House Republicans Push Forward on $4.5 Trillion Tax Bill: What You Need to Know

House Republicans are accelerating efforts to finalize a massive $4.5 trillion tax package, seeking to reshape the tax landscape ahead of the 2026 sunset of the 2017 Trump tax cuts. With Memorial Day as the informal deadline, the clock is ticking for lawmakers — and for taxpayers preparing for major changes.

Here’s where things stand today.

1. Where Do We Stand on Current Tax Legislation?

House Republicans, led by Ways and Means Committee Chairman Jason Smith (R-Mo.), are drafting a sweeping bill that would lock in many of the individual and business tax cuts enacted under the 2017 Tax Cuts and Jobs Act (TCJA).Negotiations are ongoing, with party leadership aiming to introduce a formal bill by early June. The goal is to demonstrate legislative momentum ahead of the 2026 expiration of many TCJA provisions.

2. What Tax Regulations Are Set to Expire?

If Congress takes no action, key parts of the TCJA will sunset at the end of 2025, including:

• Individual income tax cuts, resulting in higher tax brackets

• Higher standard deductions

• Expanded child tax credit

• Estate and gift tax exemption increases

• Pass-through business income deduction (Section 199A)

Without an extension, taxpayers — both individuals and businesses — could face significantly higher tax bills beginning January 1, 2026.

3. What Are the Proposed Items Being Discussed?

The $4.5 trillion proposal currently includes:

• Permanent extension of individual income tax cuts from the 2017 TCJA

• New tax incentives for manufacturers and the auto industry

• Expanded deductions for vehicle purchases and auto loans

• Potential limits on certain business deductions to control the bill’s cost

• Rollbacks or caps on green energy tax credits created under the Inflation Reduction Act

Republicans are framing the bill as a pro-growth, pro-American industry package — but internal debates over fiscal responsibility are still ongoing.

4. Which Items Are Most Likely to Pass?

Given the political environment, the most likely provisions to pass are:

• Permanent extension of lower individual tax rates — highly popular among voters

• Business incentives for U.S.-based manufacturing — strong bipartisan interest

• Targeted extensions of Section 199A pass-through deductions for small businesses

On the other hand, controversial rollbacks of green energy credits and large-scale new deductions may face tougher scrutiny in the Senate, even if the House passes them.

5. What This Means for Individuals and Businesses

• Individuals: Without congressional action, many middle- and upper-income taxpayers will see noticeable tax increases starting in 2026. Planning around standard deductions, charitable giving, and estate tax thresholds will become critical.

• Businesses: Companies may face uncertainty around key deductions. Manufacturers, in particular, stand to benefit if proposed incentives pass, but firms relying on clean energy credits could lose valuable benefits.

In short, the next 12 months are pivotal for strategic tax planning.

6. How to Tax Plan for These Potential Changes

Proactive tax planning should start now:

• Maximize current deductions and credits while they are still available

• Accelerate income into 2025 if tax rates are expected to rise in 2026

• Review estate plans to leverage current gift and estate exemptions before they potentially revert to lower thresholds

• Evaluate entity structures for pass-through businesses to optimize Section 199A benefits

• Monitor green energy investments for potential shifts in available credits

  
  

At Bizora AI, we’re staying ahead of these developments to help individuals, CPA firms, and businesses build resilient tax strategies in an evolving environment.