This week (November 24-28)

Congress: The House and Senate are out of session for the Thanksgiving holiday.

This Week in Tax Policy won't be published this week.

Last week (November 17-21)

Big picture: The House and Senate this week began a post-shutdown and year-end legislative stretch with plenty of questions about what will get done and how. The continuing resolution (CR) deal to end the shutdown left lawmakers with two upcoming deadlines: 1) Senate Majority Leader John Thune's (R-SD) commitment, regarding an extension of enhanced Affordable Care Act (ACA) premium tax credits (PTCs) expiring at the end of 2025, "to having that vote no later than the second week in December;" and 2) the new January 30 expiration of government funding. There is interest in acting on expired and expiring trade and tax provisions, but it remains too soon to tell if and how that could happen. There is already a focus on the upcoming ACA credits vote, although the details of what will be considered by the Senate are still developing. Senators Bill Cassidy (R-LA) and Rick Scott (R-FL) have outlined health savings account-based (HSA) alternatives to the credits and President Trump wrote November 18, in part: "THE ONLY HEALTHCARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE … "

During a November 18 news conference, House Majority Leader Steve Scalise (R-LA) said the three committees that work on health care policy — Ways and Means, Energy and Commerce, and Education and the Workforce — have been working on legislation "that would actually lower costs for families and give families options so they're not trapped in the 'Unaffordable Care Act' policies that drive up their premiums." He alluded to provisions that "didn't make it all way through the process" of enactment of the "One Big Beautiful Bill Act" (OBBBA) and said, "We're going to be coming back to that." A Politico report said that Ways and Means Committee Chairman Jason Smith (R-MO) supports reviving HSA provisions dropped from the OBBBA.

It isn't currently clear whether there is the potential for true bipartisan negotiation over health insurance premiums "or merely a political vote that is litigated in the midterms," as Semafor reported November 18. A later report said, "Democrats are deliberating between engaging with the GOP or forcing Republicans to vote down a subsidy extension and letting them deal with the political fallout," and cited GOP Whip John Barrasso (R-WY) as saying they need "major modifications, major revisions" to the ACA.

Aside from the myriad policy details of possible alternative approaches to respond to the question of whether to extend enhanced ACA PTCs, there is the basic question of timing, with Congress out next week for Thanksgiving then in for only a few weeks before the holidays and, shortly thereafter, expiration of the enhanced credits at the end of the year. Democrats say an extension of the credits is the only option with time growing short, an assertion that Republicans are pushing back on. During the November 19 Senate Finance Committee hearing on "The Rising Cost of Health Care: Considering Meaningful Solutions for all Americans," Ranking Member Ron Wyden (D-OR) said, "There is no way for Congress to put together a proposal in the next couple of weeks that's going to help people in January. Just can't be done. A clean extension this year is the bare minimum of what's necessary."

Additional priorities: Whether a bipartisan compromise can be reached could determine if a potential ACA credits bill could be paired with other bipartisan issues. There is continued interest in moving health, tax and trade items. Punchbowl News November 16 reported Ways and Means Chairman Smith as saying, "Would love to see some bipartisan trade items taken care of. AGOA [the African Growth and Opportunity Act] is something I think would be great. Some bipartisan health care would be nice. And there's some bipartisan tax that I'd like to fix. So it's gonna be busy. If people will work together, it will be good." Chairman Smith has previously said he wants to roll back the deduction for 90% of gambling losses that takes effect in 2026 and restore the 100% deduction, which is supported by members of both parties.

A November 20 Bloomberg Daily Tax Report story on one tax extender provision said, "Key lawmakers in both parties and chambers are introducing legislation that combines disparate efforts to expand the work opportunity tax credit [WOTC], a federal break for companies that employ veterans, ex-felons, and recipients of needs-based benefits. The introduction comes at the same time that business groups and other stakeholders are escalating their push for an expansion and extension of the credit." Ways and Means Committee member Rep. Lloyd Smucker (R-PA) November 20 introduced an updated version of the Improve and Enhance the Work Opportunity Tax Credit Act (H.R. 6231) that would increase the current credit percentage from 40% to 50% of qualified wages, expand eligibility to military spouses, and extend WOTC for five years and index its benefits to inflation, among other changes. A Senate companion bill is expected to be introduced by Senator Cassidy.

Stock buyback excise tax: The Internal Revenue Service (IRS) November 21 released final regulations that provide guidance regarding the application of the excise tax on repurchases of corporate stock made after December 31, 2022. The final regulations withdraw the "funding rule," which provided that repurchases of stock by foreign corporations were subject to the excise tax to the extent those purchases were "funded" (broadly defined) by domestic subsidiaries of those foreign corporations. The funding rule was a primary issue raised by comment letters and during an August 2024 public hearing on the proposed regulations. An EY Tax Alert is pending.

Tips guidance: Notice 2025-69 released on November 21 provides guidance to individual taxpayers who are eligible for the federal income tax deductions for qualified tips or qualified overtime compensation for tax year 2025 that was enacted under the OBBBA. The Notice provides guidance on how to satisfy the requirements for the deductions, including how to determine the amount of qualified tips or qualified overtime compensation, for tax year 2025.