The Senate returns next week with a long tax bill to-do list. Speaker of the House Mike Johnson (R-LA) has urged the Senate not to make major changes to the budget reconciliation bill that passed narrowly in House before Memorial Day, but he may be disappointed, given divisions in the Senate. TPC and the Urban Institute have produced analyses of the legislation’s most consequential tax provisions. 

• Who benefits? A TPC analysis shows that all income levels would benefit, on average, but wealthier households would see bigger gains.
• Is it tax reform? Bill Gale and Howard Gleckman argue the legislation fails key tax reform tests of fairness, efficiency, and simplicity. Gene Steuerle proposes that real tax reform is possible, and offers an alternative to consider.
• Is the pass-through deduction worth the revenue? Retaining the deduction is a priority for small business advocates, but tax experts are less convinced. Gale and Sam Thorpe make the case against extending the Section 199A deduction, calling it expensive, regressive, and unsupported by economic evidence.
• What about the corporate income tax rate? Elena Patel argues the legislation breaks the 2017 corporate tax bargain: Broaden the base and lower the rate. By doing so, it risks increasing the deficit with little economic return.
• What did the state and local tax deduction cap do? Nikhita Airi examines the state and local tax (SALT) deduction cap and the proposed increase, warning it would cost significant revenue and largely benefit high-income areas.
• How can Congress best help children? Margot Crandall-Hollick critiques the bill’s proposed expansion of the child tax credit (CTC), finding it would exclude the lowest-income families. In another analysis, Elaine Maag, Gene Steuerle, and Crandall-Hollick urge broader reforms to the CTC and earned income tax credit to better serve children amid looming cuts to the federal safety net. And Aravind Boddupalli and Luisa Godinez-Puig warn new Social Security Number requirements of adults could deny the CTC to millions of American children.
• Are Opportunity Zones helping struggling communities? The Urban Institute’s Brett Theodos and Brady Meixell argue that Opportunity Zones, another TCJA-era initiative extended by the bill, need reform to achieve their goal of benefiting underserved communities.
• What about the rest of the world? On the international front, Thomas Brosy  and Reuven Avi-Yonah assess whether a provision in the bill targeting discriminatory foreign taxes can survive legal and diplomatic hurdles. The proposal comes amid global tension over President Trump’s tariffs, the Organisation for Economic Co-operation and Development’s corporate tax reform framework, and digital services taxes.

Stay tuned: New TPC analyses are coming soon. 

Meanwhile, President Trump is open to tweaks, but DOGE’s Musk says the bill’s “not beautiful.” Trump says he’s “not happy about certain aspects” of the tax bill and is open to negotiating changes as it heads to the Senate. His comments followed a public rebuke by Elon Musk, head of the Department of Government Efficiency (DOGE), who criticized the bill’s cost and growing deficit impact. Musk told CBS, “A bill can be big or it can be beautiful. But I don’t know if it can be both.” Trump had tasked Musk’s group with formalizing federal spending cuts, but as Reuters reports, that effort is facing technical hurdles and congressional pushback. 

After phone call with the European Commission, Trump pauses European tariffs. President Trump has postponed a planned 50 percent tariff on all European Union imports from June 1 to July 9 following a phone call with European Commission President Ursula von der Leyen. The delay comes days after Trump threatened steep tariffs over what he called stalled trade talks. While Trump insisted the threat was real, he agreed to maintain a 10 percent baseline tariff for now. Von der Leyen welcomed the pause, calling for swift progress on negotiations. As Tax Notes reports, Trump likened the EU standoff to his ongoing tariff battle with China, which reached a temporary pause earlier this month. Meanwhile, the Court of International Trade has halted Trump’s tariffs on all imported goods, ruling that the president exceeded his authority in imposing them. The White House plans to appeal. 

North Carolina mails 100,000 delayed refund checks. After a surprise shutdown of its check-printing vendor, the North Carolina Department of Revenue (NCDOR) has mailed 100,000 delayed tax refund checks. The disruption, which began on May 12, affected about 300,000 individual and business refund checks and nearly half a million taxpayer notices. As WRAL reports, the state is working to find a new vendor and has created a dedicated webpage to track refund updates. Electronic filers who requested direct deposit were not affected. 

The Daily Deduction will resume its regular schedule on Monday, June 2. 

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky.