Special tax carve-outs for everyday Americans are suddenly all the rage in Congress.
What began with President Donald Trump’s signature tax cuts has sprung copycats, with lawmakers from both sides of the aisle proposing breaks on virtually everything — from boat loan interest to selling New Jersey swag.
“Must be an election year,” Rep. David Schweikert, a retiring tax writer.
It’s all part of lawmakers’ push to show they’re responding to voters’ affordability concerns ahead of the midterms, despite the mixed reviews for last year’s GOP tax cuts — even from Trump supporters.
The slew of targeted tax break proposals are modeled and named after some of the best known provisions of Republicans’ One Big Beautiful Bill Act, with titles like “No Taxes on Utility Bills” and “No Tax on Health Care.”
Still, they’ve spurred frustrations from some conservatives over clogging the tax code with smaller, specific changes, while progressives worry the breaks eat into funding dollars they’d like to see go elsewhere. And fiscal hawks have sounded off on concerns over shrinking the tax base while the U.S. has a sky-high deficit.
None of this is set to go away anytime soon, tax experts say, as provisions from the megabill are poised to expire in 2028. That leaves lawmakers with an opportunity to extend and create more special exemptions in addition to the tax breaks on tips, overtime, seniors and car-loan interest.
“These policies elicited eye rolls with Republicans while they were crafting the tax bill — these were just Trumpist favors they had to include before getting to the real tax cuts,” said Jessica Riedl, a former Republican tax aide now at Brookings Institution. “Over time, Republicans have increasingly embraced this kind of stuff. I don’t think this is a temporary trend.”
Plus, for Democrats, there’s the exemptions that possible 2028 hopefuls have been looking to enact, from Sen. Jon Ossoff’s proposal to temporarily allow farmers to shield crop payments from taxes to Sen. Chris Van Hollen’s plan to strike everyone earning less than $46,000 from paying federal income taxes.
And both parties recognize that allowing the breaks to lapse during a presidential election year could be a risky gambit.
“I don’t know what they think is going to happen,” said Bob Lord, a vice president at Patriotic Millionaires, a group of wealthy individuals who support higher taxes, who helped devise Van Hollen’s plan. “If they do away with no tax on tips, well, they can kiss the state of Nevada goodbye.”
What else we’re watching:
— FIRST IN IC: FLANAGAN TALKS SCHUMER, PANELS: Democratic Senate hopeful Peggy Flanagan — fresh off her primary victory in Minnesota Tuesday —said she’d pursue many of the same committee assignments as predecessor Sen. Tina Smith if elected. “This particular seat has a long track record of serving on the Indian Affairs Committee,” Flanagan, who would be the first Native American woman elected to the chamber, said, adding she “would look forward to serving on that committee and bringing my lived experience and work in strengthening tribal government relations to that table.” Flanagan also flagged Agriculture, Banking and Health, adding “there are a lot of priorities for Minnesotans that go right through that committee.” Flanagan also declined to back Chuck Schumer as the party’s leader should Democrats retake the chamber, saying she was “grateful” for his work but, “I think it’s time for us to have a new voice in that role.”
— REPUBLICANS TRY TO KEEP THEIR FRAUD FIGHTING DREAMS ALIVE: House Republicans are hoping Vice President JD Vance’s personal appeal to the conference to tackle alleged abuse of safety-net programs will push the issue back to the forefront of the GOP’s already-long priority list. But many are skeptical any such legislation will ultimately reach the president’s desk. Finding ways to cut government waste and fraud across Medicare, Medicaid and federal food assistance programs was a top priority for House Republicans, who set out earlier this year to pass another party-line reconciliation package centralizing the effort. Many believed the fraud issue would speak to voters’ larger concerns about affordability, since it would ostensibly involve returning lost funds to government programs.
Brian Faler, Mia McCarthy and Robert King contributed to this report.
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