House Budget Committee approves resolution for reconciliation bill addressing taxes and other issues

In brief

What happened?

The House Budget Committee on February 13 by a party-line vote of 21 to 16 approved a fiscal year (FY) 2025 budget resolution that directs the House Ways and Means Committee to approve changes in tax law that increase federal budget deficits by no more than $4.5 trillion over 10 years. The budget resolution directs other House committees to reduce federal spending by at least $1.5 trillion.  

The Senate Budget Committee on February 12 approved a differing FY 2025 budget resolution, by a party-line vote of 11 to 10, that contains budget reconciliation instructions related to border and defense spending and domestic energy production. The budget resolution does not contain tax reconciliation instructions. Under the Senate approach, tax legislation would be addressed in a second budget reconciliation authorized under an FY26 budget resolution.   

The House could vote on the House Budget Committee’s FY 2025 budget resolution as early as the week of February 24, following a President’s Day recess period the week of February 17. The outlook for Senate action on a budget resolution remains uncertain in the wake of the House Budget Committee having successfully advanced their one-bill reconciliation instruction, though it remains possible the Senate Budget Committee resolution could proceed to the floor next week. 

Observation: House Republican leaders are pursuing a one-bill reconciliation strategy that they hope could result in enactment of tax and spending reforms before the end of May. Senate Republican leaders are pursuing a two-bill reconciliation strategy, with action on the first reconciliation bill to be completed by spring and action on a second reconciliation bill dealing with tax and spending proposals to be completed before Congress begins an August recess.   

Why is it relevant?

Both the House and Senate must adopt an identical budget resolution to unlock budget reconciliation procedures that would allow legislation to advance with only Republican votes in the Senate, instead of the 60 votes generally needed to consider bills in the Senate. If House Republicans are successful in advancing their one-bill strategy, it could accelerate action on tax legislation and the other parts of President Trump’s legislative agenda.   

The budget resolution reported by the House Budget Committee sets a non-binding March 27 deadline for Ways and Means and other House committees to approve budget reconciliation legislation. The budget resolution also directs the Ways and Means Committee to increase the statutory debt limit by $4 trillion.   

Observation: The March 27 target date for Ways and Means Committee action could change during negotiations between the House and Senate on a final joint budget resolution and in any event the Senate Parliamentarian has previously ruled these deadlines to be non-binding.  

Action to consider 

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