21 September 2025 This Week in Tax Policy for September 22 Congress: The House and Senate are scheduled to be out of session the week of September 22. Next steps with respect to a potential extension of government funding by the end of the month are unclear and may amount to a waiting game. After the break, lawmakers will have only September 29 and 30 to act to prevent a government shutdown. "The real votes on whether to shut the government down will be on the 29th and 30th," an unnamed GOP senator said in an Axios report. With Congress scheduled to be out of session this week, This Week in Tax Policy won't be published, but WCEY Alerts will be issued as events warrant. Big picture: The focus in Congress remains on finding a bipartisan path forward for government funding, which will have effects on how outstanding/expiring tax, health and trade items may be addressed before the end of 2025. On September 19, the House approved 217-212 a continuing resolution (CR, H.R. 5371) to fund the government, until November 21. The Senate, however, failed to pass both the House-passed CR and the Democratic alternative to fund the government through the end of October and make permanent enhanced Affordable Care Act (ACA) premium tax credits that expire at the end of 2025. Government funding bills require 60 votes in the Senate and Democrats are demanding the premium tax credits issue be addressed in exchange for their support. Some Republicans back an extension of the credits, but Senate Majority Leader John Thune (R-SD) and Appropriations Chair Susan Collins (R-ME) don't want to consider the premium tax credits issue in the context of the CR. Thus, the two parties are at odds. Punchbowl News reported Leader Thune as saying September 19, "It's going to be funding the government through a clean, short-term continuing resolution, or a government shutdown, and that's the choice the Democrats have." The outcome of the government funding debate will impact what the tax legislative calendar looks like for the remainder of the year, both in terms of prospects for Republicans and Democrats to come together to act on bipartisan priorities and in providing a vehicle for such a package, which could be attached to a year-end appropriations measure. Expiring provisions and other items that may be considered for such a bill include:
Ways and Means markup: During a September 17 Ways and Means markup of health, tax administration and Social Security bills, the Tax Court Improvement Act (H.R. 5349) introduced by Committee members Nathaniel Moran (R-TX) and Terri Sewell (D-AL), to expand the judicial review process, and the Fair and Accountable IRS Reviews Act (H.R. 5346), by Rep. Glenn Grothman (R-WI), to require that IRS proposed penalties be reviewed and approved by a supervisor, were approved unanimously. H.R. 5349 would authorize the Tax Court "to sign subpoenas to produce books, papers, documents, electronically stored information, or tangible things for purposes of discovery or evidence, prior to a hearing," the Committee said. H.R. 5346 "clarifies that supervisory approval of a penalty is timely only if the person proposing such penalty obtains the approval in writing prior to any written communication to a taxpayer with respect to such penalty." IRS: Treasury and IRS September 19 issued proposed regulations (REG-110032-25) on the OBBBA "no tax on tips" provision, identifying occupations customarily and regularly receive tips and define "qualified tips" eligible taxpayers may claim as a deduction. "The proposed regulations list nearly 70 separate occupations of tipped workers, from bartenders to water taxi operators," said a news release. Comments on the proposed regulations are due by October 23, 2025. The IRS September 15 issued final regulations addressing catch-up contribution provisions of the SECURE 2.0 Act enacted at the end of 2022, which required that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions. Bill introductions: Senate Democrats are reintroducing prior proposals to increase taxes on corporations with high relative executive compensation and wealthy individuals. On September 16, Senator Bernie Sanders (I-VT) introduced a bill (S. 2818) to impose a corporate tax rate increase on companies whose ratio of compensation of the CEO or other highest paid employee to median worker compensation is more than 50 to 1. On September 17, Senate Finance Committee ranking Democrat Ron Wyden (D-OR) introduced the Billionaires Income Tax Act (S. 2845) to modify over 30 tax provisions "so that billionaires are required to pay taxes annually." Ways and Means member Don Beyer (D-VA) sponsors the House version (H.R. 5427). On September 15, Ways and Means members Greg Steube (R-FL) and Mike Thompson (D-CA) introduced H.R. 5366, to codify and extend the rules for personal casualty losses arising from major disasters and the rules for the exclusion from gross income of compensation for losses or damages resulting from certain wildfires. Senator Rick Scott (R-FL) is sponsoring the Senate version. A Steube news release said the Federal Disaster Tax Relief Act will permit victims to claim disaster-related personal casualty losses without having to itemize deductions through 2026. Global tax: Prior to President Trump's visit to the United Kingdom, Ways and Means Committee members urged the President to seek removal of the UK digital services tax (DST) as soon as possible. "The UK's DST collected $1 billion in 2024 alone, and an estimated $3.1 billion between 2021 and 2024, almost entirely from American companies," members said in a September 15 letter led by Rep. Ron Estes (R-KS). "The UK itself has stated that 90% of the DST is paid by five companies, which the U.S. Trade Representative believes to all be American owned companies. This discriminatory action undermines American innovation and captures the U.S. tax base."
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