This week (July 14-18)

Congress: The House and Senate are in session. The Senate is expected to take up a package of budget rescissions.

On Wednesday, July 16, the House Ways and Means Oversight Subcommittee is holding a hearing on "Making America the Crypto Capital of the World: Ensuring Digital Asset Policy Built for the 21st Century."

Last week (July 7-11)

OBBBA: It has been one week since President Trump signed on July 4 the "One Big, Beautiful Bill Act" (Public Law No. 119-21) to extend expired and expiring tax provisions, fulfilling a large swath of the Administration's domestic agenda in a package that was a primary focus for the first half of the year and going back to last year's elections. The Senate vote July 1 and House vote July 3 were both preceded by overnight sessions for policy changes — in the Senate at least, to win the vote of Senator Lisa Murkowski (R-AK) — and the ultimately successful convincing of reluctant members by GOP leaders and the President. The self-imposed deadline of July 4 proved to be a powerful incentive for members to vote in favor, with deft handling of the bill by GOP leaders in both chambers.

Main categories of the bill, described as chapters, include:

• Providing Permanent Tax Relief for Middle-Class Families and Workers, which encompasses the Tax Cuts & Jobs Act (TCJA) extensions, including the state and local tax (SALT) deduction cap
• Delivering on Presidential Priorities to Provide New Middle-Class Tax Relief: no tax on tips, overtime, and car loan interest, plus Trump accounts
• Establishing Certainty and Competitiveness for American Job Creators: permanency of TCJA pre-cliffs on bonus depreciation, R&D expensing, and the 163(j) interest deduction calculation, plus international tax provisions
• Investing in American Families, Communities, and Small Businesses, which also includes charitable provisions
• Ending Green New Deal Spending, Promoting America-First Energy and Other Reforms, detailing energy tax credit modifications
• Enhancing Deduction and Income Tax Credit Guardrails, and Other Reforms, including for ERC provisions and Social Security number requirements for education credits
• Health Tax, including eligibility requirements, waste/fraud provisions, and health savings account changes

Enrolled bill text has been posted available here.

A WCEY summary of provisions is available here.

A July 12 Wall Street Journal story noted, "In the tax-and-spending legislation that Trump signed into law July 4, Republicans reupped the Opportunity Zone tax break for investments in low-income areas and made it permanent, letting investors defer and reduce taxes. They also expanded a break often used by venture-capital investors that can wipe out capital-gains taxes when a startup is sold."

EY Alerts available related to the new law include:

• "New tax law reinvents TCJA's Opportunity Zones as new, permanent program, beginning in 2027," available here.
• "Final tax reconciliation bill expands small business stock exclusion under IRC Section 1202," available here.
• "Tax reconciliation will significantly affect individual taxpayers," available here.
• "Final tax reconciliation legislation modifies low-income housing credit," available here.

Regulatory focus: As the dust continues to settle after enactment of the bill, the focus is on regulatory implementation of energy tax credit modifications, international provisions, Trump proposals like no tax on tips and overtime, and Trump Accounts for children, plus some provisions that members of Congress want changed. Treasury, of course, has a newly confirmed Treasury Assistant Secretary for Tax Policy, Ken Kies, to oversee the writing of regulations.

Regarding implementation of Inflation Reduction Act (IRA) energy tax credit modifications, President Trump's July 7 executive order (EO) calling on Treasury "to strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the [IRC] for wind and solar facilities" has been a focus in the press. The EO, which also called for action "to ensure that policies concerning the 'beginning of construction' are not circumvented," is widely recognized as stemming from assurances made by President Trump to conservative House Republicans who were concerned with the approach to energy credits taken in the Senate version of the OBBBA. The Senate bill allowed wind and solar projects to be eligible for the credits if placed in service by December 31, 2027, and extended the tax credit timeline such that facilities retain full credit value if they begin construction within one year of the date of enactment. "In a last-minute deal last week, Senate and House Republicans agreed to allow wind and solar facilities that break ground within 12 months to receive subsidies for several years," said a story in the July 10 Washington Post. The story cited some who say the EO's language on begin construction could reduce the number of projects that qualify for the credits through guidance that would "tighten up the definitions."

Politico reported that the late Senate change that "offers more time for projects that begin construction in the next 12 months … is now in doubt. Trump's executive order directs the Treasury Department to get rid of the credits as quickly as possible, including by potentially rewriting long-standing rules that define when a project is considered to have started construction." The story further said, "For clean energy developers, the order represents a potential threat to the window of certainty — albeit a short one — that Senate moderates had given them to get their projects online and be assured of receiving the credits."

Gambling deduction: There has also been attention on the Senate's change regarding the deduction for gambling losses. Senator Catherine Cortez Masto (D-NV) July 9 introduced legislation to reinstate the prior rules (S. 2230) that she said is required because the "bill that they passed last week changed the tax code to only allow a 90% deduction on gambling losses." She unsuccessfully sought unanimous consent for Senate passage of the bill, which is cosponsored by Senators Jacky Rosen (D-NV) and Ted Cruz (R-TX), on July 10. "Unfortunately, tucked into the Republicans' tax bill was a provision that puts the industry at risk not just in Nevada but across the country," she said. "Until last week, the law of the land was that gamblers could deduct 100% of their losses from their annual taxes." Rep. Dina Titus (D-NV) sponsors the House version (H.R. 4304). "For gamblers, the change means they could owe more taxes if they lose money or win by slim margins … " said a story in the July 10 Wall Street Journal. "The change to loss deductions could have major implications for the finances of high rollers and professional gamblers." The story cited a Finance Committee spokeswoman as saying the change was made because of the current policy baseline that assumed no cost to extend current provisions, meaning each needed to be changed to comply with reconciliation rules. A Washington Post story said, "In practice, for example, under the old rule, someone who wins $100,000 and loses $100,000 could deduct the full $100,000 in losses and owe nothing. Under the new rule, they would only be able to deduct $90,000 and would still owe taxes on the remaining $10,000, despite having lost all their winnings." The story said, "Some senators have said they weren't aware of the provision, and it only publicly came to light days ahead of the bill's passage, with professional gamblers and media figures drawing attention to it."

Global tax: An EY Alert, "G7 issues statement on global minimum taxes," is available here.