President Trump’s March 4 address to a joint session of Congress included a call for tax cuts along with most of his other campaign promises and priorities. The speech (technically not a State of the Union speech due to its occurrence at the beginning of his term) was well-received by President Trump’s GOP base, but characterized as divisive by those who do not support him.

In his nearly two-hour speech, the President said Congress should enact a tax bill that would make permanent the expiring individual and estate tax rules enacted late in 2016; make tip, Social Security, and overtime pay income tax-free; and establish a deduction for interest paid on auto loans. He also called for lower taxes on domestic manufacturers, and 100 percent expensing retroactive to January, 2025. He also defended his decision to impose tariffs on goods imported from a number of other countries.

Prospects: Congressional Republicans are fighting hard to enact legislation that includes these (and other) Trump priorities. There are many controversies involved in the effort—among them are potential cuts to Medicaid that have rattled Republican and Democratic lawmakers alike, and deficit concerns. Those concerns center on the cost of the tax package—making the expiring tax rules permanent and the other new tax breaks could be astronomically expensive.

The GOP is planning on using a budget law process, reconciliation, that avoids a Senate filibuster. But with unified Democratic opposition they need virtual unanimity to pass an all-GOP reconciliation package. This will be a hard-fought initiative with an outcome that is at this point unpredictable, both as to substance and as to timing.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org.