An illustration of a yellow envelope being opened, revealing a document labeled "TAX PROPOSALS" in bold red letters. The background is blue, and two hands are holding the envelope. This image represents discussions on tax policy changes.

Breaking Down the Latest Republican Tax Proposals for 2025

Tax Tips| IRS Updates
February 19, 2025•3 min read

Breaking Down the Latest Republican Tax Proposals for 2025

On January 17, 2025, reports emerged detailing a list of tax proposals circulated by Republican members of Congress. These proposals suggest significant changes to individual, corporate, and nonprofit taxation, alongside modification in IRS enforcement fundig. Below, we summarize the key elements of these proposals and their estimated revenue impacts over the next decade.

Individual Taxation Changes

SALT Deduction Reform Options

The state and local tax (SALT) deduction cap of $10,000 expires at the end of the year. Several reform options have been proposed:

  1. Repeal SALT Deduction: Eliminate SALT deductions, raising $1 trillion over ten years.

  2. Make SALT Cap Permanent & Double for Married Couples: Maintain the $10,000 cap but increase it to $20,000 for married couples, for $100-$200 billion.

  3. Increase Cap to $15,000/$30,000: Raise the deduction limit to $15,000 for individuals and $30,000 for married couples, costing $500 billion.

  4. Limit Deduction to Property Taxes Only: Eliminate deductions for income and sales taxes while allowing uncapped property tax deductions, costing $300 billion.

  5. Eliminate SALT Deduction for Businesses: Maintain the cap for individuals while removing the deduction for businesses, generating $310 billion in revenue.

Mortgage Interest Deduction Reform

  1. Repeal Deduction for Primary Residences: This change could raise $1 trillion over ten years.

  2. Lower the Deduction Cap to $500,000: A more modest change, raising $50 billion over ten years.

Repeal Exclusion of Interest on State & Local Bonds

  • Repealing the exclusion for state and municipal bonds could generate $250 billion.

  • Repealing tax-exempt status for private activity bonds would bring in an additional $114 billion.

Estate Tax Repeal

  • Eliminating the estate tax, currently applicable to estates over $13.99 million, would cost $370 billion over ten years.

Exempting Americans Abroad from Income Tax

  • Options include raising the foreign-earned income exclusion (currently $130,000) or eliminating U.S. taxation on foreign-earned income—estimated cost: $100 billion.

Corporate Taxation Changes

Corporate Income Tax Rate Reductions

  1. Lowering the corporate tax rate from 21% to 15% would cost $522 billion over ten years.

  2. Lowering the rate to 20% would cost $73 billion.

Repealing the Corporate Alternative Minimum Tax (CAMT)

  • The 15% CAMT imposed by the Inflation Reduction Act would be eliminated, at a cost of $222 billion.

Repealing Green Energy Tax Credits

  • Tax credits for clean energy initiatives (such as carbon sequestration and electric vehicles) would be repealed, saving $796 billion.

Ending the Employee Retention Tax Credit (ERTC)

  • The ERTC was designed to support businesses during COVID-19. The proposal would extend the current moratorium on new claims and impose stricter fraud penalties, saving $70-$75 billion.

Nonprofit Taxation Changes

Expanding the Endowment Tax on Private Colleges

  • Increasing the excise tax on endowment income from 1.4% to 14% would generate $10 billion.

  • Changing the student calculation method for tax purposes could raise an additional $275 million.

Eliminating Nonprofit Status for Hospitals

  • Revoking hospitals' tax-exempt status could generate $260 billion over ten years.

IRS Enforcement & Funding Repeal

Repeal of IRS Enforcement Funding

  • The Inflation Reduction Act allocated supplemental funding to the IRS for enforcement. Repealing this funding would reduce outlays by $20 billion but also decrease tax revenue collections by $66.6 billion, resulting in a net cost of $46.6 billion over ten years.

These tax proposals represent significant shifts in federal taxation policy. While many of the proposed measures aim to reduce the tax burden on individuals and businesses, they also come with varying revenue trade-offs. Policymakers and taxpayers alike should closely monitor these discussions as they unfold in Congress.

As always, individuals and businesses should consult tax professionals to understand how these potential changes may impact them.


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