Advocacy News – May 22, 2025
What’s happening: Over the past couple of weeks, the Michigan Chamber had the opportunity to join roundtables hosted by the U.S. Chamber of Commerce with Congressmen Tom Barrett and John James to discuss renewal of the Federal Tax Cuts Jobs Act (TCJA). Poised to expire, the TCJA was a seminal policy of the first Trump Administration and lead to significant re-investment into the economy by thousands of businesses in Michigan.
- What’s new: In a positive turn of events today, the U.S. House of Representatives passed the tax cuts as part of Trumps ‘Big Beautiful’ Reconciliation Bill. The legislation contains a slew of tax breaks for individuals, a bigger state and local tax (SALT) deduction, Medicaid cuts, and immigration spending measures — but no Social Security tax cuts.
Why it matters: If the TCJA were to expire, it would functionally result in a $600 billion tax increase, much of which would be shouldered by the business community. Experts, who believe that a pro-growth economic strategy is critical to address the country’s ever-growing budget deficit, have stated that continuation of the TCJA is a critical pillar of that approach.
Here are some key components of the legislation:
- Tax cuts: Permanently establish the 2017 individual tax breaks, lowering most of the income-banded marginal tax rates, including the top rate of 39.6%, which fell to 37%. It also nearly doubled the standard deduction.
- Estate, gift exemptions and childcare tax credits: Permanently increase estate and gift tax exemptions and set the exemption rate at $15 million for the tax year. As well as permanently fix the $2,000 increased child tax credit, while temporarily boosting it by $500 per child from 2025-2028.
- SALT deduction: The 2017 law capped the state and local tax deduction at $10,000. The House legislation raised that cap to $40,000 and would begin phasing it out at incomes of $500,000.
- Extra deduction for seniors: Provides an extra standard deduction of up to $4,000 per individual age 65 and over from 2025-2028. It begins to phase out over $150,000 for married taxpayers filing jointly and $75,000 for individual filers.
- Miscellaneous: Eliminates taxes on qualifying tips and overtime pay through 2028. Also included is a provision that would allow qualifying taxpayers to deduct car loan interest for cars with final assembly in the U.S.
What’s next: The MI Chamber will continue to advocate for support of TCJA as the proposal moves to the U.S. Senate.
For questions or more information, contact Mike Alaimo.