Tracking Tax Reform in 2025
Congress is focused on addressing the pending expirations of the Tax Cuts and Jobs Act (TCJA) prior to the end of this calendar year. Here’s where things stand and what market participants should know.

NOTE:
The following article will continue to evolve as updates emerge. We will attempt to annotate when major changes and clarifications occur. It is intended to provide updates on current events and is not intended to provide legal or financial advice or counsel as to any particular situation. The National Association of Bond Lawyers (NABL) takes no responsibility for the completeness or accuracy of this material. You are encouraged to conduct independent research of original sources of authority. If you discover any errors or omissions, please direct those and any other comments to NABL.
Major Update
Senate Finance Releases Text
On the evening of June 16, Senate Finance Committee Republicans released the text of their chamber’s tax package. Like the House-passed version of the bill, it includes two provisions of direct consequence to the municipal market, and numerous others that may be of indirect interest to municipal market participants.
In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA)—a sweeping reform of the U.S. tax code that included a number of permanent changes as well as other provisions set to expire at the end of Calendar Year 2025. The process leading up to the passage of TCJA included various threats to the tax-exempt municipal market. A version of the bill that passed the House of Representatives even included a widespread repeal of the tax exemption for qualified private activity bonds (PABs). The final enacted bill repealed the tax exemption for advanced refunding bonds.
Regardless of the outcome of the 2024 elections, municipal market participants have recognized the high potential for legislative action on tax reform in 2025 and—more specifically—the potential for threats to the tax exemption on municipal bonds to reemerge. NABL and other municipal market groups have launched an array of advocacy resources to enable and encourage market participants to advocate early and often for tax-exempt municipal bonds.
As the process to address looming TCJA expirations unfolds this year, developments will likely come piecemeal and through both formal and informal channels. In order to help NABL members stay on top of these developments we have created and will maintain this tracker to organize important updates chronologically. NABL members will receive urgent updates via “NABL Alert” emails.
Quick Resources
- Congress.gov Entry for OBBB >
- Text of Senate Finance Committee (as of 6/16/2025) >
- Text of House Passed-Bill (as of 5/22/2025) >
- Section by Section Summaries of Tax Title (as of 5/12/2025) >
- Does not reflect changes made prior to final House passage on May 22, 2025.
Relevant Scores

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Proposals of Interest
As of June 16, 2025
While the exclusion of provisions that would broadly threaten tax-exempt municipal bonds preliminary drafts thus far bodes well for the municipal market, both the House and the Senate have floated and even advanced various proposals of direct and indirect consequence to the municipal market. Below is a running list of various proposals that may be of interest to municipal market participants and where they stand. While NABL does not have an official stance on many of these policies, they are likely relevant to specific sectors of the market.
The “LIHTC Fix”
The Senate Finance Committee’s text proposes modifying the tax-exempt financing requirement for the 4 percent LIHTC credit. Under current law, a project may receive credit if more than 50 percent of the project’s eligible basis is financed with a tax-exempt bond subject to a state volume cap. The Senate bill would reduce this requirement to 25 percent of the eligible basis for bonds issued after December 31, 2025. The House version similarly included this change, but only for bonds issued after December 31, 2025 and before 2030.
State and Local Tax (SALT) Deduction
The Tax Cuts and Jobs Act (TCJA) capped federal individual income tax deductions for state and local taxes at $10k per year. The House proposal would raise the cap to $40k per year for taxpayers making $500k or less per year. Taxpayers making above $500k would see a gradual phaseout out of the expanded SALT deduction. The income and deduction cap thresholds would increase automatically by 1 percent from 2026 through 2033. The Senate Finance Committee’s draft language, however, would extend the current cap. Republican leadership has noted that the cap is still the subject of ongoing debate and negotiations. Both bills also include language targeted at applying the cap more broadly to encompass payments made by select partnership and S corporations in lieu of individual taxes.
“Endowment Tax”
Both chambers propose expanding the excise tax on applicable college and university investment income (primarily endowments), albeit at differing rates across a tiered system, see the chart below. Under existing law, a 1.4 percent tax is generally applied to the investment income of institutions with more than 500 students and whose investment assets exceed $500k per student. Both bills would also amend the calculation of assets per student to exclude international and undocumented students, which could impact select schools depending on their international student body.
HOUSE BILL
Endowment per Adj. Student | Tax Rate |
---|---|
$500,000 – $749,999 | 1.4% |
$750,000 – $1,249,999 | 7% |
$1,250,000 – $1,999,999 | 14% |
$2,000,000+ | 21% |
SENATE PROPOSAL
Endowment per Adj. Student | Tax Rate |
---|---|
$500,000 – $749,999 | 1.4% |
$750,000 – $1,999,999 | 4% |
$2,000,000+ | 8% |
Private Foundation Tax
Under current law, all private foundations that are exempt from taxation under IRC section 501(a) are subject to an excise tax equal to 1.39 percent of the net investment income of such foundation for the taxable year. The House bill would amend the current excise tax on net investment income framework for tax-exempt private foundations under IRC section 4940(a) with a tiered system, as follows in the chart below, while the Senate Finance draft maintains the current flat tax.
HOUSE BILL
Size of Assets | Tax Rate |
---|---|
$0 – $49,999,999 | 1.39% |
$50,000,000 – $249,999,999 | 2.78% |
$250,000,000 – $4,999,999,999 | 5% |
$5,000,000,000+ | 10% |
SENATE PROPOSAL
Size of Assets | Tax Rate |
---|---|
Any | 1.39% |
Energy Tax Credits
The code contains a number of tax credits designed to encourage investment in energy facilities and ongoing energy production. The Inflation Reduction Act of 2022 further expanded a number of those credits with an emphasis on clean and renewable energy investment. Both the House and Senate bills would terminate and accelerate the sunset of a number of these energy tax credits. The Senate Finance draft, however, is largely seen as a less aggressive phaseout of these credits.
Section 501(p): Suspension of Tax-Exempt Status of Terrorist Organizations
Early iterations of the House proposed bill included changes to section 501(p) of the Code. Existing law allowed the IRS to issue a letter revoking an organization’s tax-exempt status after a set process. Proposed changes would grant the Treasury Secretary the authority to suspend an organization’s tax-exempt status if, at any point in the preceding three years, the organization provided more than a minor amount of material support or resources to a listed terrorist organization. It would also subject the Treasury Department’s ability to make such a suspension to a set of procedural and due process protection. While the proposed inclusion of the provision stirred a number of questions and concerns for the non-profit section, it was omitted from the House-passed bill in the eleventh hour and does not appear in the Senate proposal at this time.
New Markets Tax Credit (NMTC)
The Senate version of the bill would permanently authorize the New Markets Tax Credit (NMTC) program. The House bill does not address NMTC, which is set to expire after December 31, 2025 without a further extension.
Timeline of Updates
January | February | March | April | May | June
[New Updates]
June
- [6/21/2025] JCT Releases Score for Senate Bill: The Joint Committee on Taxation (JCT) released a new report that estimates the Senate version of the tax bill will add about $440 billion to the federal deficit over the next 10 years. The score uses the Senate’s preferred current policy baseline model that effectively assumes a $0 cost of extending expiring provisions of the TCJA. Read Report >
Weekly Update: June 20, 2025
On Monday evening, the Senate Committee on Finance released text for the Senate’s version of the pending tax bill. Notably, neither the House nor Senate have thus far proposed provisions that would broadly reduce the ability of municipal issuers to issue tax-exempt municipal bonds. Learn more about various proposals of interest to the municipal market in both the House and Senate bills.
- [6/16/2025] Senate Finance Releases Text: The Senate Committee on Finance released text of its contribution to the Senate’s version of the tax bill. Notably, the text includes near identical changes to the volume cap tax-exempt financing requirements for LIHTC and the calculation of research and development expenditures for the purposes of qualified small issue bonds as those seen in the House bill. View Senate Text and Resources >
Weekly Update: June 13, 2025
Members of the Senate continued negotiations in their efforts to resolve remaining disputes on the Republican tax bill. While Senate Republicans appear close to releasing and possibly advancing their chamber’s version of the bill, it remains unclear how far they will depart from the version of the bill that passed the House last month. Republican leadership aims to pre-conference as much of the bill as possible in order to meet their goal of landing the tax package on the President’s desk before the July Fourth holiday. They admit, however, that outstanding disagreements between the chamber could drag the process deep into July and possibly beyond.
Weekly Update: June 6, 2025
The Senate returned from recess this week to the difficult task of advancing the tax bill passed by the House last month. A number of key disagreements remain unresolved between the House and the Senate that will complicate Republican leadership’s goal of delivering the final package to the President by July 4. Changes to energy tax credits, the state and local tax deduction, and Medicaid are among the thorniest issues for the chambers to reconcile. Another key challenge: making the math work. The Concurrent Budget Resolution passed in April provided different instructions to the House and the Senate. While the House was able to work out the math under their bill, the Senate must now do the same on their side.
- [6/4/2025] CBO Estimates $2.5 Trillion Deficit Under House OBBB: The Congressional Budget Office (CBO) released an estimate indicating that the House-passed version of the OBBB would add nearly $2.5 trillion to the federal deficit over the next 10 years.
- [6/4/2025] Trump Calls for End of Debt Ceiling: President Trump indicated in a Truth Social post that he would support bipartisan congressional efforts to abolish the federal debt ceiling, which is a self-imposed limit controlled through statute. The post appears to conflict with current congressional Republican efforts to address the federal debt ceiling through a one time increase via the OBBB along party lines.
May
Weekly Update: May 30, 2025
Senators will return to Washington, DC on Monday to begin work on the 1000+ page tax bill recently passed by the House. Speaker Mike Johnson (R-LA) was able to hold the majority of the Republican caucus together and narrowly pass the package out of the House, but its fate in the Senate faces significant headwinds. Many Republican Senators disagree with the House’s bill on a number of issues, including Medicaid cuts, phase outs of select energy tax credits, and the cap on state and local tax (SALT) deductions. Senate Majority Leader John Thune (R-SD) has promised Senate passage by July 4, but even if that date is reached, a conference committee may be needed to further iron out differences across the chambers.
- [5/28/2025] JCT Updates Score of House Bill: The Joint Committee on Taxation (JCT) released a revised score on the already House-passed version of the OBBB to account for various last minute changes, including the increase on the state and local tax (SALT) deduction cap to $40k. The new estimate places the cost of the bill at just over $3.9 trillion.
- [5/22/2025] House Passes OBBB: Early in the morning of Thursday, May 22, the U.S. House of Representatives passed its version of the OBBB (H.R 1) in an extremely narrow 215-214 vote. Two members of the Republican caucus joined all Democrats in voting against the measure, and one Republican member voted “present.” The package now heads to the Senate where it will almost certainly undergo substantial changes and possibly require a conference process prior to final passage. While the bill does focus on municipal bonds, it does include a number of provisions that will likely directly and indirectly impact the municipal market, including:
- [LIHTC and Housing Bonds] Sec. 111109. Modifications to low-income housing credit (LIHTC): Among various other changes, this section would alter the requirement for 4% LIHTC that at least 50 percent of the aggregate basis of the building and land be financed with tax-exempt bonds subject to a state’s private activity bond (PAB) volume cap. The new requirement would drop from 50 to 25 percent of the aggregate basis. Several past Congresses have floated this proposal, dubbed the “LIHTC Fix,” as a means to alleviate state volume cap pressures and expand LIHTC availability.
- [Qualified Small Issue Bonds] Sec. 111002. Deduction of domestic research and experimental expenditures: This section would create a new section of the code, Section 174A, that would allow taxpayers for a period of time to immediately deduct domestic research or experimental expenditures. Along with other coordinating changes, this provision would also harmonize these changes with the consideration of capital expenditures not taken into account when determining the aggregate authorized face amount for qualified small issue bonds under Section 144(a)(4)(C).
- [5/21/2025] OBBB Manager’s Amendment: The House Committee on Rules adjourned in the evening of May 21, 2025 without a vote on the package. Shortly thereafter, the Budget Committee reconvened and Republican leadership released text of a manager’s amendment that offers strategic changes to various portions of the OBBB in an effort to win over hardliners. Analysis on the changes is ongoing.
- [5/21/2025] Rules Committee Meeting: The House Rules Committee convened at 1:00am on Wednesday, May 21, to discuss and set the terms for a forthcoming floor vote on the One, Big, Beautiful Bill (OBBB) Act. House leadership is expected to introduce a manager’s amendment that would address outstanding policy disputes within the Republican caucus, including how to address the SALT cap. As of 11:00am, the Rules Committee hearing was ongoing and no manager’s amendment has been released. Speaker Mike Johnson (R-LA) is reportedly working with the SALT caucus on a deal to raise the SALT cap to $40k along with other promises and restrictions.
- [5/18/2025] Budget Committee Advances Tax Bill: The House Budget Committee voted to advance the tax bill out of committee during a hearing held late in the evening of Sunday, May 18. House leadership reportedly offered to accelerate the implementation date for new proposed work requirements on Medicaid from 2029 to December 31, 2026 in order to coax several fiscal conservatives who had threatened to reject the bill. The four hardline conservatives, who tanked the Friday committee vote, cast their Sunday vote as “present” in order to allow the bill to proceed out of committee. Fiscal conservatives continue to push for deeper cuts to Medicaid and select clean energy tax credits, while the “SALT caucus” continues to reject the proposed increase to $30k for the state and local tax (SALT) deduction.
- [5/16/2025] Budget Committee Rejects Tax Bill: The House Budget Committee voted 16-21 against advancing the One, Big, Beautiful Bill (OBBB) Act. Several conservative Republican members defected from the rest of the party citing concerns pertaining to outstanding JCT scores on certain aspects of the bill and a desire to see deeper cuts to energy tax credits and Medicaid.
Weekly Update: May 16, 2025
The House Ways and Means Committee released its highly anticipated text for extending the TCJA and various other tax proposals. While the text did not include any proposals that would broadly curtail the tax-exempt bond market, the process of tax reform still has a long way to go.
What’s Next
The House Budget Committee has scheduled a hearing for 9:00am ET on Friday, May 16, where members will stitch together the various committee contributions into a comprehensive bill. As of Friday morning, it remains unclear if House Republicans have enough votes to pass the measure out of the Budget Committee.
After the Budget Committee completes its work, the House Rules Committee will convene to iron out the final procedural considerations prior to a full floor vote on the measure. An amendment to address outstanding policy debates, such as potential changes to the $10k state and local tax (SALT) deduction cap, may be introduced during the Rules Committee meeting. A full floor vote would then follow.
Assuming it passes a full floor vote, the measure would then head to the Senate, where a number Republicans have already indicated their disapproval of various aspects of the House bill. The concurrent budget resolution, passed by both chambers in April, instructs Senate Republicans to make significantly smaller federal spending reductions than the House. Senate Republicans also plan to rely on an accounting method known as “Current Policy Baseline,” which would effectively allow them to zero out the projected cost of extending the Tax Cuts and Jobs Act (TCA) provisions otherwise set to expire at the end of the calendar year.
- [5/15/2025] House Budget Schedules Markup: The House Committee on Budget noticed a markup hearing for the One, Big, Beautiful Bill Act scheduled for the morning of Friday, May 16. The Budget Committee’s role is to assemble the various contributions passed by each committee into a comprehensive bill. As of the afternoon of Thursday, May 15, it remains unclear if the Budget Committee has the votes to advance the package.
- [5/14/2025] W&M Advances Package in Markup: The Ways and Means Committee held a markup into the night on May 13. The Committee advanced the bill along party lines, clearing a major obstacle and placing the package on a clearer path to a full floor vote before Memorial Day. NEXT STEPS: After all the House Committees clear their portions of the package, the House Budget Committee will stitch the various sections together into one comprehensive package. The House Rules Committee will then schedule a hearing to finalize the procedures for a floor vote. Amendments may be offered at the Rules Committee to address last minute items, including potential changes to the proposed $30k cap to individual state and local tax (SALT) deductions. Municipal market participants should pay close attention to the procedural steps over the next several weeks. The Senate will also likely make changes to whatever package passes the House.
- [5/12/2025] W&M AINS Text Released: The Chairman of the Ways and Means Committee, Rep. Jason Smith (R-MO), released an Amendment in the Nature of a Substitute (AINS) to the text released on May 9. As expected, the updated text puts forth a host of revenue raising proposals that were absent from the first iteration of text released by the Committee. It also proposes elevating the cap on state and local tax (SALT) deductions from $10k to $30k, although the SALT caucus has already rejected this offer. Notably, the AINS does not include any immediately apparent proposal to broadly curtail the tax-exempt bond market. Instead, it proposes reducing the volume cap subjected tax-exempt bond financing requirement for 4 percent Low Income Housing Tax Credit (LIHTC) from 50 to 25 percent—a proposal colloquially known as the “LIHTC Fix.” It also proposes slight modifications for qualified small issue bonds. These observations result from an initial analysis conducted by NABL and may evolve as the market fully digests and analyzes the AINS. While the omission of provisions harmful to the tax-exempt bond at this juncture is highly welcomed news, the situation remains fluid and subject to rapid changes. Municipal market participants should continue to conduct outreach to the members of Congress to emphasize the importance of tax-exempt bonds to American communities.
- [5/10/2025] JCT Scores “Skinny” Bill: The Joint Committee on Taxation (JCT) released estimates for the House Ways and Means starting text, described immediately below, and scored the preliminary portions of the package to cost just under $5 trillion over the next 10 years. Read JCT Report >
- [5/9/2025] W&M Releases Tax Starting Text: The Ways and Means Committee released 28 pages of legislative text outlining a starting point for an upcoming House reconciliation bill. The bill notably does not include a number of outstanding policy items, including how the $10k cap on state and local tax deductions will be addressed. With the exception of a few small provisions, the text also does not include many revenue raising provisions (“pay fors”). While the legislative text does not include any provisions directly related to tax-exempt municipal bonds, it is critical to note that additional legislative text is likely between now and the scheduled Committee markup on Tuesday, May 13. Read W&M Starting Text >
- [5/9/2025] Bessent Estimates “X-Date” in August: Treasury Secretary Scott Bessent indicated in a letter to Speaker Johnson that the federal government would likely reach its “x-date,” the date on which the federal government will exhaust its cash and extraordinary measures, sometime in August. He urged Congress to address the federal government’s debt ceiling by mid-July to avoid disruptions. Congressional Republicans aim to address the federal government’s self-imposed borrowing limit via an upcoming budget reconciliation package. Read Letter >
Weekly Update: May 9, 2025
Key tax writers on the House Ways and Means Committee spent a large part of the week working to iron out outstanding policy disputes in anticipation of unveiling their contribution to the broader forthcoming reconciliation package. While major questions remain, Committee leadership could begin releasing legislative text in the coming days.
Initial text could come as soon as this afternoon (May 9), but may omit specific revenue raisers that would be included at a later time. Leadership aims to begin the Committee’s markup next Tuesday, May 13, but that date is subject to change pending the outcome of negotiations through the weekend.
Speaker Johnson (R-LA) continues to express confidence in his chamber’s ability to pass a full bill prior to its upcoming recess for Memorial Day. The Ways and Means Committee hitting its targets for a markup next week is essential to the House hitting its broader timelines. Amid several policy impasses, the Speaker also indicated that the House may not hit its target of $2 trillion in cuts, indicating that $1.5 trillion may be a more realistic goal. Per the Budget Resolution’s instructions, if the House reduces its spending reduction goal by $500 billion it must also reduce its planned expenditures by the same amount.
While details on potential threats to the municipal bond market remain scarce, advocates are generally hearing positive reactions from the Hill. It is critical to note, however, that nearly all proposals, including changes to the tax-exempt status of qualified bonds, remain on the table as potential “pay fors” pending the outcome of broader policy debates such as those listed below.
Focus on SALT
How to address the cap on state and local tax (SALT) deductions remains one of the biggest sticking points for the caucus. Republicans from high tax states such as California, New York, and New Jersey have long demanded a substantial increase to the cap. Many view the decision to instate a $10k cap on the deduction as having cost several high tax state Republicans their seats, and possibly the Republican party its majority in the House, after the 2018 elections. Any final tax package is almost certain to contain some degree of relief on the cap, but as of Friday morning, negotiators have yet to find a compromise that will satisfy the “SALT caucus” of Republicans without significantly ballooning the cost of the package. Republican leadership initially offered to raise the cap to $20k and then $30k, but SALT Republicans have rejected both offers as insufficient and “insulting.” The $10k cap is a temporary provision enacted under TCJA that sunsets without action at the end of the calendar year.
Medicaid
Republican members of the House Energy and Commerce Committee also deliberated on how to accomplish their Committee’s budget instructions to reduce federal spending by nearly $800 billion. Hitting that threshold would almost have to include some degree of cuts to federal spending on Medicaid funding to state governments, which is distributed via Federal Medical Assistance Percentage (FMAP) formulas. Negotiators have proposed several options, including a per capita cap on state FMAP allocations. Such a move would overload a greater share of the cost of Medicaid to state governments and may result in states having to cut back on benefits to residents. Reporting from the Hill suggested the proposal was both “on” and definitively “off the table” throughout the week. At this point it remains unclear to what extent Congress will alter Medicaid funding in its upcoming package.
White House Proposals
The Administration has also reportedly sent its wish list of tax proposals to the Hill in both writing and via several phone calls between President Trump and congressional leaders. The White House is looking to add a number of campaign promises—including no taxes on tips and overtime—into the mix that are in addition to the extensions of TCJA provisions. The President has also thrown tentative support behind some proposals that would raise revenue such as closing the carried interest loophole and adjusting the tax marginal tax rate.
It is critical for municipal market participants to start and maintain a dialogue with members of Congress on the importance of tax-exempt bonds to their district and constituents.
Debt Ceiling
The reconciliation package remains tied to the federal government’s need to address its debt ceiling. Treasury Secretary Scott Bessent has indicated he would provide updated estimates in early May for the federal government’s “x-date,” the day on which the federal government will exhaust its extraordinary measures for handling the debt ceiling. While he did not provide estimated dates, Bessent did indicate that the federal government’s debt ceiling was on a “warning tack.” Outside groups estimate the federal government will reach its “x-date” sometime between August 1 and October 31, 2025.
Weekly Update: May 2, 2025
Various House Committees have begun marking up, and in some cases advancing, their contributions to a larger reconciliation bill. Municipal market participants await insights from the House Ways and Means Committee, which has been instructed to make trillions of dollars of cuts and would have jurisdiction over any potential changes to tax-exempt municipal bonds.
Key updates from April 30, 2025 markups held by other committees follow below. While the Ways and Means Committee is rumored to hold its markup next week, but that timing is highly subject to change. Congressional tax writers are hoping other committees will complete their work prior to finalizing the tax section of the package.
A number of key policy issues remain unresolved, including:
- How to address the demands of “SALT Republicans,” a cohort of moderate Republican hailing from states with high state and local tax (SALT) deduction claims? The cohort seeks a meaningful increase to the $10k cap on the SALT deduction instated by the TCJA of 2017.
- What changes could be made to Medicaid? The Energy and Commerce Committee has been instructed to pursue policy changes that would lower the deficit by $800 billion of the next 10 years, an amount that would likely require some change to cost sharing relationship between the federal and state governments.
- To what extent will new tax breaks proposed by President Trump, including no longer taxing earned tips and overtime pay, be worked into the broader package?
At this point in time, the tax exemption on municipal bonds shares broad bipartisan support, but decisions on large outstanding policy questions (likely over the weekend and into early next week) will influence the Ways and Means Committee’s need for additional revenue offsets. It is likely the Committee will begin releasing legislative text for proposed tax law changes between now and the next two weeks, although that expectation is subject to change pending the outcomes of ongoing negotiations.
Even beyond these policy disputes within the House, the two chambers of Congress continue to work under differing sets of instructions for their respective committees. The House is pursuing work to substantially reduce certain federal outlays, while the Senate aims to pursue a “current policy baseline” strategy that would effectively allow them to assume a zero dollar cost for extending TCJA provisions.
It is critical for municipal market participants to start and maintain a dialogue with members of Congress on the importance of tax-exempt bonds to their district and constituents.
What’s Next?
Speaker Mike Johnson (R-LA) and other members of House Republican leadership continue to indicate that they want to pass their chamber’s version of a reconciliation package by the Memorial Day holiday. This deadline is ambitious but certainly possible. Other Republican members of Congress have indicated that timing on the chamber’s work may slip into June. Once the House passes its version of the bill, the Senate will need to work on its version of the bill. The chambers would need to iron out differences via either a conference committee after the Senate passes its own version, or by “pre-conferencing” outstanding differences before the Senate votes on a bill.
The White House has indicated it now views July 4 as a deadline for final enactment of the package, although many view this timeline as overly ambitious. Treasury Secretary Bessent will release updated estimates on the timing of the “x-date,” the day on which the federal government will exhaust its extraordinary measures for handling the debt ceiling. Outside groups estimate the federal government will reach its “x-date” sometime between August 1 and October 31, 2025. Assuming Republican leadership continue to plan to use a reconciliation package to address the debt ceiling, the “x-date” would be a near-essential deadline to conclude work.
April
- [4/30/2025] Transportation and Infrastructure Markup: The House Committee on Transportation and Infrastructure (T&I) held markup on and advanced its contributions to the House’s reconciliation package. As proposed, the legislation would reduce the federal deficit by $10 billion over the next 10 years, make a series of increased investments to the Coast Guard and air traffic controllers network, rescind a host of funding streams authorized under IRA, and impose an annual car registration fee of $250 for electric and $100 for hybrid vehicles. The markup notably scrapped a plan to impose a $20 annual vehicle registration fee that had initially been proposed by the committee. Committee Information >
- [4/30/2025] Financial Services Markup: The House Committee on Financial Services held markup on and advanced its contributions to the House’s reconciliation package. As proposed, the legislation would reduce the federal deficit by $1 billion over the next 10 years, fold the Public Company Accounting Oversight Board (PCAOB) under the SEC, substantially cut funding to the Consumer Financial Protection Bureau (CFPB), rescinds certain funding for the Department of Housing and Urban Development (HUD) authorized under the Inflation Reduction Act (IRA), and a host of other changes in the financial services and consumer protection space. Committee Information >
- [4/29/2025] Johnson Signals W&M Markup Next Week: Speaker Mike Johnson (R-LA) told reporters that he expects the House Ways and Means Committee, which has jurisdiction over the tax code, to markup and vote on its portion of the reconciliation package next week. Various other committees began work on their aspects of the large forthcoming package, but the Ways and Means Committee has reportedly been waiting to conduct its process until it knows the outcome of work conducted by other committees. To date, no legislative text proposals have been made public from the Ways and Means Committee.
- [4/28/2025] Markup Begins: Various House Committees begin markup on their contributions to a larger package. Notably, the House Ways and Means Committee is not expected to begin public markup work on their portion of the bill until the following week.
Weekly Update: April 25, 2025
Members of the House and Senate will return to Washington, DC next week after a two-week recess. The House will likely immediately dive into its work of crafting a reconciliation package now that both chambers have reached a concurrent budget resolution. Some House committees may begin markup of various aspects of the package as early as next week. We expect the House Ways and Means Committee, which has jurisdiction over tax law changes, may possibly begin its work the following week. It is possible, although not certain, that specific legislative text proposals could trickle out of Congress as early as next week.
- [4/14/2025] HFSC Letter in Support of Munis: Republican leaders on the House Financial Services Committee send a letter (dated April 10, 2025) in support of preserving tax-exempt municipal bonds to the leadership of the Ways and Means Committee.
Both Chambers Agree to Concurrent Budget Resolution
In a major advancement for Republicans’ economic agenda, the House passed the Senate’s revised budget resolution on Thursday, April 10, 2025. The move came after fiscal conservative holdouts forced Speaker Mike Johnson (R-LA) to scrap an earlier vote planned for that Wednesday. While the concurrent resolution’s instructions differ for tax writing committees across the House and the Senate, it does allow both chambers to begin the arduous work of crafting forthcoming reconciliation packages—albeit along two paths and under differing targets.
- [4/10/2025] House Passes Revised Senate Budget Resolution: Two House Republicans joined all the Democrats in voting against the measure, which ultimately prevailed with the support of the remainder of House Republicans in a 216 to 214 vote.
- [4/5/2025] Senate Passes Budget Resolution: Early on Saturday morning, the Senate voted along party lines (51 to 48) to adopt the budget resolution outlined immediately below.
- [4/4/2025] House Dear Colleague Letter: A bipartisan group of 25 members of the House led by Rep. Don Bacon (R-NE) sent a Dear Colleague letter in support of tax-exempt municipal bonds to Ways and Means leadership. Read Letter >
- [4/2/2025] Senate Unveils New Budget Blueprint: The Senate Committee on Budget unveiled a new budget resolution that moves the Senate’s starting reconciliation salvo closer in line to the House but demonstrates continued differences between the two chambers. View Second Proposed Senate Budget Resolution >
- What’s In the Resolution: The resolution brings the Senate’s proposed plan closer inline to those in the House, but it continues to deviate from the House version in some potentially significant ways. It provides for a $5 trillion increase to the federal debt; instructs Committees to aim for $1.5 trillion in cuts to federal expenditures; but notably sets a deficit reduction floor for Committees of a few billion dollars.
- “Current Policy” vs. “Current Law”: The Senate’s second resolution relies on a method of accounting for the cost of TCJA extensions known as “current policy” baseline, which allows the cost estimation of any forthcoming reconciliation package to assume expiring TCJA provisions exist in perpetuity when considering the baseline. The move essentially allows the Senate to project that the cost of further TCJA extensions will not materially increase the federal government’s tax expenditures and would greatly reduce pressure to find revenue offsets to pay for such extensions. It remains a significant difference from the House budget resolution, which relies on “current law” baseline and assumes extending expiring TCJA provisions, which expire on December 31, 2025 absent legislation, will increase federal expenditures for the purpose of accounting the cost of a forthcoming reconciliation package.
- Next Steps: The Senate could begin the process on voting on the package as soon as Thursday, April 3. A Senate vote on the package by week’s end would possibly allow the House to clear it before Congress adjourns for a two week Easter recess. Speaker Johnson has reiterated his desire to deliver a final package to the President for signature by Memorial Day, but many uncertainties remain that could drag the reconciliation debate through the summer and into fall.
March
Weekly Update: March 28, 2025
Congressional leaders in both chambers have largely coalesced around idea of tackling all of the President’s financial agenda in “one, big beautiful” bill. The House and Senate have passed competing budget resolutions, and differences between the two must be ironed out in a concurrent resolution to begin the process of crafting a forthcoming reconciliation bill. Senate leadership is hopeful, however, that they can pass a budget resolution that aims to tackle the same breadth of agenda items as those listed in the House resolution—including expirations of select TCJA provisions and addressing the federal government’s debt limit. Senate Budget leadership aims to craft and pass a budget resolution that concurs with the broad goals of the House’s resolution, but provides differing instructions to Senate Committees than those provided to House Committee’s. Such a move would allow both chambers to proceed with reconciliation work, while punting more specific policy disagreements to be ironed out at a later stage.
At this point in time, the Senate aims to pass a new budget resolution prior to adjourning for its Easter recess on April 11. Meanwhile, the House Ways and Means Committee continues to meet and discuss initial policy plans for a forthcoming reconciliation package.
Revised estimated timelines for the federal government’s x-date now suggest that Congress has until late summer or early fall to address the debt ceiling. These estimates will be further updated once the federal government passes the April 15 deadline for income tax filings. Later estimated dates suggest Congress has more time to include further financial policy goals, such as extending TCJA provisions, in a legislative vehicle to address the debt ceiling.
- [3/26/2025] CBO: X-Date Likely in August/September: The Congressional Budget Office (CBO) released its estimate that “if the debt limit remains unchanged, the government’s ability to borrow using established ‘extraordinary measures’ will probably be exhausted in August or September 2025.” Read CBO Report >
February
Weekly Update: February 28, 2025
Late in the evening on February 25, the House of Representatives passed its version of a budget resolution. This version of the budget resolution differs from a resolution that passed the Senate last week. Tuesday’s vote represents a significant advance in the Republican effort to address the expirations of the TCJA in the first half of this year, but a number of challenges remain. While this plan is ambitious, municipal market participants should prepare for developments to occur along this timeline. Read Full Update on House Resolution >
- [2/25/2025] House Passes Budget Resolution: Late in the evening on Tuesday, February 25, the House of Representatives passed its version of a budget resolution. This version of the budget resolution differs from a resolution that passed the Senate last week.
- What is in the Resolution: The House resolution establishes a federal budget for FY2025, sets budgetary levels for the federal government for FY2026-2034, and provides instructions to specific Committees to begin working on a forthcoming budget reconciliation package that would reconcile federal revenues and expenditures to reach these budgetary levels. Those instructions direct the Ways and Means Committee to increase the federal expenditures over such time by no more than $4.5 trillion. This deficit threshold is to be reduced proportionally in the event that Committees, including the Committee on Ways and Means, fail to enact offsets that reduce that deficit by at least $2 trillion.
- What It Means in General: House Republicans plan to use this budget resolution to begin a budget reconciliation process that seeks to increase federal expenditures, which would include outlays and tax expenditures, by $4.5 trillion and reduce federal spending or increase revenues by $2 trillion. This subsequent reconciliation bill would aim to address the majority of the Republican party’s economic agenda—including extension and modification of select expiring provisions of the TCJA, other tax priorities, increased spending on national and border security, and addressing the pending U.S. federal government debt ceiling.
- Next Steps: Both the House and Senate must pass identical budget resolutions for both chambers to commence work on a reconciliation package. It seems likely that the Senate will now shift toward the House’s strategy to advance their economic agenda via one large bill instead of two separate ones. Members of Congress, however, will likely need to iron out remaining substantive differences across the chambers via either a formal conference committee or an informal pre-conference process. Once both chambers agree to a budget resolution, we will likely see the House take a lead start in suggesting and vetting specific policy proposals consistent with and seeking to accomplish the goals set forth in the budget resolution. The process of reconciliation is rather rigid and involves a number of steps.
- What It Means for the Municipal Market: At this time, Republicans are still aiming to use this budget reconciliation process to address the debt ceiling. In theory, the process would need to conclude before the approach of the debt ceiling x-date, which is likely some time in or around May. This week’s vote represents a significant advance in the Republican effort to address the expirations of the TCJA in the first half of this year. While this plan is ambitious, municipal market participants should prepare for developments to occur along this timeline. Despite inclusion on the House Budget Committee’s “Menu of Options,” the tax exemption continues to enjoy broad bipartisan support, and we have heard minimal threats to the tax-exempt status of municipal bonds from congressional offices. It is worth noting, however, that details surrounding offsets and revenue raisers will likely only manifest after both chambers pass identical budget resolutions and the elimination or reduction of the tax exemption for municipal bonds remains a potential option for negotiators. Municipal market participants should continue to advocate on behalf of the tax exemption.
WeeklY Update: February 21, 2025
While the House remained in recess this week, Republican leadership and negotiators were busy calling members to whip votes in favor of the House budget resolution in advance of potential floor action when members of Congress return to Washington, D.C. next week. The House package aims to advance much of the President’s economic agenda, including addressing expiration of certain TCJA provisions, via one bill. It faces potential headwinds, however, from moderate Republicans who fear the measure may pave the path for too drastic of cuts to federal spending. Despite apparent dismay from the President earlier this week, the Senate held a floor vote on Thursday to advance its more limited measure that would save work on TCJA for a second bill later in the year. Both chambers must agree upon the same budget resolution to set high level spending parameters prior to beginning work on specific policy measures in a forthcoming reconciliation package.
- [2/20/2025] Senate Advances Budget Resolution: The full Senate voted 52 to 48 to advance the chamber’s version of a budget resolution.
- [2/19/2025] Trump Backs House Approach: After previously maintaining no affirmative preference on whether his economic agenda was advanced via one or two reconciliation packages, President Trump threw his support behind the House budget resolution in a Truth Social post. The move surprised Senate leadership who spent the week working to advance their own budget resolution that would lay the groundwork for a two bill approach. Vice President JD Vance later told negotiators that while the President preferred a single bill approach, the White House understood the need for a backup approach to advance as well.
Weekly Update: February 14, 2025
The House and Senate have released and advanced competing budget resolutions out of Committees. While both versions would officially kick start the budget reconciliation process, the two chambers have varying approaches on how to enact President Trump’s economic agenda. The House is pursuing “one, big, beautiful bill” that would attempt to tackle everything, including expiring provisions of the TCJA, in one sweep. Meanwhile, the Senate is advancing a narrower approach that aims to tackle energy, defense, and the border today, while saving TCJA for a later bill. Both packages propose cuts to federal spending, but the House’s proposal seeks to reduced federal costs by $1.5 to $2 trillion, which would put significant pressure on negotiators to find offsets.
- [2/13/2025] House Advances Budget Resolution: The House Budget Committee voted to advance its version of a budget resolution along party lines. Leaders of the House Freedom Caucus endorsed the package after striking an agreement that would effective limit the amount of tax cuts allowed in a forthcoming package if negotiators are unable to reach $2 trillion in spending cuts.
- [2/12/2025] House Unveils Competing Budget Resolution: In response to the Senate’s shift toward working on its own budget resolution, House leadership released their own version that seeks to tee up one forthcoming large reconciliation package. Unlike the proposal in the Senate, the House package would seek to tackle most of President Trump’s economic agenda, including expirations of the TCJA, in one singular reconciliation package. It would:
- Raise the debt ceiling by $4 trillion, which would effectively punt the next debt ceiling by an estimated two years
- Provide for $4.5 trillion worth of tax cuts and additional spending;
- Provide for $300 billion of new defense and border security spending;
- And, instruct negotiators to cut at least $1.5 trillion in other expenses.
- [2/12/2025] Senate Budget Committee Advances Resolution: After holding a markup of the budget blueprint released the week prior, the Senate Committee on Budget voted along party lines to advance the measure on to a floor vote.
- [2/7/2025] Senate Releases Budget Resolution: Coming out of a convening in Mar A Lago, the Senate Budget Committee Chairman, Lindsey Graham (R-SC), released his chamber’s budget resolution framework. Graham announced that the Senate Budget Committee would debate the blueprint next Wednesday and Thursday with a possible vote on the measure in the second half of next week. The Senate’s move comes as the House continues to work toward finding consensus on their chamber’s blueprint. The Senate’s blueprint is more limited in scope than what the House is expected to produce. It would authorize $85.5 billion in new annual spending to support investments in border security, national security, and domestic energy production.
- [2/6/2025] Trump Outlines Tax Reform Priorities: During a meeting with Senators at Mar A Lago, President Trump outlined his priorities for a forthcoming tax package. Information provided to the media about the meeting specifically referenced the President’s desire to “eliminate all the special tax breaks for billionaire sports teams owners.” Read More from Politico >
- [2/6/2025] Key Senators Want to Advance Their Own Budget Resolution: Senate Budget Committee Chairman Lindsey Graham (R-SC) announced this week that his chamber will attempt to advance its own version of a budget resolution, teeing up a process for the Senate to move before the House on a budget reconciliation package. Unlike the House, the Senate has favored advancing their priorities via two bills: a preliminary package to address immigration and energy, and a second one to address expirations of the TCJA later in the year.
- [2/4/2025] Higher Ed “Menu” Options: A new document was released, entitled “Possible Reconciliation Revenue Options Affecting Higher Education.” The document appears to be a reiteration of the earlier “Menu” of options with only specific line items related to higher education in America. It lists “Eliminate Exclusion of Interest on State and Local Bonds,” but does not include the bullet discussing the tax exemption on all other bonds, which would presumably include qualified 501(c)(3) bonds.
January
- [1/31/2025] PFN Letter to Congress: The Public Finance Network (PFN), including NABL, submits a letter to members of the 119th Congress in support of the tax exemption on municipal bonds. Read Letter >
- [1/17/2025] House “Menu” of Options: POLITICO published a document released from the House Budget Committee that appears to list 50 pages of potential revenue raisers that could pay for at least part of a large reconciliation bill later this year. The list appears to be a basis for discussion rather than concrete proposals that have achieved broad consensus from committee members. It is a large list of potential revenue raising options, extending far beyond the realm of tax. Although many of the options are likely unviable and specifics remain ambiguous, the document does represent the first written document from this Congress suggesting to alter the tax-exempt status of interest on municipal bonds. It also further validates the early advocacy work by municipal market groups such as NABL and illuminates the need for market participants to advocate early and often for tax-exempt municipal bonds. Some of the listed options include changing existing law to:
- Eliminate exclusion of interest on state and local bonds;
- End tax preferences for “other bonds” (with a note indicating that this means “private activity bonds and Build America Bonds”);
- Eliminate “nonprofit status” for hospitals;
- Expand taxes on large college endowments;
- Advance other proposals relating to entitlement reforms, the state and local tax (SALT) deduction, and other development tax incentives.