Budget hearing previews 2025 tax showdown


Treasury Secretary Janet Yellen’s testimony before the Senate Finance Committee highlighted some of the expected debates around tax issues, as much of the 2017 Tax Cuts and Jobs Act will expire next year.


The Biden administration estimates its budget would raise more than $4 trillion in net revenue over 10 years. While much of the budget recycles previous tax proposals, it also introduced new revenue-raisers, including an increase of the new corporate alternative minimum tax from 15% to 21%, an expansion of the limit on deducting compensation exceeding $1 million under Section 162(m), and further increasing IRS funding by more than $100 billion for the next 10 years.


Yellen acknowledged that the administration would seek to preserve the current income tax brackets for filers with income below $400,000 but would not commit to maintaining the current standard deduction level, which also sunsets at the end of next year.


Yellen generally sought to avoid statements that could box the administration into negotiating positions should President Joe Biden be re-elected and defended Treasury’s participation in multilateral OECD talks around the taxation of multinational corporations.


“We’re attempting to negotiate in the OECD a significant Pillar 1 agreement that will bring significant benefits to American businesses that have been hit with unfair and discriminatory tax burdens in many parts of the world,” said Yellen, while defending criticisms that the OECD framework will hurt U.S. businesses while sending billions in tax revenue overseas. Yellen argued that the UTPR and Pillar 2 portions of that international agreement would increase revenues for the federal government.


Questioned about Biden administration efforts to eliminate tax benefits for fossil fuel companies, Yellen said that such provisions need to be eliminated to allow renewable energy sources to grow. She later amended that statement by saying the Biden administration seeks to create a “level playing field” for renewables.  



Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “§,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More tax hot topics