The House Ways and Means Committee has advanced tax provisions to be included as a part of a final reconciliation bill. Following an over 17-hour markup beginning on May 13, 2025, the Committee approved in a party-line 26-19 vote legislative proposals that address expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) as well as new tax policies supported by the Trump administration.
Key provisions of the legislation include:
- Extends 100-percent bonus depreciation through 2029 retroactive to January 1, 2025
- Allows full expensing of research and development expenses through 2029 retroactive to January 1, 2025
- Returns to full EBITDA standard for 163(j) business interest loan deductions through 2029 retroactive to January 1, 2025; increases gross receipts limitation from $31 million to $100 million
- Allows 100-percent depreciation for qualified production property for construction started between January 20, 2025, and through December 31, 2028, and placed into service by Dec. 31, 2032
- Makes permanent the Section 199A deduction and increases the maximum deduction to 23 percent of qualified business income
- Increases dollar limitations for Section 179 deduction; maximum expense amount to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million
- Increases small business gross receipts test from $25 million to $80 million
- Enhances and makes permanent the estate and gift tax exemption, increasing the exemption amount to $15 million for 2026 and then indexed annually for inflation
House Speaker Mike Johnson (R-LA) intends to have the Budget Committee combine the bills the week of May 19 with the intention to hold a full vote by Memorial Day. Republican lawmakers not on the tax writing committee have raised concerns over various aspects of the multi-trillion measure, with passage from Ways and Means a first step. The Senate is working on its own reconciliation measure as the White House has called for a final bill by July 4th.
Reciprocal Tariffs on China Lowered for 90 Days
The United States and China agreed to lower tariffs on imported goods from one another effective as of this morning, May 14, 2025 at 12:01am and through at least August 12, 2025. In a statement released on May 12, 2025, the two countries announced an agreement to cut tariffs by 115 percent, leaving a base tariff rate of 30 percent on goods imported into the U.S. from China and a 10 percent rate on U.S. goods sent to China.
The rate for “reciprocal” tariffs imposed on China, which had reached a total of 125 percent, was lowered to the 10 percent baseline tariffs that the U.S. is imposing on all imports from all countries. This 10 percent tariff is in addition to the 20 percent China tariffs imposed and then increased in February and March 2025, respectively, under the International Emergency Economic Powers Act (IEEPA). The tariffs on virtually all imports from China now range from 30 percent to 70 percent, when factoring in other tariff actions that may apply such as the Section 301 action, which began in 2018, and the Section 232 national security tariffs on specific goods.
In many cases, current tariffs can apply as follows:
- Tariffs on Chinese imports appearing on the steel or aluminum 232 derivatives list and 301 lists 1-3 have a 70% rate still
- Tariffs on Chinese imports appearing on the steel or aluminum 232 derivatives list and 301 list 4a have a 52.5% rate still
- Tariffs on Chinese imports not covered by 232 but on the 301 list 1, 2, or 3 now have a 55% tariff
- Tariffs on Chinese imports not covered by 301 but on the 232 list now have a 45% tariff
- Tariffs on Chinese parts not covered by 232 nor on the 301 list have a 30% tariff
- Tariffs on low-value imports worth $800 or less under the “de minimis” exemption now have a 54% tariff
- The reciprocal 10% tariff on other non-USMCA countries remain in place until July 10 at 12:01am
Notes:
1. If a product is added to the steel or aluminum 232 list, it would eliminate the International Emergency Economic Powers Act tariff of 10% on China and the reciprocal global tariffs of 10% (or any higher rate in the future for that country).
2. The 20% combined Feb. 4/March 4 tariffs on China apply regardless of 232 action
3. Note that the Section 232 25% tariff will only apply to the value of the steel or aluminum, and not the entire part if that import appears outside of HTS Chapters 73 (articles of steel) or 76 (articles of aluminum).