Last Tuesday, President-elect Trump had an electoral victory ushering his return to the White House. And while votes are still being counted as we write this issue, full Republican control of Congress looks almost certain. Although the Republican margin in the House may be excruciatingly close, reconciliation is now firmly on the table for 2025. Let's take a broad look at the stage and timetable being set for next year's legislative action to address the expiring tax provisions in the Tax and Jobs Act (TCJA), additional tax provisions expiring at the end of 2025, and Trump's populist tax cuts proposed on the campaign trail.

With House Republicans in the majority, Representative Jason Smith (R-MO) would retain the gavel as Chairman of the Committee on Ways and Means. Although several members of the taxwriting panel announced other plans ahead of the election, no current members lost their reelection bids (despite close calls for Representatives David Schweikert (R-AZ) and Michelle Steel (R-CA)). We'll see a lot of familiar faces returning to the panel and a handful of new ones.

The Senate Committee on Finance will more dramatically change in 2025. Two members, Senators Bob Casey (D-PA) and Sherrod Brown (D-OH), lost their reelection bids and Senators Ben Cardin (D-MD), Tom Carper (D-DE), and Debbie Stabenow (D-MI) are retiring. Sen. Robert Menendez (D-NJ) resigned in August. Democrats will be adding a number of new members to replace these departing members and Senator Ron Wyden (D-OR) will remain as Ranking Member next year. 

Senator Mike Crapo (R-ID) will take the gavel as Chairman next year with an even larger complement of Republican taxwriters. With Republicans capturing at least 53 Senate seats, the Committee on Finance's current 14-13 party ratio will likely be revised to add at least one Republican seat. In addition, either Senator John Thune (R-SD) or Senator John Cornyn (R-TX), senior members of the Committee on Finance, may also need to be replaced if one is elected to succeed Senator Mitch McConnell (R-KY) as Senate Majority Leader.

Looking ahead, House Republican leaders have been signaling their plans for early and rapid progress on a budget reconciliation bill in 2025 for months. This special legislative process sets up consideration of a tax and spending bill that cannot be filibustered in the Senate and can pass on a simple majority. Changes to Social Security and non-germane content (i.e., policies unrelated to taxes and spending like immigration reform) aren't allowed without a 60-vote waiver. Even still, Republican leaders may look for ways to shoehorn in policy changes that the Senate Parliamentarian might accept as germane because they implicate revenues. However, at least one Senate Republican has advocated for a more extended timeline, suggesting that because there remains a full year until the TCJA provisions expire, lawmakers could use that time wisely to draft a considered and comprehensive bill.

The House Republican game plan to move a reconciliation bill fast faces some real challenges. In the House, reconciliation bills tend to pass with less drama than the Senate because the party in control typically can afford to lose a few dissenters, but next year may be different. If House Republicans hold a majority barely above 218 members and every vote is needed to pass a reconciliation bill, that means the tail can wag the dog in terms of making demands for policy changes. This happens all the time in the Senate, but rarely in the House. 

If past is prologue, the timetable for assembling and advancing a reconciliation bill will be buffeted by inevitable delays, political drama, and departures as the Trump administration selects its appointees and nominations. Presidential appointments of sitting members may be scrutinized because even a temporary vacancy could stymie House legislative work for months without a functioning majority. In other words, reconciliation will likely be tracked on a calendar rather than a stopwatch.
 
In the coming weeks, we will take a closer look at the key lawmakers, proposed tax breaks, revenue raisers, and other issues in play for next year's Super Bowl of tax. #TaxTake

Upcoming Speaking Engagements and Events

Marc is speaking at the TEI Nebraska Chapter Fall Seminar today. He will also speak at the University of Texas School of Law 72nd Annual Taxation and BlueCross BlueShield 2024 National Tax conferences on December 4.

Loren will speak at TEI Carolinas Chapter Tax Update Seminar on November 13 and the TEI New York 61st Annual Tax Symposium on December 5.

In the News

In Roll Call, Marc stressed the need for presidential candidates to focus on expiring tax provisions.

In Tax Notes, Jorge commented on the uncertain future of funding for the IRS following President-elect Trump's victory and Republican control of Congress, while Marc discussed the potential for fast tax action post presidential election. 

In Bloomberg Law, Marc commented on the GOP takeover of the Senate and Mike Crapo's (R-ID) new pivotal role as Chair of the Senate Finance Committee and Jorge highlighted the importance of Senator Crapo's role in drafting tax legislation next year.

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