The White House is rolling out an overview of President Donald J. Trump’s new tax cut proposal, which is expected to be soon introduced as legislation in Congress. On Thursday, White House press secretary Karoline Leavitt outlined the plan shortly after Trump met privately with Republican lawmakers who have been at an impasse over how to proceed with the legislation.
“So these are the tax priorities of the Trump administration that the President has laid out for Members in that meeting today,” Leavitt announced before listing off a series of overhauls to the tax code. According to Leavitt, President Trump expects the plan to include no tax on tips—noting that this was “a very public campaign promise the President made”—no tax on senior citizens’ social security, no tax on overtime pay, a renewal of the tax cuts enacted by Trump during his first term, an adjustment to the SALT cap, the elimination of special tax breaks for billionaire sports team owners, closing the carried interest loophole, and new tax reductions for companies that locate their production in the United States.
CONGRESS DIVIDED?
Two of the plan’s most contentious provisions will likely be the proposals to close the carried interest loophole and adjust the tax code’s SALT cap. The carried interest loophole results from the different tax treatment of interest on assets held over a certain period of time. If that interest is held for three years, it is treated as a long-term capital gain and taxed at a much lower rate than if it had been realized essentially as annual income. Changes to the loophole are fervently opposed by private equity, real estate, and hedge fund managers who use it to reduce their tax burdens.
Additionally, Congress appears divided on what changes should be made to the SALT cap, a provision allowing taxpayers to itemize as a deduction their state and local taxes on their federal income tax return. This provision is popular in high-tax states as it allows residents to offset that burden by reducing what they owe on the federal income tax. In 2017, President Trump capped the SALT deduction at just $10,000—significantly limiting the deduction individuals living in high-tax states can claim. However, the President has signaled he is open to lifting the cap, though some lawmakers want it abolished entirely.
Meanwhile, Republican lawmakers on Capitol Hill are also divided on how to amend the tax code to implement Trump’s proposed cuts. House and Senate Republican leaders are at odds on whether to tackle the tax cuts with border security funding and other priorities in one budget reconciliation bill or separate the cuts into their own budget measure, resulting in two bills.
BREAKING – Trump administration tax plan:
– No tax on tips
– No tax on seniors’ Social Security
– No tax on overtime pay
– Renewing the Trump Tax Cuts
– Adjusting the SALT cap
– Eliminating special tax breaks for billionaire sports team owners
– Closing the carried interest… pic.twitter.com/QRSNVrasky— Insider Paper (@TheInsiderPaper) February 6, 2025
