Washington Watch
Welcome to the First Session of the 119th Congress.
Both Houses of Congress are back in action this week. The primary focus in the Senate continues to be the budget reconciliation bill. Senate Parliamentarian Elizabeth MacDonough has disqualified a number of provisions included in various committee’s texts submitted to her as violating the Byrd Rule. This process, colloquially known as the Byrd Bath, ensures that provisions looking to be enacted through the budget reconciliation process actually affect revenues or spending. She is expected to make rulings on the Senate Finance Committee’s package this week.
One Senate bill of note was introduced late last week. The Vehicle Axle Redistribution Increases Allow New Capacities for Efficiency (VARIANCE) Act was filed by Senator Pete Ricketts (R-NE). The legislation would create a 10% axle variance for commercial motor vehicles transporting dry bulk goods and increase the maximum weight on any tandem-axle trailer to 37,400 lbs. Dry bulk goods tend to shift in transport which often leads to trucker violations of the axle weight limit. The bill’s definition of “dry bulk” includes biomass and wood chips.
In the House, the Appropriations Committee begins its markup this evening of the Fiscal Year 2026 Agriculture, Rural Development, Food and Drug Administration and Related Agencies bill. On Thursday, the House Natural Resources Committee’s Subcommittee on Federal Lands will hold a hearing titled “Fix Our Forests: Advancing Innovative Technologies to Improve Forest Management and Prevent Wildfires.”
U.S. House of Representatives - Schedule for the week of June 23, 2025
U.S. Senate - Schedule for the week of June 23, 2025
- The Senate is in session through Wednesday.
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Cheat Sheet
June 5, 2025
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Senate Releases Tax Reconciliation Language but Challenges Remain: On Monday evening, the Senate Finance Committee unveiled its portion of the budget reconciliation bill. Finance is the panel that is in charge of fashioning the tax provisions in the comprehensive measure. The text tracks largely along the lines of what the Hardwood Federation team expected, with a few deviations. Provisions in the text of concern to the Federation are the following:
- 100 percent bonus deprecation/full expensing: As expected the bill not only restores this tax benefit allowing businesses to immediately expense 100% of capital investments in machinery and equipment but makes this provision permanent. Recall that the House-passed bill only extends full expensing for 5 years.
- Research & Development (R&D) Credit: The Senate’s text restores this tax benefit that expired in 2022, which up until that year, allowed businesses to fully write off their R&D costs in the same year in which those costs were incurred. As with full expensing, the Senate also opted to make this benefit permanent. The House-passed bill only extended it for 5 years.
- Section 199A: The Senate Finance Committee’s text, like the House, makes the 20% deduction for S-Corporations and other pass-through structures permanent. However, while the House opted to bump this number up to 23%. The Senate holds it at 20%.
- Section 179: Like the House, the proposal increases the maximum amount a business may write off certain expenses to $2.5 million and increases the phaseout threshold amount to $4 million.
- EBITDA: The Senate mirrors the House approach in restoring EBITDA as the measure for calculating business interest expense. The current standard established by TCJA is EBIT, which is not as generous and serves to make companies less competitive, particularly in a high-interest rate environment.
- Estate and Gift Tax Exemption: Like the House, the Senate bill permanently increases basic estate and gift tax exemption amount and the generation-skipping transfer tax exemption to $15 million.
- State and Local Tax (SALT) Deduction: The Senate opted to keep the current $10,000 cap on the SALT deduction, deviating from the House approach which raised it to $40,000.
Senate leaders hope to have the combined budget reconciliation package on the Senate floor next week to align with their goal of passing the bill through the upper chamber before the July 4 recess. That deadline seems like a stretch goal at this point however, as several GOP Senators have voiced concern with various provisions. Leadership also would prefer to avoid a formal conference committee with the House and so negotiations over the SALT issue and others will be front and center in the coming days. Senate Republicans do not like the House approach to SALT, but the handful of GOP lawmakers in the House from high SALT states have indicated that the $40,000 cap is nonnegotiable. The Federation will continue to closely track this issue and provide support for important business tax provisions.
Limited Progress on Trade: Although it had been anticipated that progress on trade deals would be made during this week G-7 meeting in Canada, particularly with Canada and the E.U. discussions were limited due to President Trump's early departure. Canadian Prime Minister Carney did state that he thinks a deal could be done in the next month and E.U. officials also spoke optimistically. The President did sign final documents with Keir Starmer, Prime Minister of the United Kingdom, the only trade deal to be finalized to date.
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