 minutes ago

• Newsweek

'Mass Layoff' Provision in Trump Bill Sparks Alarm: 'Deeply Concerning'

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. A provision in the Senate budget bill would allow for millions of dollars to go directly toward President Donald Trump and the administration's ability to lay off federal workers without the consent of Congress. It is a move that Ben Olinsky, senior vice president of Structural Reform and Governance at the Center for American Progress, called "deeply, deeply concerning." The provision, written by the Senate Committee on Homeland Security and Governmental Affairs, would give $100 million to the Office of Budget Management (OMB), according to Government Executive. The office is run by Project 2025 author Russ Vought, a proponent of mass government layoffs, which are a central tenet of Project 2025. President Donald Trump talks with reporters in the Oval Office of the White House on June 18, 2025, in Washington. President Donald Trump talks with reporters in the Oval Office of the White House on June 18, 2025, in Washington. Alex Brandon/AP Photo Olinsky referenced the lawsuits by federal employees fired by Department of Government Efficiency (DOGE) cuts, telling Newsweek: "[This bill is] exactly the kind of thing that the president has been trying to do, I would say, illegally, as he seeks to shut down departments or agencies, or limit [agencies] to a handful of staff down from 1000s and do large mass layoffs and other kinds of cuts to entire functions or programs." Those in favor of the bill have said: "Any president should have the ability to clear the waste he or she has identified without obstruction." Newsweek contacted Senator Rand Paul, a Kentucky Republican and chairman of the Senate Committee on Homeland Security and Governmental Affairs, via email for comment. Why It Matters Many of the people affected by mass federal layoffs initiated by DOGE at the start of Trump's second term are now in court as they were made without congressional approval. The provision would allow for federal employees to be fired with little to no legal recourse. Olinsky told Newsweek that it would lead to current and future distrust in the government by federal workers. Federal work used to be a lesser paid but significantly more stable line of work. If the provision passes, federal work will be seen as a much less realistic plan for long-term employment and will result in bright and capable Americans choosing to work in the private sector. What To Know The provision of the bill, which is the Senate's version of Trump's "Big Beautiful Bill" passed by the House, appears in a section about government spending and reorganization by the Senate Homeland Security and Governmental Affairs Committee. It would revitalize a provision last used in 1984 that allows the president to reorganize the federal government. However, Olinsky explained to Newsweek that it differs from the 1984 provision in one significant way. "Those previous reorganization authorities that were granted to the president still had a role for Congress," he said. Congress then had a certain amount of time to either approve or disapprove of the plan, and that determined whether the president's plan could go into effect. "In the current reorganization language, it says that most of the statute that's currently on the books, or that was on the books through 1984, will not apply," Olinsky said. "And it basically says the president can put together a reorganization plan, and as long as it's making government smaller, it is deemed approved. "So, there would be no further review by Congress, no further action. It would simply be automatic. It is approved by this language without [Congress] having seen it first. That is dramatically concerning to me." Senator Rand Paul, chair of the Senate Committee on Homeland Security and Governmental Affairs, talks with reporters in the Russell building on June 17, 2025, in Washington. Senator Rand Paul, chair of the Senate Committee on Homeland Security and Governmental Affairs, talks with reporters in the Russell building on June 17, 2025, in Washington. Tom Williams/CQ Roll Call via AP Images Olinsky added: "The executive actions that the Trump administration has been taking are absolutely taking Project 2025, the most extreme parts of it, and putting them into effect. And, actually going much further in many cases." Project 2025 says that the president should be able to " employees." It speaks in broad terms about federal employees, whom its authors see as part of the "federal bureaucracy." "Federal employees are often ideologically aligned—not with the majority of the American people, but with one another, posing a profound problem for republican government, a government "of, by, and for" the people," Project 2025 says. Olinsky said that people fired as a result of DOGE cuts could continue their suits in court, but anyone fired under the new provision would not have a case against the government. He said the only means of legal recourse for fired employees would be if mass firings reduced the government's ability to monitor enforcement functions. For example, if the White House fired every member of an agency that oversaw labor standards, someone could potentially sue and say their firing undermined government enforcement work. Other critics of this move say it directly undermines Congress' ability to govern, as government spending is one of Congress' primary responsibilities. Olinsky said there is a chance the Senate parliamentarian rules that the provision defies the Byrd Rule, which says that all reconciliation packages have to focus on budget issues and cannot stray into other parts of government. Olinsky believes the provision violates the Byrd Rule, but whether enough members of the Senate and/or the parliamentarian believe the same is "an open question," he said. What People Are Saying Ben Olinsky, senior vice president of Structural Reform and Governance at the Center for American Progress, told Newsweek: "This [bill] would basically give [Trump] carte blanche to refashion the entire federal government in ways that he likes. "Now, even under this language, it basically means you have to make the government smaller, not larger. But there's a lot of playing you could do to assist with [Trump's] priorities and stifle functions of government that he just doesn't like. "This should be deeply, deeply concerning to anyone." The Senate Committee on Homeland Security and Governmental Affairs: "This provision would reestablish the authority for a president to reorganize government as long as these plans do not result in an increase in federal agencies and the plan does not result in an increase in federal spending." What Happens Next The House does not have a similar rule, so if the provision remains in the Senate version of the bill, it cannot be removed through a parliamentarian complaint to the Bird Rule by the House.

Fox News

27 minutes ago

• Fox News

'Mofo...in the White House': Jasmine Crockett attacks Trump, praises Massie in anti-Iran strike rant

Rep. Jasmine Crockett, D-Texas, launched another tirade against President Donald Trump over the weekend, while offering rare praise for one of her House GOP colleagues who is currently at odds with the commander in chief. The Democratic firebrand took to Instagram Live late Saturday to criticize Trump's strikes on Iran, while giving a "shout out" to Rep. Thomas Massie, R-Ky., over his bipartisan resolution to rein in the president's ability to conduct such operations. "So long story short, for those of you that are unaware, the mofo that resides in the White House has unilaterally, in my estimation, declared war," Crockett said in the video. "Mofo" is often used as a shorthand term for the curse phrase "motherf---er." Crockett, an outspoken progressive, is part of the chorus of voices on the left accusing Trump of wrongly bypassing Congress in his military operation against Tehran's nuclear sites. Trump officials have maintained that they are in compliance with the War Powers Act. "We are living in this time in which there is someone who is occupying the White House who does not care about any rules, any norms, any laws, nor the Constitution. And we cannot be a civilized country if there is no law and order," Crockett said. She then launched an attack on Trump's crackdown on illegal immigration, accusing him of doing more harm with his strikes on Iran. "I know that they may claim, 'We law and order, blah blah blah. So go get the undocumented people and let's try to ship them out.' Let me tell you something – they are not the people that are putting us in harm's way," Crockett said. "It is him and his administration that is putting us in harm's way." Crockett called on her supporters to confront Trump supporters, adding, "I literally need you to wake them the f--- up, because everything since he has stepped into office has done nothing other than put us in harm's way." Later in the roughly 20-minute video, Crockett asked her supporters living in Republican-held districts to reach out to their representatives in Congress. "We need action now, and that is going to take a few Republicans, like, getting on the right page," she said. "And right now there's only one Republican that I know I can count on for sure doing the right thing. And that's going to be Thomas Massie. The rest of them, it's a little bit questionable." Foreign entanglements, particularly when the U.S. military is involved, are an issue that's made for strange political bedfellows in the past. When the House passed emergency foreign aid last year in separate packages by region, each passed with bipartisan support – while also seeing "no" votes from dovish progressives and conservatives wary of U.S. involvement overseas. Trump's weekend strikes on three Iranian nuclear facilities are no different. While the move gained wide support from Republican leaders and some pro-Israel Democrats, a small group of conservatives has expressed varying levels of concern. Rep. Marjorie Taylor Greene, R-Ga., posted on X that she could "support President Trump and his great administration on many of the great things they are doing while disagreeing on bombing Iran and getting involved in a hot war that Israel started." Rep. Warren Davidson, R-Ohio, commended the "strength and precision" of the strikes to Fox News Digital on Sunday but argued Congress needed to regain its "war powers." "While President Trump has legal precedent on his side, the legal reality underscores how far we've drifted from the constitutional order," Davidson said. Massie, who has been one of the most consistent lawmakers in Congress regarding his skepticism of foreign entanglements, is leading a resolution alongside Rep. Ro Khanna, D-Calif., to limit Trump's war powers on Iran. He told Fox News Digital on Sunday that he hoped to force a vote on the bipartisan measure and signaled cautious optimism that it could succeed. "I think it could [pass the House], because we have such a tight majority. And the Democrats aren't very consistent about war, but when there's a Republican in the White House, they find their religion, their anti-war religion again," Massie said. Fox News Digital reached out to Massie's office and the White House for comments on Crockett's video.