House approves budget resolution for reconciliation tax and spending reforms

In brief

What happened?

The House on February 25 by a vote of 217 to 215 approved a fiscal year (FY) 2025 budget resolution that directs the House Ways and Means Committee to approve net tax cuts of $4.5 trillion over 10 years. Under the House’s “one big, beautiful bill” approach for reconciliation legislation, the budget resolution directs other House committees to reduce federal spending by at least $1.5 trillion but makes approval of the full $4.5 trillion in net tax cuts contingent on Congress achieving a higher goal of $2 trillion in spending cuts. The House budget resolution also proposes a $4 trillion increase in the current $36.1 trillion statutory limit on federal debt. 

The Senate on February 20 by a vote of 52 to 48 approved a "skinny” FY 2025 budget resolution that contains budget reconciliation instructions related to border and defense spending, domestic energy production, and a minimum level of unspecified spending cuts. The Senate-passed budget resolution does not contain tax reconciliation instructions. Under the Senate two-bill approach for reconciliation legislation, tax cuts policy changes and additional spending cuts would be addressed in a second budget reconciliation authorized under an FY26 budget resolution.

A budget resolution does not require the president’s signature, but both the House and Senate must adopt an identical budget resolution to unlock budget reconciliation procedures that would allow legislation to advance with a simple majority vote in the Senate, instead of the 60 votes generally needed to consider bills in the Senate.

House and Senate leaders will need to decide how best to resolve differences between budget resolutions passed by each chamber, either through a House-Senate conference committee or by the House and Senate trading proposed amendments to the resolutions passed by each chamber. 

Why is it relevant? 

Successful action by House Republicans to advance their one-bill strategy for an FY 2025 reconciliation bill could accelerate action on legislation addressing expiring Tax Cuts and Jobs Act (TCJA) provisions and the other parts of President Trump’s legislative agenda.  

Action to consider 

Business leaders and individuals will need to evaluate the potential effect of a reconciliation tax cut and spending cut bill on the US economy, business, and individuals.