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What will the House Ways & Means Committee propose on Tuesday?

What will the House Ways & Means Committee propose on Tuesday?

Analysis of the proposed individual income tax reforms and what the markup process will look like.

Late Friday, May 9, House Ways & Means released a 28-page committee print that would make these individual income tax reforms. The Joint Committee on Taxation puts the conventional revenue effect at -$4.9 trillion through 2035 compared against current law, in which TCJA expires after 2025.

Proposed tax reforms

The committee print includes several key modifications:

  • TCJA Extension: Make permanent the 2017 Tax Cuts and Jobs Act’s lower rate schedule, alternative minimum tax structure, and estate tax thresholds
  • Standard Deduction: Enlarge the standard deduction from 2025-2028 while keeping personal and dependent exemptions repealed
  • Child Tax Credit: Increase to $2,500 for 2025-2028, then return to indexed $2,000 levels, requiring Social Security Numbers for parents and children
  • Pass-Through Deduction: Raise the §199A deduction rate to 22 percent

Missing campaign proposals

Absent from the print were policies President Donald Trump discussed on the campaign trail: the state and local tax deduction, taxation of Social Security benefits, tips, and overtime pay, and a potential deduction for auto-loan interest.

That said, they might still show up on Tuesday. Here’s how the markup will work:

  1. Staff post an amendment in the nature of a substitute (AINS) Monday night or Tuesday morning.
  2. At 2 p.m. ET (May 13) the Committee meets, adopts the AINS as base text and considers member amendments.
  3. The bill reported at adjournment—whatever changes are adopted—is what moves to the House floor and will form the basis for Senate negotiations.

Five fresh Manifold markets to prepare for Tuesday

Analysts across the country are currently preparing for the full markup on Tuesday. At PolicyEngine, we’re guessing what we can test and bolster in our simulation system to contribute evidence on Tuesday’s final proposals.

The SALT cap may be the most watched decision point. It’s also the most complex market: Tuesday will tell us the new SALT cap, with NY Republicans having reportedly rejected $30,000 doubled for married filers. Some have betted against a Social Security tax exemption showing up. And betted against a tip exclusion as well. But of the full exclusions, Manifold users find overtime the least likely. Users also think an auto-loan interest deduction unlikely.

Where the wider betting market stands

These are the only markets I’m aware of targeting Tuesday’s markup, but others are looking further down the road:

  • Kalshi puts a 71% chance no tax on tips becoming law before 2026 and an 83% chance the SALT cap rises above $10k, with another market giving a 45% chance it’s raised above $30k.
  • Polymarket sees a 34% chance tips are untaxed by August, and a 73% chance a reconciliation bill clears both chambers by the end of August.
  • Manifold there’s a 47% probability that Congress renegotiates and extends TCJA in the second half of 2025.

Coming next from PolicyEngine

As soon as the committee reports its bill Tuesday, we will:

  1. Update our microsimulation to reflect any changes.
  2. Publish new revenue and distribution tables.
  3. Refresh our household calculator so you can see the impact on your own taxes.

Until then, place your bets and watch Tuesday’s markup—prediction markets will be moving in real time.