In brief
On 9 March 2024, the Biden Administration released its proposed budget for fiscal year 2025, and the Treasury Department released its General Explanations of the Administration’s Fiscal Year 2025 Budget Proposals, commonly known as the “Greenbook.” Many of the proposals in this year’s Greenbook appeared in earlier years, but a few proposals are new or modified (as noted below). Due to the divided Congress and competing political priorities during a general election year, there is little chance that any of the Greenbook proposals will be passed into law in 2024. However, the Greenbook illustrates the consistency of the President’s tax policy objectives during his first term and maps out priorities for a possible second term. Accordingly, taxpayers should consider the Greenbook’s provisions when identifying and advocating for their 2025 legislative priorities. In this article, we focus our analysis on new or modified proposals and review certain carryover proposals.
Key takeaways
As the saying goes, the President proposes [a budget], and Congress disposes [of it]. As we saw with the failed effort to pass the Build Back Better Act, the Biden Administration was unable to garner enough support to pass several of the Greenbook proposals when Democrats had the majority in both the House of Representatives and Senate. That said, the Greenbook provides a platform for an Administration to propose tax policies, so that those provisions can be studied further and potentially developed for future implementation. Proposals in past Greenbooks that were not enacted in the short term have been picked up in legislation years later. As a result, it is important for US businesses to continue educating Congress of the projected consequences of any tax proposals to guide the evolution and adoption of these proposals in the future.
Though many of the proposals in the FY25 Greenbook are carry-overs from the FY24 Greenbook, there are some new recommendations and modifications to prior proposals. We will highlight some of these changes, as well as some carry-over proposals that would be significant if enacted, including:
- increases to various rates affecting corporations and high net worth individuals
- proposals for aligning the Code with the OECD Pillar Two rules and modifying other US international tax rules
- new rules for tax-free spin-offs
- expansion of the denial of deductions for salaries of highly compensated employees
- measures that align with recently announced IRS enforcement efforts
- reforms aimed at modernization of IRS administration
- modifications to previously-proposed crypto rules
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