Kara Sears
In the United States, tax laws are voted on by members of Congress and the Senate. An example of this is the Tax Cuts and Jobs Act, which was passed by the Senate on December 20, 2017, with a vote of 51-48, and by the House on the same day with a vote of 224-201. The Act included provisions such as lowering the mortgage interest deduction for newly purchased homes and second homes and capping the deduction for state and local income tax. Another example is the Tax Relief for American Families and Workers Act of 2024, which was introduced in the 118th Congress.
| Characteristics | Values |
|---|---|
| Name of tax law | Tax Cuts and Jobs Act |
| Date passed | December 20, 2017 |
| Passed by | The Senate |
| Voting type | Yea-And-Nay |
| Votes | Yea: 224 |
| Nay: 201 | |
| Present: 0 | |
| Not voting: 7 | |
| Remote voting | By Proxy |
| Party | All Parties |
| Republican | |
| Democratic | |
| Independent |
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What You'll Learn
The Senate passes the Tax Cuts and Jobs Act
In the United States, tax laws are voted on by the Senate and the House of Representatives. On December 2, 2017, the Senate passed the Tax Cuts and Jobs Act, with additional changes made prior to its approval. The Act was criticised by some for being rushed through the legislative process with minimal transparency. For instance, Bloomberg columnist Al Hunt described it as a "slipshod product, legislated with minimal transparency".
The Act included significant tax cuts for the top 1%, with the share of income going to this group doubling from 10% to 20% since the pre-1980 period. In contrast, workers now pay a larger share of pre-tax income in payroll taxes, and incomes for the working class have stagnated. Up to 13 million people, mostly from the bottom 30% of the income distribution, are predicted to lose health insurance or subsidies.
The Act also included permanent corporate tax changes, which are estimated to increase economic inequality. While a person in the bottom 10% would receive an average tax cut of $50, those in the top 1% would receive an average cut of $34,000. The Act adds $1.5 trillion to the deficit, which would have triggered automatic spending cuts of $150 billion per year over ten years, including a $25 billion annual cut to Medicare. However, this was avoided when Congress passed a PAYGO waiver, which was then signed by President Trump.
The final version of the Act maintained the prior law's tax exemption for tuition waivers and allowed the use of tax-exempt municipal bonds to fund professional sports stadiums. The Act was officially passed by the House on December 20, 2017, and several companies, including Wells Fargo and AT&T, announced wage increases and bonuses for their workers as a result.
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House Republicans extend individual tax cuts
In the United States, Congress is the branch of the federal government responsible for making laws. A bill is a proposal for a new law or a change to an existing law. The idea for a bill can come from a sitting member of the U.S. Senate or House of Representatives or be proposed during their election campaign. Bills can also be petitioned by citizens or citizen groups who recommend a new or amended law to a member of Congress that represents them.
Once a bill is introduced, it is assigned to a committee whose members will research, discuss, and make changes to the bill. The bill is then put before that chamber to be voted on. While both the Senate and the House have equal authority in terms of functionality, only the House can initiate tax and revenue-related legislation.
In 2018, House Republicans passed a bill to extend individual tax cuts. The bill was passed 220-191, mostly along party lines, with only a few Democrats backing the bill and about 10 Republicans voting against it. The bill aimed to make the individual tax cuts permanent and lock in the doubling of the standard deduction and the Child Tax Credit. The tax cuts were initially made temporary to limit the bill's projected additions to the deficit, allowing it to qualify for Senate procedural rules that enable some legislation to pass by a simple majority.
The 2018 bill also included retirement-related tax provisions, such as a new tax-free savings account and a plan to make it easier for small businesses to form a group retirement plan. It also allowed students to treat stipend payments as compensation when contributing to IRA plans and extended 529 savings plans for homeschool expenses.
In 2021, the House voted once again to permanently extend the individual rate cuts in the GOP's $1.5 trillion tax-cut law. The bill was part of Republicans' "Tax reform 2.0" effort, with proponents arguing that the cuts were necessary to maintain a thriving economy.
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Congress can waive automatic spending cuts
In the United States, Congress has the power to make tax laws. The Constitution grants Congress the authority "to lay and collect Taxes, Duties, Imposts and Excises", and it specifies that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law". This means that federal taxing and spending require legislation enacted into law by Congress.
Congress can also waive automatic spending cuts. For instance, under the 2010 Statutory Pay-As-You-Go (PAYGO) Act, the House and Senate enforce the PAYGO principle through similar internal rules, which can be waived by a majority vote in the House and by the vote of 60 senators. The PAYGO system was first established as a standing rule of the House of Representatives on January 4, 2007, but it was abandoned less than a year later due to widespread demands to ease tax burdens.
Budget sequestration is a provision of US law that results in an across-the-board reduction in certain types of spending included in the federal budget. It involves setting a hard cap on government spending within broadly defined categories. If Congress enacts annual appropriations legislation that exceeds these caps, an automatic across-the-board spending cut is imposed on all departments and programs by an equal percentage. The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) first authorised budget sequestration, and it was later included in the Budget Control Act of 2011 as a disincentive for Congress to pass deficit reduction legislation.
Congress has the power to waive these automatic spending cuts, and it has done so on multiple occasions. For example, the Bipartisan Budget Act of 2013 increased the sequestration caps for fiscal years 2014 and 2015, but it also extended the imposition of cuts to mandatory spending into 2022 and 2023. Additionally, the American Taxpayer Relief Act of 2012 delayed the implementation of budget sequestration, which was originally set to come into force on January 1, 2013.
Furthermore, Congress can waive the "Byrd Rule", which is a constraint on reconciliation that allows Congress to make changes to spending and tax legislation by majority vote. The Byrd Rule provides a point of order against any provision or amendment to a reconciliation bill that is deemed "extraneous" to the purpose of amending spending or tax law. If a point of order is raised, the offending provision is automatically stripped from the bill unless at least 60 senators vote to waive the rule.
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Senators vote on reading legislation
In the United States, Senators do vote on reading legislation. Senators Rick Scott, Roger Marshall, Joni Ernst, and Josh Hawley reintroduced the "Read the Bill" legislation, which requires members of Congress to have ample time to read bills before voting on them and to certify that they have read every bill they vote on. This legislation also mandates the release of a CBO score for the text at least 24 hours before a vote.
Senator Scott emphasized the importance of Senators understanding the content of bills, particularly those that spend billions of taxpayer dollars, to prevent reckless economic decisions. Senator Marshall echoed this sentiment, citing an example where Senators were given only 18 hours to review a 4,155-page omnibus bill. Senator Ernst also supported the legislation, stating that politicians should be forced to read a bill before voting on it.
The "Read the Bill" legislation aims to address concerns about Senators not having sufficient time to review bills before casting their votes. By requiring Senators to certify that they have read the bills, the legislation promotes informed decision-making and accountability.
Voting statistics and records of Senators' votes on various pieces of legislation, including tax laws, are often made publicly available through official government websites and other sources. These records provide transparency and allow citizens to hold their representatives accountable for their decisions.
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Congress passes a No Tax on Tips bill
In the United States, Congress has the power to pass tax laws. An example of this is the "One Big Beautiful Bill", which includes a No Tax on Tips provision. This bill was passed by Congress and signed into law by President Trump on July 4, 2025.
The No Tax on Tips Act, also known as S.4621 in the 118th Congress (2023-2024) and S.129 in the 119th Congress (2025-2026), is a part of this larger bill. It eliminates taxes on tips for employees who regularly receive them, allowing them to deduct up to $25,000 in tips from their income subject to federal income tax. This deduction is available to both itemizers and nonitemizers, and it applies to cash and non-cash tips. Additionally, businesses must report these tips on Form W-2 for employees and Form 1099 for non-employees.
The No Tax on Tips provision also impacts businesses that employ tipped workers. The act amends the Internal Revenue Code (IRC), allowing employers to claim the Federal Insurance Contributions Act (FICA) tip credit. This credit lets businesses reduce their taxable income by the amount they pay for the employer share of Social Security and Medicare taxes on employee tips. The employer share of the FICA tax is currently at 7.65%.
Furthermore, the No Tax on Tips Act expands the business tax credit for payroll taxes paid on tips received in specific service industries, including barbering, hair care, nail care, esthetics, and body and spa treatments.
The No Tax on Tips provision is retroactive, meaning that it applies to tipped wages earned in 2025 and onwards, and it will remain in effect through December 31, 2028.
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Frequently asked questions
Senators and members of the House of Representatives vote on tax laws.
The Tax Cuts and Jobs Act.
The Senate passed the final bill, 51-48, on December 20, 2017. On the same day, a re-vote was held in the House, and the bill passed, 224-201.
The Act had a negative impact on Americans seeking advanced degrees and reduced funding for scientific research. It also zeroed out the federal tax penalty for violating the individual mandate of the Affordable Care Act.
The process for passing a tax law can vary, but it typically involves debate, proposing amendments, and setting rules for final consideration. In the case of the Tax Cuts and Jobs Act, there were important differences between the House and Senate versions of the bills due to reconciliation rules.
