This week (June 9-13)

Congress: The House and Senate are in session. The Senate Finance Committee's portion of the reconciliation bill, addressing tax and health issues, may be released this week.

The House Ways and Means Committee has scheduled a hearing with Treasury Secretary Scott Bessent for Wednesday, June 11 at 10 a.m.

The Senate Finance Committee hearing with Secretary Bessent is set for Thursday, June 12 at 10 a.m.

Last week (June 2-6)

OBBBA: The reconciliation process for Senate Republicans to pass their version of the House-passed One Big, Beautiful Bill Act (OBBBA, H.R. 1) to extend Tax Cuts & Jobs Act (TCJA) provisions expiring at the end of 2025 and cut mandatory spending is already underway, with some committees releasing draft text to meet their instructions. Senate Majority Leader John Thune (R-SD) said the Finance Committee portion of the bill will likely be released next week; that some committees may hold markups and others may not, at the discretion of the chairmen; and that the goal is for a Senate vote the last week of June to try to meet the Administration's July 4 enactment target. (It has long been speculated that a regular order committee process for the bill would be bypassed in the Senate.) Ideally, the President and Republican Congressional leaders would like to see the House accept any Senate-passed bill so that the President could sign the legislation in early July, rather than go to conference either formally or informally to reconcile different House and Senate products. However, it remains unclear whether this objective can be met. "It'll have to track fairly closely, obviously, with the House bill because they've got a fragile majority and struck a very delicate balance in getting it passed in the House in the first place," Thune said in Punchbowl News. "But there are some things that senators want added to the bill or things that we'd do slightly differently."

There have long been pockets of Republican senators with objections to broad aspects of the House bill:

• Inflation Reduction Act (IRA) energy tax credit concerns have been expressed by members including Senators Lisa Murkowski (R-AK), John Curtis (R-UT), Tillis, and Jerry Moran (R-KS)
• Medicaid concerns have been cited by Senators Murkowski, Susan Collins (R-ME), Shelley Moore Capito (R-WV), Jim Justice (R-WV), and Josh Hawley (R-MO), who objects to Medicaid provider tax and cost sharing provisions in the House bill
• Wariness over the overall spending level and insufficient deficit reduction, plus the debt limit increase, have been expressed by Senators Ron Johnson (R-WI), Rand Paul (R-KY), Mike Lee (R-UT), and Rick Scott (R-FL)

The Senate's plans for changing the OBBBA came into greater focus as the week went on. Following a White House meeting with Senate Finance Committee Republicans, there was more speculation about dialing back the House bill's state and local tax deduction (SALT) cap and greater uncertainty about Senators' plans to make permanent the House bill's temporary, five-year extensions of TCJA pre-cliffs on bonus depreciation, IRC Section 163(j) interest deductibility, and IRC Section 174 R&D expensing. Senators are also emphasizing their concerns about IRA credit rollbacks and education and charitable provisions.

TCJA pre-cliffs — Politico reported June 5: "Sen. Ron Johnson of Wisconsin, who was among the Senate Finance Committee Republicans to meet with Trump at the White House Wednesday, said the president told lawmakers it could be better for economic growth to make the provisions temporary, because that would provide a more immediate incentive for businesses to take advantage of them. 'He actually made a pretty good case for making them temporary to spur investment early on,' Johnson told reporters." However, Senator Steve Daines (R-MT), who said weeks ago that pro-growth provisions in the Ways and Means bill, focusing on the pre-cliff extenders, should be made permanent rather than only extended on a temporary basis, interpreted the President's position as being good with either approach. Leader Thune and Senate Finance Committee Chairman Mike Crapo (R-ID) have said they want to make the provisions permanent.

SALT — The SALT cap issue seemed mostly resolved when House leaders struck a deal with high-tax state Republicans to increase the cap to $40,000 per household for incomes under $500,000 prior to the OBBBA vote, with the expectation that the deal would need to stick for a Senate-amended version to pass the House again. But Republican Senators, while aware of the political need for SALT cap relief in the House despite having no members of their own heavily invested in the issue, aren't yet on board with the level of relief in the House-passed bill. Finance Chairman Crapo was cited as saying there are no Republican Senators from New York, New Jersey or California, and therefore little appetite "to do $353 billion for states that, basically, the other states subsidize." Similarly, Senate Finance member Roger Marshall (R-KS) said on Bloomberg TV, "This is basically a $350 billion subsidy for blue states," and that Senate leaders should consult House Speaker Mike Johnson (R-LA) regarding potential "wiggle room" on the bill's approach. Leader Thune said in the Bloomberg Daily Tax Report, "There really isn't a single Republican senator who cares much about the SALT issue." It isn't clear how the provision may be trimmed, but high-tax state House members are warning a bill can't pass without the agreed-upon relief.

IRA energy credits — Senator Thom Tillis (R-NC), one of at least five Republican members with concerns about IRA energy tax credit rollbacks — the others are Lisa Murkowski (AK), John Curtis (UT), Kevin Cramer (ND) and Jerry Moran (KS) — was reported by Bloomberg Government as saying the Senate Finance Committee has a general consensus to soften some of the House provisions. "We have an agreement we have to change some of the ramp-down provisions," he said, adding proposals are still being discussed. A June 3 Politico article reported on possible changes to the House bill's energy tax credit changes, which could include longer timelines: "Senate Republicans could look to link the phaseout timelines so that developers can access tax credits when they begin construction on a project, rather than attaching them to when a project begins producing energy, as the House Republican bill does." Senator Tillis was quoted in the article as saying, "What we're trying to focus on is to make sure that if businesses have invested and have projects in progress, that we do everything we can to hold them harmless … I do believe that investment tax credits, production tax credits have to have a beginning, middle and an end."

Education and charitable - Politico reported Senator James Lankford (R-OK) as saying he may push for changes to the House proposals on university endowment taxes and excise tax on private foundations, while also advocating for the charitable non-itemizer deduction.

The Congressional Budget Office said the OBBBA would increase the deficit by $2.4 trillion over 10 years and require $550 billion in interest payments. There has been an undercurrent of concern about the deficit impact of the bill, but a story in the June 6 Washington Post said some opposition appeared to soften following the White House meeting. The story cited Senator Ron Johnson as saying more significant deficit reduction could come in subsequent legislation. And it highlighted the fact that, even following House passage of the bill, there is a still a balancing act required in appeasing members, including those invested in the SALT issue. "If Trump and Republican leaders in Congress alter the bill to placate the moderates, they risk losing the support of budget hawks," the story said. "And if they increase cost-cutting measures to satisfy hard-liners, blue-state Republicans have threatened to sink the legislation."

Global tax: There continues to be attention on the House bill's new IRC Section 899, which would increase income tax and withholding tax rates and expand the application of the BEAT rules on foreign-parented groups, applicable to residents of countries with certain "unfair foreign taxes," including the undertaxed profits rule (UTPR) and digital services taxes (DSTs). The provision as drafted also hits foreign investors located in these countries who invest in US investment assets directly or through various fund structures. The House has said the proposal wouldn't cover portfolio interest such as on Treasuries, but concerns over potential effects on foreign investment in the US persist. The issue even rose to the level of the Sunday political shows, as National Economic Council Director Kevin Hassett said on This Week June 1 that the proposal "is a reasonable response to what other countries have done to our big companies." There was discussion about whether the proposal could run afoul of the reconciliation Byrd Rule if it was found to engage treaty issues that are under the jurisdiction of the Senate Foreign Relations Committee, which doesn't have a role in the reconciliation bill, but Punchbowl News reported that the Senate parliamentarian had ruled that the provision is under the purview of the Finance Committee.

Tax Notes reported Treasury Deputy Secretary Michael Faulkender as referencing proposed IRC Section 899 in the context of current OECD negotiations to eliminate the applicability of the Pillar 2 global minimum tax rules to US MNEs.

IRS: The Senate Finance Committee June 3 approved the nomination of former Rep. Billy Long (R-MO) to be IRS Commissioner 14-13, along party lines. Ranking Member Ron Wyden (D-OR) continued to cite concerns about his personal business dealings with tribal tax credits and Employee Retention Tax Credits and his use of campaign funds.

Bill intros: On June 4, Senator Bill Cassidy (R-LA) introduced a bill (S. 1938) to modify the amount of revenue transferred to Puerto Rico and the U.S. Virgin Islands, the "rum cover over," from the excise taxes collected on rum that is produced in or imported into the rest of the United States from the two US territories.

Recently posted EY Alerts include:

• "US House approves tax reconciliation bill, with minor rate changes in international tax provisions" (Tax Alert 2025-1143)
• "Tax reconciliation bill passed by House could significantly affect individual taxpayers" (Tax Alert 2025-1161)

"House-passed HR 1 contains new information reporting and withholding provisions" (Tax Alert 2025-1187)