An increase in income tax rate means you'll pay a higher percentage of your income to the government. This directly reduces your disposable income, the money you have left after taxes for spending or saving. This can make it harder to afford basic necessities, save for retirement, or invest in your future.
On Monday, March 11, President Joe Biden released his Budget request to Congress (“Budget”) and various accompanying documents. Separately, the Treasury Department released its General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals, commonly known as the “Green Book,” which provides more detailed descriptions of the tax proposals in the Budget along with associated revenue estimates.
The $7.3 trillion Budget is the largest in U.S. history, including $1.6 trillion in base discretionary spending—approximately $895 billion for defense and $734 billion in non-defense discretionary spending. If enacted in its entirety, the Budget would raise $5 trillion in additional tax revenue over the next 10 years compared to baseline budgetary estimates. For FY2025, the Budget would result in an estimated federal deficit of approximately $1.8 trillion—an increase of about 30% compared to FY2023 levels. Below are key figures in the president’s Budget.
Treasury Secretary Janet Yellen will appear before the Senate Finance Committee on Thursday, March 21, to address lawmakers’ questions. Yellen is expected to also participate in a similar hearing with the House Ways and Means Committee following the spring recess.
This is the fourth and final Budget proposal that Biden will submit to Congress before the end of his first term, highlighting the tax-policy priorities that will continue to be central to his reelection campaign. Republicans are expected to oppose a majority of the tax and spending proposed in the Biden Budget request, and the extent of congressional Democrats’ support for all of the tax proposals is uncertain.
Below are the Brownstein tax policy team’s five key takeaways on the Budget:
- Proposed $5 Trillion Tax Increase Produces Net Projected Deficit Reduction of $3 Trillion.
- Absent Recommendations to Address TCJA Expirations, the Biden Budget Leaves Democrats’ Opening Position Unclear in the Lead-Up to 2025 Tax Reform.
- Political Priorities Take Center Stage as Biden Ramps Up Campaign Effort.
- Biden Doubles Down on Long-Term IRS Expansion, Requesting Over $100 Billion in Additional Mandatory Funding and Expanded Enforcement Authority.
- Yellen Refuses to Alter Course on the Global Tax Agreement and Other International Tax Reforms.
To read more about these takeaways and next steps, please click below.
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