House Budget Committee Advances Reconciliation Bill – GOP Faces Crucial Week

Late Sunday night, the House Budget Committee approved the Republican reconciliation bill by a 17–16 vote, advancing the legislation one step closer to the House floor. A last-minute agreement allowed four conservative members to vote “present,” helping the bill move forward while preserving their negotiating leverage.

This moment marks real progress in a complex legislative process—progress that brings us closer to restoring critical tax tools for innovative, growth-focused businesses.

Speaker Mike Johnson now faces an intense negotiation week, balancing demands from conservative hardliners and moderate members. Key sticking points include Medicaid work requirements, federal payment formulas to states (FMAP), and an accelerated rollback of clean energy credits. Despite the challenges, momentum is building behind this package.

Key Provisions to Track

• Section 174 – R&D Expensing
  The bill reinstates immediate expensing for domestic R&D beginning in 2025 through 2029, reversing the current amortization requirement. This is a vital correction that restores predictability for innovation-heavy industries.
  
  
• Section 199A – Qualified Business Income Deduction
  A proposed increase from 20% to 23% expands the deduction and access for a wider array of pass-through businesses, including those in service sectors.
  
  
• Bonus Depreciation
  The return of 100% bonus depreciation through 2029 would allow companies to fully expense eligible investments immediately—boosting cash flow and reinvestment capacity.
  
  
• Section 179 Expensing
  Increased expensing limits—rising from $1 million to $2.5 million with higher phase-outs—would provide flexibility and front-loaded tax benefits for small and mid-sized businesses.

Legislative Outlook

There is still work to do. Disagreements remain around Medicaid provisions, SALT deduction caps, and energy tax credits. However, these issues are being actively negotiated. The House Rules Committee is scheduled to meet at 1:00 a.m. ET Wednesday to consider a manager’s amendment that could reflect updates and compromise solutions.

Importantly, House leadership has made clear: no Memorial Day recess without a vote. The Senate is preparing to take up the bill in June, with the stated goal of delivering a final package to President Trump by July 4.

This reconciliation bill—while not final—offers a strong foundation to restore and enhance critical tax incentives. For R&D-focused companies, pass-through entities, and capital-intensive businesses, the opportunity to regain long-term tax planning stability is within reach.

Policy Debates Still Unfolding

While the bill includes significant business relief, key negotiations are ongoing in three areas with broader political implications:

• SALT Deduction Cap: The current $30,000 cap remains unchanged in the draft, but blue-state Republicans continue to push for a higher threshold or regional accommodations. Speaker Johnson is expected to revisit the issue this week as part of ongoing coalition-building.
  
  
• Medicaid Reforms: Johnson’s proposal to accelerate work requirements to 2026 has drawn pushback from moderates, many of whom represent states with high Medicaid participation. Discussions also continue around proposed changes to FMAP—the federal formula for Medicaid funding—which has been a flashpoint within the GOP conference.
  
  
• Nutrition Program Cuts: The bill includes reforms to federal nutrition programs, shifting more financial responsibility to states and tightening eligibility. These provisions have triggered concerns among members in competitive districts, and additional changes may be negotiated in the Rules Committee or on the floor.

Next Steps
• House Rules Committee hearing: 1:00 a.m. ET, Wednesday
• House floor vote expected before Memorial Day
• Senate Target for final legislation to be on President Trump’s desk: July 4

Stay Informed on Tax Policy Changes

ABGi is closely monitoring these developments and will continue providing insights as the reconciliation bill progresses. We're optimistic about the direction and committed to helping our clients navigate the path ahead.

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