Trump Pitches Retirement Accounts as Republicans Mull Tax Bill

President Donald Trump proposed new retirement savings options for taxpayers without a work plan in his State of the Union address, but Republicans remain divided over other whether to pursue further tax legislation this year.

President Trump used the annual address to pledge to give taxpayers without employer retirement plans “access to the same type of retirement plan offered to every federal worker,” plus a $1,000 matching contribution. The administration has so far offered few additional details on the proposal but has confirmed that the $1,000 match refers to the existing retirement savings contribution credit, known as the saver’s credit. It is unclear how much of the plan can be accomplished without legislation. White House Economic Advisor Kevin Hassett suggested the saver’s credit could be expanded legislatively. 

Opportunities for tax legislation will be limited this year. President Trump offered no other new tax policy proposals in his address and confirmed that he will not ask Congress to vote on any tariff legislation. Instead, he plans to rely on his remaining tariff authority after the recent Supreme Court decision (see Section 122 Import Surcharge Replaces IEEPA Tariffs for more information).

Republicans continue to discuss the idea of a second reconciliation tax bill, which could address a range of tax issues, such as healthcare, housing affordability, retirement incentives, or tariff refunds. President Trump has been consistently cool to the idea, but Treasury Secretary Scott Bessent and Hassett recently said it is under consideration. 

Senate Majority Leader John Thune, R-S.D., said on Fox News that he is “soliciting ideas from the relevant committees” to see whether any issue “would get 50 votes.” He specifically highlighted retirement accounts as “a great idea,” but acknowledged that “there’s a lot of work that has to happen in the House and the Senate in order to make something like that become a reality.”

House Ways and Means Committee Chair Jason Smith, R-Mo., continues to discount the possibility. “I would love a second reconciliation bill, but I can count votes,” he told a Politico reporter. “And we do not have the votes.”

• Key Impact: Republicans remain deeply divided on their tax priorities. The narrow majorities in both chambers would make a reconciliation bill difficult, and the administration is increasingly focused on the tax regulatory space. 

Indexing Capital Gains to Inflation

Sens. Ted Cruz, R-Texas, and Tim Scott, R-S.C., are reportedly pushing Treasury to issue guidance that would index the basis of assets to inflation for purposes of calculating capital gain. President Trump openly flirted with the idea during his first term but ultimately declined to pursue it.

"I've studied indexing for a long time and I think it will be perceived, if I do it, as somewhat elitist. I don't want to do that," President Trump told reporters in 2019. "I think indexing is really probably better for the upper-income groups."

The administration has not discussed the idea openly in the president’s second term and it was not mentioned in the State of the Union address. But Treasury has been fairly ambitious in recent regulations, and it’s possible President Trump’s thinking on the issue has evolved.

Housing Bill

The Senate voted 84-6 on March 2 to advance a housing affordability bill. The bill includes a range of nontax provisions, and lawmakers are expected to add a provision to ban large institutional investors from purchasing single-family homes. The legislative effort enjoys significant bipartisan support, and the House and Senate bills share many common elements. Neither version contains tax provisions at this point, but some members have discussed adding them.

Democratic Wealth Tax

Sens. Bernie Sanders, I-Vt., and Rep. Ro Khanna, D-Calif., on March 2 introduced legislation that would impose a 5% tax on the net value of a taxpayer’s assets exceeding $1 billion. The legislation includes provisions for defining and valuing a taxpayer’s assets, though it leaves many technical considerations unaddressed.