House Ways and Means Committee Chairman Jason Smith (R-MO) lent some new uncertainty to the outlook for an additional budget reconciliation bill with tax provisions this year. Asked on CNBC's "Squawk Box" September 9 whether there will be a "part two" to the "One Big Beautiful Bill Act" (OBBBA), Chairman Smith said, "I think that's a great question. I feel like we delivered everything that the President promised to the American people, and that he campaigned on, in this bill." Further asked whether a second reconciliation package would be too hard as the elections approach, Chairman Smith emphasized his initial preference for one bill because two partisan reconciliation bills have never been signed into law in the same year.

House Speaker Mike Johnson (R-LA) said before the August recess that he wanted Congress to act on a second reconciliation bill this year to address provisions omitted from the OBBBA. But President Trump hasn't publicly asked for another bill and other GOP members have suggested privately that the focus for now may be more toward a year-end bipartisan package that could address outstanding tax, trade and health care priorities. Tax extenders that expire at the end of 2025 include the Work Opportunity Tax Credit (WOTC), Empowerment Zone tax incentives, the seven-year recovery period for motor sports entertainment complexes, and expensing rules for film, television and theatrical productions under IRC Section 181.

Recent press articles have focused on prospects for addressing these provisions. Tax Notes on September 8 reported on members and the business community supporting WOTC. Regarding the credit being omitted from the OBBBA — which addressed the CFC look-through rule, New Markets Tax Credit, and cover over of tax on distilled spirits — Rep. Lloyd Smucker (R-PA) said, "The WOTC bill is one that I was hoping to see in there." Smucker sponsors the Improve and Enhance the Work Opportunity Tax Credit Act (H.R. 1177) to:

• Update WOTC and encourage longer-service employment
• Increase the current credit percentage from 40% to 50% of qualified wages
• Add a second level of credit for employees who work 400 or more hours
• Eliminate the age cap at which SNAP recipients are eligible for WOTC

On July 29, Ways and Means members Judy Chu (D-CA) and Nicole Malliotakis (R-NY) and Senate Finance Committee members Raphael Warnock (D-GA) and Marsha Blackburn (R-TN) introduced the Creative Relief and Expensing for Artistic Entertainment (CREATE) Act, to extend through 2030 the IRC Section 181 100% deduction for production costs of films, television, and sound recordings in the year paid or incurred.

Senate Finance Committee members Todd Young (R-IN) and Mark Warner (D-VA) and House Ways and Means Committee members Claudia Tenney (R-NY), Mike Thompson (D-CA) and Terri Sewell (D-AL) sponsor the Motorsports Fairness and Permanency Act of 2025 (S. 1763/H.R. 2231), to make permanent the seven-year recovery period for motorsports entertainment complexes.

Government funding — A bipartisan package on tax and other issues could be attached to a year-end spending bill, but the appropriations outlook remains unclear with an expiration of government funding looming on September 30. (Typically, funding would be patched until later in the year, then a more substantial year-end bill could include other priorities.) There continues to be attention on House Appropriations Chairman Tom Cole's (R-OK) plan for Congress to complete consideration of three of the dozen annual appropriations bills — Military Construction-Veterans Affairs, Agriculture (which includes the Food and Drug Administration), and Legislative Branch — and for a continuing resolution (CR) for other government funding into November or December. Some conservative House members are pushing for a yearlong CR, but Freedom Caucus Chair Andy Harris (R-MD) said September 8 that the group would back a shorter patch if GOP leaders can gain the requisite votes.

Speaker Johnson seems aligned with the Cole plan, suggesting September 9 his preference for "an actual, old-school conference, the way this is supposed to work between the House and Senate" on the Military Construction-VA bill that the Senate paired with the two other bills. But he did not say how long other government funding would be extended. The White House budget anomalies document sent to Capitol Hill on September 9 cited January 31, 2026, as their preferred end date for a CR.

CRs and other government funding bills need at least some Democratic support because they require 60 votes in the Senate. And in the House, some Republicans oppose short-term CRs as a rule, which may require gaining Democratic votes in that chamber. There are doubts about whether Democrats would vote for a bill extending government funding beyond September 30 without winning any policy concessions, especially given the criticism Senate Democratic Leader Chuck Schumer (D-NY) faced for supporting a CR last March, through September 30, without taking a tougher stand on Administration actions.

Extension of enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of the year is increasingly becoming entwined with government funding efforts. Some Democrats say they won't back a CR without addressing what is a traditionally Democratic issue (given that they alone enacted both the enhancements and the underlying ACA). However, Republicans are cognizant of the potential effects on the midterm elections of letting the enhanced credits expire, especially following the Medicaid changes they enacted in the OBBBA.

Some Republicans are suggesting a greater focus on the issue. "The White House needs to be instructed by what it takes to get a CR out of the Senate," Sen. Thom Tillis (R-NC) said in Punchbowl News September 8. "I'm pretty much on record talking about how disruptive the [OBBB] Medicaid cuts were … The last thing we want to do, for the purposes of Democrats, is have another bad message on health care policy."

Republican leaders have expressed some willingness to act on the credits if changes can reduce the cost. A September 8 Politico story cited Senate Majority Leader John Thune (R-SD) as saying the Democrats should "come forward with a solution" that would extend the subsidies at a lower cost. "This a problem … of their making," he said. Senator Thune has also said a CR needs to be "clean" and free of extraneous issues, suggesting that he envisions any deal on premium credits to be on a broader funding measure.

Other members are opposed to acting on the credits. Freedom Caucus member Rep. Chip Roy (R-TX) posted on social media September 9, "No - the @HouseGOP should not extend … checks notes … $400 BILLION in Biden's COVID-era expansion of Obamacare subsidies that are increasing the cost of healthcare. We should instead pass Healthcare Freedom to give people their doctor of choice at lower prices … "

Tax — The Senate Finance Committee is holding a hearing today (Wednesday, September 10) at 10 a.m.) on the nomination of Donald Korb to be IRS Chief Counsel. The Committee will also consider the nomination of Jonathan Greenstein to be a Deputy Under Secretary of the Treasury. Any number of issues of concern to members regarding Treasury and the IRS could be addressed during member questioning.

In a September 9 letter to Treasury Secretary Scott Bessent, Senators Elizabeth Warren (D-MA), Angus King (I-ME), John Hickenlooper (D-CO), Sheldon Whitehouse (D-RI), Ed Markey (D-MA) and Rep. Don Beyer (D-VA) raised concerns with two new interim guidance notices "intended to erode" the corporate alternative minimum tax (CAMT).

The letter addressed:

• Notice 2025-27, which revised the safe harbor for determining applicable corporation status for purposes of the CAMT
• Notice 2025-28, regarding the application of the CAMT to applicable corporations with financial statement income (FSI) attributable to investments in partnerships

In the letter, the members said Notice 2025-27 allows companies to avoid the CAMT if their income, under a simplified accounting method, is below $800 million, which is significantly higher than the Biden administration's threshold of $500 million. "Further, this notice also indicates future potential erosion of the CAMT tax base by stating that Treasury and the IRS will reconsider the treatment of unrealized capital gains," the letter said. Additionally, Notice 2025-28 "creates additional complexity for tax administrators and risks enabling gaming and inconsistent outcomes across similarly situated taxpayers," the letter said.

Global tax — House Ways and Means Committee Republicans met September 9 with Treasury Assistant Secretary for Tax Policy Ken Kies regarding the Administration's implementation of tax provisions included in the OBBBA. According to the Daily Tax Report, Kies suggested Treasury would likely support member efforts to revive the Section 899 retaliatory tax regime dropped from the OBBBA if other nations don't abide by the G7 statement calling for a side-by-side system to fully exclude US-parented groups from the Undertaxed Profits Rule (UTPR) and the Income Inclusion Rule (IIR) for domestic and foreign profits. Chairman Smith has said members could return to the proposal if countries don't comply or impose taxes deemed too punitive, and Rep. Ron Estes (R-KS) said in July that the US must verify nations are complying.

Recent press articles have checked in on the status of Pillar Two following the G7 statement. A September 8 Bloomberg Daily Tax Report story said, "Negotiators at the OECD are racing to rewrite large parts of the global minimum tax framework by year-end to placate the US, a goal that appears elusive as dozens of countries raise concerns about being put at a competitive disadvantage," after Treasury gave other nations a December 31 deadline to agree on a plan that would exempt US companies from the UTPR and IIR. The story cited previous reporting on concerns by some nations that exempting US companies would be unfair and impinge on their sovereign right to tax corporations doing business within their borders.

Politico Morning Tax on September 9 said, "It's far from clear how quickly that agreement within the G7 can be turned into something durable and workable" even in light of the year-end deadline Treasury has set. "It's one thing to come to a general agreement among the G7, quite another to hash something out that can get consensus among the 140 countries taking part in global tax negotiations through the Organization for Economic Cooperation and Development," the story said.