Legislative Landscape
On Nov. 19, Senate Majority Leader John Thune (R-SD) released the 2026 Senate calendar.
T-28 Days Until the Expiration of the ACA eAPTCs: With the House scheduled to be in session for two more weeks, Congress has yet to land on a solution for the expiring Affordable Care Act enhanced premium tax credits (eAPTCs). Earlier this week, Majority Leader Thune painted a dim picture regarding ongoing negotiations with Democrats as the stalemate for a solution is ongoing. However, as part of a deal to end the government shutdown, nine Democrats joined Republicans in voting for the continuing resolution based on the promise of a vote on a health care proposal that addresses the expiring credits. That vote is set for next week and Majority Leader Thune noted that it is unlikely that they will reach an agreement by then.
On the other side of the Hill, Speaker Mike Johnson (R-LA) was reported to have been responsible for intervening in a potential White House proposal to extend the eAPTCs for two years. He noted that the plan would not have enough support on the House floor as several House Republicans came out against it in response to reports of a White House plan. Minority Leader Hakeem Jeffries (D-NY) warned that inaction could lead to significant premium increases for millions and urged House Republicans to join a Democratic-led discharge petition to force a floor vote on a three-year extension.
Senate Releases FY2026 FSGG Appropriations Bill: Last week, the Senate Appropriations Financial Services and General Government (FSGG) subcommittee released its FY2026 appropriations bill. The proposal allocated $11.8 billion for the Internal Revenue Service (IRS), reducing the budget by $481 million in comparison to the FY2025 funding levels. The bill provides the Treasury Inspector General for Tax Administration (TIGTA) with $160 million and $3.2 billion for taxpayer services by shifting resources for technology and operations support. The FSGG appropriations bill comes on the heels of the pending minibus, including Interior, Defense, Transportation-HUD (THUD) and Commerce-Justice-Science (CJS), that Majority Leader Thune is trying to tee up in the Senate as the Jan. 30, 2026, funding deadline approaches.
IRS, Tax Court Bills Advance in the House: On Monday, the House passed H.R.5346, the Fair and Accountable IRS Reviews Act and H.R.5349, the Tax Court Improvement Act by voice vote. The Fair and Accountable IRS Reviews Act would require IRS employees to get initial penalty determinations approved by an immediate supervisor before notifying the taxpayer. The Tax Court Improvement Act would expand the court’s authority for subpoenas and special trial judges, jurisdiction to apply equitable tolling and aligns the recusal standards with the U.S. appellate and district courts. Both bills will advance to the Senate, where their ultimate consideration is uncertain.
Young Sends Letter to IRS on Staking Treatment: On Nov. 18, Sen. Todd Young (R-IN) sent a letter to the Acting IRS Commissioner and Treasury Secretary Scott Bessent urging a review and clarification, modification or reversal of Revenue Ruling 2023-14 on the taxation of cryptocurrency staking rewards. In the letter, Sen. Young highlights that the current guidance is incomplete and expressed concern about the timing of income recognition, consistency with other digital asset activities like mining and airdrops and stakeholder input. Sen. Young asked the agency to explain its rationale and indicate whether it plans to issue revised or supplemental guidance.
Pressley Sends Letter to IRS and Treasury Department on Trump Accounts: On Nov. 21, Rep. Ayanna Pressley (D-MA) sent a letter to Treasury Secretary Scott Bessent urging comprehensive and equitable guidance on implementing new child savings “Trump Accounts” created by the One Big Beautiful Bill Act (OBBBA, P.L. 119-21). In the letter, Rep. Pressley warns that the OBBBA’s program structure will deepen wealth inequality and provide only limited benefits for most families. The letter also requests that the IRS issue timely regulations, clarify tax treatment and benefit interactions, confirm automatic enrollment and employer contributions, clarify if there will be engagement with Democrats and experts in implementation and address leadership instability at IRS by nominating a permanent commissioner so the program can be administered fairly and effectively.
Smucker Introduces WOTC Extension Bill: On Nov. 20, Rep. Lloyd Smucker (R-PA) introduced H.R. 6231, the Improve and Enhance the Work Opportunity Tax Credit (WOTC) Act to extend the credit for five years. The bill would also increase the existing qualified wages credit from 40% to 50%, allow military spouses to claim the credit and expand the credit for people who work 400 hours or more annually.
In the Senate, a bipartisan group introduced the companion bill, led by Sens. Bill Cassidy (R-LA), Catherine Cortez Masto (D-NV), John Boozman (R-AR), Roger Marshall (R-KS), Peter Welch (D-VT), Jerry Moran (R-KS), Maggie Hassan (D-NH), Jim Justice (R-WV) and Tim Kaine (D-VA).
Hinson, McDonald Rivet Introduce Section 529 Expansion Bill: On Nov. 21, Reps. Ashley Hinson (R-IA) and Kristen McDonald Rivet (D-MI) introduced H.R. 6272, the Early Education Savings Program Act, to expand the use of section 529 plans. The bill would expand section 529 plans to cover child-care expenses for children under the age of 5. Funds used for child-care expenses would be uncapped and must be used at a state-licensed facility under the proposal.
House Proposals On Retirement Tax Changes Emerge: Last week, Reps. Jimmy Panetta (D-CA) and Darin LaHood (R-IL) introduced H.R. 6324, the Retirement Simplification and Clarity Act. The bill would implement recommendations from the GAO to update the 402(f)-notice process, direct the IRS to rewrite the notice and allow certain individuals to transfer funds from their employee-sponsored 401(k) plans into an annuity.
Additionally, Rep. Abe Hamadeh (R-AZ) introduced H.R. 6190, the Tax Cuts for Veterans Act of 2025, which would exclude military retirement and related benefits from the income tax.
111 Constitution Avenue
Kies Flags Upcoming Guidance and the 2026 Filing Season: On Nov. 20, Treasury Assistant Secretary for Tax Policy and Acting IRS Chief Counsel Ken Kies spoke at a conference where he highlighted upcoming guidance related to OBBBA implementation. He specifically noted new incentives for tips and overtime, factory investments, bonus depreciation, “Trump accounts,” school choice credits, the section 45Z clean fuel credit, international provisions, the Johnson Amendment, refundable credits claimed by undocumented immigrants and the tax-exempt status of certain 501(c)(3)s.
He also discussed the 2026 filing season and said the agency is prepared for it as essential employees remained at the agency to work on implementation efforts during the extended government shutdown. On international tax issues, he cautioned other governments against backing away from OECD negotiations and suggested Congress could reinstate the previously proposed Section 899, also known as the “revenge tax,” if negotiations on the United States’ side-by-side exception to the Pillar Two global minimum tax are not successful.
Tax Guidance Issued – Nov. 19 through Dec. 3
Initial Guidance on Trump Accounts: On Tuesday, the Treasury Department and the IRS issued Notice 2025-68, providing initial guidance for the Trump Accounts created by the OBBBA. The guidance offers details on the structure of the program, establishment of initial and rollover Trump accounts, and notes that certain governmental entities and charities can make qualified contributions. The issued guidance coincides with the announcement of the $6.25 billion donation by Michael and Susan Dell for such accounts.
For more details about the program, please see here for the White House announcement and trumpaccounts.gov.
Guidance for the 2026 Filing Season for Taxpayers Claiming the Tip and Overtime Deduction: On Nov. 21, the Treasury Department and the IRS issued Notice 2025-69, providing 2025-only guidance for individuals claiming the deductions for “qualified tips” and “qualified overtime compensation” for tax years 2025–2028. Since Forms W‑2 and 1099 for 2025 will not separately report these amounts, the notice outlines other methods employees and nonemployees may use to determine qualified tips (for example, relying on W‑2 box 7, Forms 4070, box 14 entries, Form 4137 or corroborated tip logs) and to compute the Fair Labor Standards Act (FLSA)-based overtime premium component of overtime pay using pay statements and reasonable allocation fractions. The notice also provides transition relief by temporarily treating tips in listed tip-earning occupations as not from specified service trades or businesses for enforcement purposes, explains that overtime must be FLSA-required premium pay to qualify (not purely contractual or state-law extras) and confirms the deductions are unavailable to married individuals filing separately and requires a Social Security number to claim them.
Comments Requested on Tax Credits for Scholarship Granting Organizations: On Nov. 26, the Treasury Department and the IRS issued Notice 2025-70 announcing their intent to issue guidance under section 25F, which provides a nonrefundable individual income tax credit of up to $1,700 per year beginning in 2027 for cash contributions to state-certified scholarship granting organizations (SGOs) that fund elementary and secondary education scholarships for income-limited eligible students. The notice describes statutory SGO requirements (including 501(c)(3) status, separate accounts for qualified contributions, at least 90% of income spent on scholarships, income-verification and priority rules and prohibitions on earmarking and awards to disqualified persons). It also outlines an envisioned state election, annual SGO listing and detailed certification process distinguishing single-state and multistate SGOs. The notice poses targeted questions and requests comments on state policies and procedures, the meaning of “located in the state,” implementation of the state tax credit offset, interpretation of “income,” treatment of multistate and alternative organizational structures, the definition of “disqualified person,” and possible IRS reporting and recordkeeping requirements (including donor and recipient-level data). Public comments are due by Dec. 26, 2025.
Allocation of Foreign Income Taxes and Recognition of Pretransition Gain or Loss: On Nov. 25, the Treasury Department and the IRS issued Notice 2025-72, announcing plans to issue regulations on the one-month deferral provision in the OBBBA for specified foreign corporations with fiscal years ending on Nov. 30, 2025. The regulations will address rules to allocate foreign taxes between the required one-month short taxable year and the following taxable year and will also modify the Section 987 regulations so that pretransition gain or loss elections and related rules operate correctly in short taxable years.
Guidance on Loans Secured by Rural or Agricultural Real Property: On Nov. 20, the Treasury Department and the IRS issued Notice 2025-71, providing interim rules under section 139L on the exclusion from income of 25% of interest received by lenders on loans secured by qualifying rural or agricultural real property. The guidance defines key terms (including “interest received,” “pre‑enactment loan,” and “qualified rural or agricultural property”), sets rules and safe harbors for determining when and to what extent a loan is treated as secured by qualifying property (including fair market value thresholds, treatment of subsequent holders, mixed collateral and reasonable good‑faith reliance) and provides allocation rules for refinancings, significant modifications and post‑enactment borrowings. It also clarifies that qualifying use can include seasonal agricultural or fishing operations and aquaculture facilities, but excludes incidental agricultural activity. It allows taxpayers to rely on the guidance provided for loans made after July 4, 2025, and on or before 30 days after proposed regulations are published. Comments are requested on definitional issues (such as “rural or agricultural real estate” and “substantial use”), mixed‑use properties, post‑issuance changes in collateral or use and securitization structures. Public comments are due on Jan. 20, 2026.
IRS Issues Final Guidance on Corporate Stock Buyback Tax: On Nov. 21, the IRS issued final regulations for corporate stock repurchases under the Inflation Reduction Act. The final rules clarify their application after Dec. 31, 2022, modify exceptions for reorganizations, retirement plan contributions and regulated investment companies (RICs) and real estate investment trusts (REITs). The final regulations exclude “plain vanilla” preferred stock and certain other classes of preferred stock from the tax and also include transition relief for “mandatorily redeemable preferred stock” issued prior to Aug. 16, 2022, if the corporation does not have discretion over repurchase decisions. The regulations also adjust the “netting rule” and drop the proposed “funding rule” from the April 2024 proposed regulations that would have taxed certain foreign corporate share repurchases indirectly funded by U.S. subsidiaries.
Treasury Department to Block Use of Certain Tax Credits By Undocumented Immigrants: On Nov. 20, the Treasury Department announced it would issue guidance clarifying the refundable portions of several individual income tax credits. The department specifically notes the Earned Income Tax Credit (EITC), Additional Child Tax Credit, American Opportunity Tax Credit (AOTC) and Saver’s Match Credit will be treated as “federal public benefits” under the 1996 Personal Responsibility and Work Opportunity Reconciliation Act. The department cited a legal opinion by the Department of Justice that allows the agencies to bar undocumented and other non‑eligible immigrants from receiving these types of tax benefits.
Tax Worldview
Ongoing Global Tax Negotiations Include Potential One-Year Safe Habor: The interim safe harbor that simplifies tax calculations under the global minimum tax deal is reportedly being considered for a one-year extension to 2027. The proposal comes as the United States continues to press the Organisation for Economic Cooperation and Development (OECD) to adopt a side-by-side approach that would exclude U.S. multinationals from the Pillar Two global minimum tax. The extension would give countries additional time to implement permanent local legislation for a long-term safe harbor solution, preventing a gap when the current safe harbor expires at the end of 2026. By allowing companies to use a simplified method to determine if additional top-up tax is required, the safe harbor reduces administrative burdens that businesses face under the new 15% global minimum tax. Extending the safe harbor would help ensure a smoother transition until a permanent framework is formally adopted.
Republican Tax Writers Send Letter to POTUS on Proposed French DST Increase: On Nov. 25, 16 Republican members of the House Ways and Means Committee sent a letter to President Trump expressing significant concerns with France’s recent proposed increase in its digital services tax (DST). They highlighted that the tax unfairly targets large American digital companies and imposes substantial additional costs and threatens U.S. investment. The letter also urges potential retaliatory action, including reopening investigations into DSTs by France and other countries.
The letter was signed by Reps. Ron Estes (R-KS), Greg Steube (R-FL), Adrian Smith (R-NE), Mike Kelly (R-PA), David Schweikert (R-AZ), Darin LaHood (R-IL), Kevin Hern (R-OK), Carol D. Miller (R-WV), Gregory F. Murphy, M.D. (R-NC), Claudia Tenney (R-NY), Beth Van Duyne (R-TX), Randy Feenstra (R-IA), Mike Carey (R-OH), Rudy Yakym III (R-IN), Max L. Miller (R-OH) and Aaron Bean (R-FL).
Hearing and Events
House Ways and Means Committee
The House Ways and Means Tax Subcommittee held a hear titled “Promoting Global Competitiveness for American Workers and Businesses” on Dec. 3.
Senate Finance Committee
The Senate Finance Committee does not have any tax hearings scheduled for this week.