119th Congress Preview
The 119th Congress will be sworn in on January 3, 2025. In addition to the White House, Republicans will control both the House of Representatives and the Senate—although they will do so with narrow margins, meaning they will need almost every Republican in the conference to agree to move legislation, especially if they cannot get Democratic support.
Because so many provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) expire at the end of 2025, Congress will prioritize passing tax legislation in the next year. The TCJA was a major policy achievement during President Trump’s first term, and the Administration and Congress have said they want to extend the TCJA and build on its provisions. On the campaign trail, President Trump expressed support for new tax provisions, such as reversing cap on the state and local sales tax deduction included in the 2017 bill or eliminating taxes on Social Security benefits. Regardless of how Congress and the Administration approach the tax bill next year, it will be very expensive.
Help us ensure Congress understands philanthropy’s work and our sector’s priorities by:
- Meeting with your Members of Congress and their staff. Reach out to govt@cof.org for support anywhere in the process.
- Calling and writing to your Members of Congress to let them know what you think about legislation that impacts the sector. Keep track of the Council’s Take Action page; we’ll let you know of opportunities to tell your Members how to support your work.
- Continuing to read Washington Snapshot and signing up for the Public Policy Action Network for more in-depth public policy updates.
- Building relationships with elected officials at the state and local levels, where proposals impacting your work may be more likely to move.
- Reaching out to the Council’s Government Affairs team at govt@cof.org. We are always happy to meet with you, and we’d love to help set up meetings with your congressional offices.
And don’t forget about all the resources already available on the Council’s website, such as:
Plus, Council members can access a resource packet that includes template outreach letters as well as talking points for the 2025 tax debate. We are in the process of updating these for the 119th Congress.
If you don’t see a resource that would be helpful to you, let us know by replying to this email. We hope to be your go-to place for all the information, analysis, and talking points you need about how Congress's tax proposals could affect your work.
Budget reconciliation
Republicans fell short of the 60 votes needed to overcome a filibuster in the Senate, meaning they will likely use budget reconciliation to pass tax and other major policy priorities. Budget reconciliation only requires a simple majority to pass a bill in the Senate, fast tracking it for consideration and avoiding the threat of a filibuster. Democrats used it to pass the Inflation Reduction Act in 2022, and Republicans used it to pass the TCJA in 2017. However, budget reconciliation is restricted to legislation that changes certain government spending, revenues, or the federal debt limit—it is not a catch-all way to get around the filibuster.
Just this week, incoming Senate Majority Leader John Thune (R-SD) laid out plans to consider two major bills under reconciliation. One bill would be considered within the first 30 days of the Trump Administration taking office focusing on the border, defense, and energy. The second bill would be a tax package. Both chambers need to agree on a plan of action, so there will be more discussion to come. However, key House Republicans have already publicly disagreed with these plans.
Senate dynamics:
While Republicans succeeded in flipping the Senate, their 53-47 margin is too narrow to overcome a filibuster without getting some Democratic support. While the President’s nominations for federal appointees only require a simple majority to pass, other legislation — including government funding and most other bills — needs to receive 60 votes.
Senate leadership will look different: for the first time since 2003, Sen. Mitch McConnell (R-KY) will not hold a leadership position in the Republican conference. Sen. John Thune (R-SD) will be Majority Leader. Sen. Chuck Schumer (D-NY) will return to his role as Senate Minority Leader.
The most relevant committee for philanthropy’s priorities, the Senate Committee on Finance (SFC), will most likely be chaired by Sen. Mike Crapo (R-ID), while current Chair Ron Wyden (D-OR) will shift back to ranking member. While we don’t expect significant changes to the Republican side, there will be several new Democrats on the Committee. We’ll update you on SFC membership in Snapshot next year once the full Committee roster is announced.
House dynamics:
The Republicans kept the House, but continue to have narrow margins; 220 to 215. As of writing, House leadership will not change: Rep. Mike Johnson (R-LA) will remain Speaker of the House, while Rep. Hakeem Jeffries (D-NY) will remain Minority Leader. But with several House members expected to join President Trump’s administration, the House majority total will fluctuate until special elections are held. That leaves House Republican leadership with very tight margins to shepherd through legislation.
The House Committee on Ways and Means—where tax legislation will originate—will likely continue to be chaired by Rep. Jason Smith (R-MO) with Rep. Richard Neal (D-MA) staying on as ranking member. It is also important to note that many of the 118th Congress’s letters about nonprofits and philanthropy, as well as most of the legislation we expressed concerns with, originated in the Ways and Means Committee.
2025 Tax Bill:
So far, here’s what we know about Republicans’ tax priorities:
- Extending individual provisions of the TCJA: The TCJA reduced marginal tax rates across the board and increased the standard deduction. It also doubled the estate tax threshold and repealed the Pease limitation on itemized deductions—all of which expire at the end of 2025, and all of which are likely to be up for extension.
- Increasing corporate tax incentives: Earlier this year, Chairman Smith and Chairman Wyden introduced bipartisan tax legislation that included corporate tax incentives, such as a deduction for research and experimental expenditures, an increase in limitations on expensing of depreciable business assets, and others. These will likely continue to be priorities for Republicans, as will maintaining the reduced corporate tax rate. We may also see additional corporate tax incentives proposed.
- Continuing the excise tax on university endowments: The TCJA created a 1.4% excise tax on net investment income of big private colleges and universities. This is likely to be extended.
- Rolling back the Inflation Reduction Act (IRA): The IRA includes clean energy tax incentives, which Republicans opposed. As Republicans look to offset the cost of extending the TCJA, the IRA will likely be a target.
While the Democrats are likely to have limited input, here is what we know about potential priorities they are likely to advocate:
- Child Tax Credit: The Wyden-Smith tax package included an expansion of the Child Tax Credit. This has long been a priority for Democrats, and depending on how the credit is structured, Republicans could be on board.
- State and Local Tax Deduction (SALT): The TCJA limited SALT to $10,000, which Democrats and some Republicans objected to during and since passage in 2017. It is possible Democrats would advocate for restoring the full deduction, and we expect several House Republicans to call for changes to, or a full restoration of, the deduction.
Finally, it is important to note that a full extension of the TCJA is estimated to cost $4.5 trillion over 10 years. Policymakers will look to offset the cost, with some proposals looking to the charitable sector for potential revenue raisers. The Council is closely monitoring this conversation, and we will keep you updated in Snapshot and through our other channels.
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