While

House Republicans’

major

tax

-cut bill contains hundreds of pages of policy changes, it also leaves out some key tax provisions that have been discussed over the past several months.

The House

voted earlier on Thursday to approve

the $4 trillion budget

reconciliation

Bill, from 215 to 214. Not one Democrat sided with Republicans in favor of the bill, which was endorsed by President

Donald Trump

and Republicans the

One Grand Stunning Bill Legislation

. Creating the bill required weeks of negotiations, leading to several prominent provisions being omitted.

Significantly, although House Speaker Mike Johnson (R-LA) guided the legislation through the House, the Senate will get the chance to amend it, which means that several of the omissions might still be included in the final version President Trump would endorse.

Changes to corporate rate

The top corporate tax rate was reduced from 35% to 21% under the 2017 Tax Cuts and Jobs Act. Importantly, much of these recent tax reductions involve prolonging or permanently implementing numerous aspects of the 2017 tax reforms, originally scheduled to end in 2026.

However, the corporate tax rate wasn’t touched. This change was made permanent, which economists argue stimulated significant economic expansion and assisted in averting corporate “inversions,” where large U.S.-based multinational firms combine with minor overseas entities to shift the merged entity’s headquarters to low-tax jurisdictions.

On the campaign trail, Trump talked about cutting the headline corporate tax rate to 20% and endorsed reducing it from 21% to 15% solely for companies that make their products in America.

Lowering the corporate tax rate to 15% for all corporations would slash revenue by between $460 billion and $675 billion over the next decade, according to the Committee for a Responsible Federal Budget.

Nevertheless, the concluding version of the House bill approved on Thursday morning via reconciliation did not encompass a reduced corporate tax rate.

The bill also did not increase the corporate tax rate. Some Republicans suggested this option as well to compensate for the revenue loss resulting from extending certain individual tax cuts and other proposed modifications to taxes.

Carried interest

A provision that did not make it into the final House version of the reconciliation bill was the removal of the

so-called carried interest “loophole.”

Carried interest is a kind of income that some investment firms earn while managing investors’ money. It is taxed at the rates on investment income, but critics say it should be taxed at the higher rates that apply to labor income.

Raising taxes on carried interest was one of Trump’s priorities in crafting tax policy on Capitol Hill.

The White House unveiled its list of tax priorities earlier this year. Among them were eliminating taxes on tips, Social Security, and overtime pay, raising the state and local tax deduction cap, removing special tax breaks for billionaire sports team owners, introducing tax cuts for made-in-America products, and carried interest.

Proponents of maintaining the present taxation rules for carried interest assert that increasing taxes on carried interest would be unfair, hinder economic expansion, and reduce businesses’ access to funding sources.

Drew Maloney, who serves as the president of the American Investment Council, stated in a recent announcement that each year, the private equity and private credit sectors contribute approximately $700 billion to the economy. Additionally, he mentioned that firms backed by private equity provide employment opportunities for around 12 million workers.

Chairman Jason Smith of the House Ways and Means Committee (R-MO) informed the Washington Examiner on Friday that there was insufficient backing from Republicans to incorporate alterations to carried interest into the budget reconciliation process. According to Smith, he does not anticipate this change being included in the Senate version either.

“Carried interest has been a topic with extensive debates in the House, but ultimately didn’t gather enough support… which is why it wasn’t included in the legislation that was approved by the House,” Smith explained during a telephone conversation.

Higher top marginal rate

Another tax change

That was not part of the reconciliation process.

Bill was raising the highest marginal tax rate.

Trump allegedly contemplated changing the highest individual tax rate back to 39.6% for those who earn more than $2.5 million annually, reversing it from the current rate of 37%.

Many believed that a slight hike for the richest taxpayers might assist Republicans in countering the Democrats’ narrative that the bill disproportionately benefited the affluent.

However, even though the White House was considering this option, Trump recently shared on social media platforms that Democrats could potentially label him as someone who raises taxes, which contradicts his pledges to maintain low tax rates.

“The problem with even a ‘TINY’ tax increase for the RICH, which I and all others would graciously accept in order to help the lower and middle income workers, is that the Radical Left Democrat Lunatics would go around screaming, ‘Read my lips,’ the fabled Quote by George Bush the Elder that is said to have cost him the Election,” Trump said. “NO, Ross Perot cost him the Election! In any event, Republicans should probably not do it, but I’m OK if they do!!!”

Grover Norquist, who founded Americans for Tax Reform, informed the Washington Examiner on Friday that this concept served as a “stress test” demonstrating that Republicans did not waver from their vow against raising taxes.

“So we locked in, the Republican Party said, ‘We are not raising rates, got that?’” Norquist said. “That’s what we don’t do. We do not do rates. It was interesting to see that sort of a stress test on the Republican Party with a handful of people who are going, ‘Oh, we could show how progressive we are.’ Really? No.”

Baby bonus

The tax legislation does

boost the popular child tax credit

, but it doesn’t include funding for a “baby bonus” — essentially giving money to parents of newborns in a bid to help parents and incentivize family creation.

The tax legislation raised the child tax credit to $2,500 through 2028. The increase to $2,500 is essentially an inflation adjustment, given that’s about how much the credit would need to be to have the same purchasing power as when it was doubled to $2,000 as part of the 2017 tax cuts. It would revert to $2,000 in 2029, although it would still be indexed to inflation.



THE WINNERS AND LOSERS OF REPUBLICAN TAX BILL SO FAR

Nevertheless, the bill did not include any baby bonuses, even though several legislators advocated for them.

For example, Representative Blake Moore (R-UT) proposed a bill earlier this year that aims to increase the credit above the levels set by reconciliation and establish a new $2,800 tax benefit for expectant mothers.