House Republicans are working to incorporate several of President Trump's tax proposals into new legislation, despite some of his unexpected suggestions, like eliminating income taxes for earnings under $200,000 in favor of tariff revenues. Key proposals from Trump's campaign, such as not taxing tips, overtime pay, or Social Security benefits, are being considered, but with more limitations than initially advertised. Concerns about the cost of these proposals are significant, with the potential to significantly increase the deficit, prompting Republicans to also discuss spending cuts in programs like Medicaid. Measures to restrict tax exemptions for tips and overtime pay to lower-income Americans are being debated, with the possibility of implementing these breaks only for the duration of Trump's term. The proposal to not tax Social Security benefits requires creative legislative maneuvering due to procedural rules, potentially leading to a broader tax break for seniors instead.

President Trump's suggestion to eliminate income taxes on earnings under $200,000 surprised many Republicans, as it was not previously discussed among those crafting the tax bill. The plan relies on tariff revenues to replace lost income tax revenue, which has not been formally proposed by lawmakers.

Several of Trump's campaign promises, including not taxing tips, overtime, and Social Security benefits, are being considered by House Republicans, although they are likely to be implemented with more restrictions. These ideas aim to provide relief to lower and middle-income Americans but pose challenges due to potential high costs.

The potential cost of implementing these tax cuts without offsetting spending reductions could increase the deficit by trillions, according to estimates. This has prompted Republicans to also discuss potential cuts to programs like Medicaid to manage the fiscal impact.

The proposed tax exemption for tips is being carefully designed to limit its scope, with a threshold income level for eligibility and exclusions for gig workers, to prevent misuse. Companies like DoorDash are lobbying for the inclusion of independent contractors in this tax break.

Efforts to provide a tax break for Social Security benefits face procedural challenges, as reconciliation rules prevent direct changes to Social Security's finances. As a workaround, Republicans are considering expanding existing tax deductions for seniors to alleviate their tax burden.

Senator Ron Johnson and other Republicans express concerns over the lack of guiding principles in these tax proposals, preferring simpler solutions like lowering overall tax rates rather than creating specific exemptions.

The debate over these tax breaks is ongoing, with Republicans seeking to balance tax relief with fiscal responsibility, considering both the immediate political benefits and the long-term economic implications.