Legislative Update: Republicans Aim to Finalize Tax Deal by July Fourth Recess

Republicans Aim to Finalize Tax Deal by July Fourth Recess

Treasury Secretary Scott Bessent announced on April 28 that House and Senate Republicans are close to finalizing their major tax cut package intended to be passed through budget reconciliation by the July Fourth recess. Bessent said recent talks with congressional GOP leaders and tax committee chairs show “substantial agreement” is now within reach.

Despite Bessent’s optimistic claims, Republicans remain divided over whether to repeal clean energy tax credits from the Inflation Reduction Act (IRA), concerns about Medicare cuts, and persisting disagreements between the House and Senate on how to address the $10,000 state and local tax (SALT) deduction cap. GOP leadership and Ways and Means Chairman Jason Smith (R-MO) met this week with key lawmakers from high-tax blue states who are demanding SALT relief. Although participants reported progress, no agreement was reached.

Initially, Speaker Mike Johnson (R-LA) had hoped to pass a final reconciliation bill by Memorial Day, but that timeline has slipped, with House Republicans now aiming to move their version through the chamber by then. As individual committees continue to markup their sections, the House Ways and Means Committee is working to finalize its portion of the legislation for markup during the week of May 12. However, no firm schedule has been announced. Bessent’s revised target of July Fourth allows additional time to navigate the complex reconciliation process and align both chambers on final provisions.

Senate Majority Leader John Thune (R-SD) expressed cautious optimism, calling the July deadline “aspirational” while noting that the process remains highly complex. Thune indicated that the true deadline for passing the reconciliation bill—which is expected to include a provision raising the federal debt limit—is tied to when the Treasury Department’s borrowing authority runs out. Secretary Bessent has not yet provided an updated X-date but noted that revenue intake remains strong, with a more precise estimate expected soon. The Congressional Budget Office (CBO) currently estimates that the so-called “X-date,” when the Treasury can no longer meet its obligations, will occur in August or September.

Trump Proposes Four-Year Extension on Business Expensing Tax Breaks

President Donald Trump announced that his administration will include a four-year extension of the bonus depreciation tax break in its forthcoming tax legislation, retroactive to January 20. The tax incentive, originally part of the 2017 Tax Cuts and Jobs Act, allowed businesses to deduct 100 percent of certain capital investments immediately, but it began phasing out in 2023 and is set to expire by the end of 2025. Trump’s new plan to temporarily restore the full deduction falls short of the permanent extension many in the business community and Congress had hoped for.

The House Ways and Means Committee is working within a $4.5 trillion cap for tax cuts, and limiting the bonus depreciation extension to four years could significantly reduce the cost—far less than the estimated $378 billion it would take to extend it for a full decade. Trump also hinted the tax break could be applied to factories, aligning with Treasury Secretary Scott Bessent’s push to support accelerated depreciation for factory construction.

Trump Administration Launches Fast-Track Permitting for Fossil Fuel Projects

The Trump administration introduced an emergency permitting process designed to expedite approval for oil, natural gas, mining, geothermal, and hydropower projects on public lands, with a target timeline of 28 days or less. The Interior Department stated the move was a direct response to the national energy emergency declared by President Donald Trump on his first day in office. Notably, the expedited process will exclude wind and solar projects. Interior Secretary Doug Burgum framed the decision as essential to bolstering U.S. energy and national security.

To meet the accelerated timeline, the administration plans to employ alternative procedures to fulfill requirements under major environmental laws, including the National Environmental Policy Act (NEPA), the Endangered Species Act, and the National Historic Preservation Act. These laws typically require extensive environmental reviews, which can take years and are often subject to legal challenges.

EPW Kicks Off Work on Reauthorizing Investments in Water Infrastructure

The Senate Environment and Public Works (EPW) Committee convened a hearing on April 30 to assess the implementation of the water infrastructure provisions of the Infrastructure Investment and Jobs Act (IIJA), identify persistent challenges, and consider priorities for reauthorization.

Senators, administration officials, and stakeholders emphasized the need to maintain federal investment in water infrastructure, support underserved and rural communities, and streamline access to funding. The hearing laid a foundation for bipartisan work on reauthorizing the IIJA’s water programs. Lawmakers and witnesses alike signaled strong support for maintaining robust federal engagement, while urging reforms to ensure efficiency, equity, and long-term sustainability in national water infrastructure policy.

Witnesses and lawmakers agreed that the Clean Water and Drinking Water State Revolving Funds (SRFs) are the cornerstone of federal water infrastructure investment while praising the programs. They also underscored that while the IIJA marked a historic investment in water infrastructure, it was only a “down payment” on the nation’s long-term water infrastructure needs. EPA estimates call for over $1.2 trillion in investment over the next two decades. Senators and stakeholders called for a reauthorization that maintains or increases current funding levels and ensures predictability for utilities undertaking long-term capital planning.

During the hearing, lead service line replacement emerged as a prominent topic, with several witnesses and senators emphasizing its urgency as a public health priority. Senator Alex Padilla (D-CA) stressed the importance of targeting federal funds to communities with the greatest needs. He highlighted the long-term health consequences of lead in drinking water, particularly for children, and called for continued investment beyond the Infrastructure Investment and Jobs Act (IIJA) to eliminate lead pipes nationwide fully.

Olivia Wein, a senior attorney at the National Consumer Law Center, echoed these concerns, underscoring the role of federal funding in ensuring that lead pipe replacement programs do not financially burden low-income households.  Jim McGoff, Chief Operating Officer of the Indiana Finance Authority, also referenced the technical and financial challenges of lead pipe replacement, noting that small communities often lack the resources to conduct complete inventories or manage replacement efforts without robust federal support. Overall, there was bipartisan consensus on the need to prioritize lead remediation efforts and ensure that funding mechanisms are equitable and accessible to the communities most affected by lead contamination.

Senate Republicans Block Resolution to Overturn Trump’s Tariffs

A Senate resolution to overturn President Donald Trump’s national emergency declaration, which underpins broad global tariffs, failed in a 49-49 vote, falling short due to the absence of Senators Sheldon Whitehouse (D-RI) and Mitch McConnell (R-KY). The resolution, co-sponsored by Sen. Rand Paul (R-KY) and Sen. Ron Wyden (D-OR), challenged tariffs of 10–50% that Trump imposed on over 50 trading partners. Though largely symbolic—given that the House blocked a vote and Trump promised a veto—the failed vote handed Trump a political win, with Vice President JD Vance later casting a tie-breaking vote to formally table the resolution.