By Richard Rubin
Updated March 12, 2025
WASHINGTON—Senate Republicans are planning tax reductions that go well beyond an extension of President Trump’s expiring tax cuts.
On the menu: Reviving lapsed business tax breaks, expanding the child tax credit, loosening the cap on the state and local tax deduction and incorporating Trump’s ideas for eliminating taxes on tips, overtime and Social Security benefits, said Finance Committee Chairman Mike Crapo (R., Idaho), who ticked through a list of ideas Wednesday that could easily top $5 trillion or more over a decade.
On top of that, Crapo said, senators have submitted about 200 additional tax ideas to him, such as an expanded low-income housing tax credit, changes to the Opportunity Zone program for investments in low-income areas and further cuts in the estate tax. The final bill won’t include all of those proposals, Crapo said, but some will get in.
“The price of this bill grows and is a bigger deal than everybody is focused on,” Crapo said Wednesday at the U.S. Chamber of Commerce as he urged business executives to get behind the Republican tax agenda.
Finance Committee Republicans are scheduled to meet with Trump at the White House on Thursday as talks heat up on the tax-and-spending bill that will carry the bulk of the president’s legislative agenda in the unified Republican government. Their House counterparts on the Ways and Means Committee have been hashing out their bill in closed-door sessions this week.
The House and Senate, both controlled by Republicans, must agree twice to maneuver the bill through Congress without Democratic votes. First, they have to settle on a fiscal framework and then they have to write the detailed legislation.
They have been stuck for months on that first step. In February, the House set its framework, calling for at least $1.5 trillion in spending cuts over a decade and $4 trillion to $4.5 trillion in tax cuts, plus money for border security and national defense.
The Senate is moving much more slowly, and it could be weeks before there is a House-Senate deal on a framework.
Crapo said senators are interested in spending cuts, too, but they haven’t hashed out the exact contours. Like the House, the Senate will also count on some revenue from faster-than-forecast expected growth. And they may also look at spending cuts that happen outside this tax bill as they try to measure the ultimate effect on budget deficits.
“We’ve got 51 senators to get on the same page, and when I know what that page is, I’d be glad to let everybody know,” Crapo told reporters.
Crapo’s outline for the tax bill starts with extending the tax cuts from 2017 that are expiring at the end of the year. Without congressional action, taxes would go up on most households in 2026, with marginal rates rising and the standard deduction and child tax credit shrinking.
Avoiding those tax increases costs about $3.8 trillion, Crapo said. He wants that to count as $0 for official scoring purposes, arguing that continuing current policy shouldn’t count as a cost. That is the easiest procedural path to achieving Senate Republicans’ top goal: making those tax cuts permanent.
On top of that, Crapo wants to revive business provisions for research deductions, interest expenses and capital costs that expired or phased out already under the 2017 law. Last year, Senate Republicans blocked a bipartisan bill that would have continued them. That is another $500 billion, Crapo said.
Trump’s ideas have a wider range of cost estimates, Crapo said, and could land at anywhere from $300 billion to $4 trillion. Lawmakers are still working on the exact language for how to lower or eliminate taxes on tips, overtime and Social Security benefits.
Crapo said he is interested in expanding the nonrefundable portion of the child tax credit, which goes to people who pay net income taxes but not to many lower-income households. That is currently $2,000 and it isn’t indexed to inflation. Boosting that to $2,500 would be more than $300 billion, according to a calculator from the Committee for a Responsible Federal Budget.
An increase in the $10,000 cap on state and local tax deductions is necessary to get the bill through blue-state Republicans in the House. Crapo said he expected House members to resolve that issue. Then there are senators’ individual requests.
“The list goes on and on,” Crapo said. “We need to do some of those, and so there is a price tag there.”