During the December 3 House Ways and Means Tax Subcommittee hearing on "Promoting Global Competitiveness for American Workers and Businesses," members looked ahead both to progress on an international agreement under the OECD-led global tax deal on a side-by-system that would exempt US multinationals from most Pillar Two global minimum tax rules and more international tax legislation to build on the reforms in the 2017 Tax Cuts and Jobs Act (TCJA) and 2025 "One Big beautiful Bill Act" (OBBBA), which witnesses and members praised.

"We expect to see the technical work that has been done, and these negotiations move forward, this week," Full Committee Chairman Jason Smith (R-MO) said of the OECD-led efforts on a side-by-side system. "We have been patient to allow for all negotiating parties to have the space they need to reach agreement, but they must reach agreement soon." He renewed his warning that Congress will take action if other nations walk away from the agreement.

Rep. Brad Schneider (D-IL) said policymakers need to reach a decision and conclusion on Pillar Two by the end of this year. Rep. Kevin Hern (R-OK) said he hopes the forthcoming side-by-side proposal will protect US businesses from the harmful effects of Pillar Two, which otherwise would expose US multinationals to two layers of minimum taxes and subject traditional income-based tax incentives to stricter scrutiny than benefits available elsewhere. Rep. Ron Estes (R-KS) said the treatment of substance-based tax incentives is reportedly one of the stumbling blocks to a potential OECD side-by-side agreement, and it is a priority for non-refundable US tax credits to be treated equitably with the refundable tax credits of other nations.

Rep. Estes highlighted his interest in working on additional reforms, including:

• Regarding the base erosion and anti-abuse tax (BEAT), consideration of the high-tax exemption and allowing deductions for payments already subject to US tax, which he said would encourage businesses to bring more intellectual property (IP) back into the US
• Regarding Net CFC tested income (NCTI), formerly GILTI, policymakers could fully eliminate the foreign tax credit haircut to simplify tax rules
• Regarding the foreign-derived deduction-eligible income (FDDEI), formerly FDII, policymakers could make beneficial changes to further incentivize companies to build, service and maintain future IP in the US

Estes added that policymakers could enhance future investments in the US by allowing taxpayers to deduct the cost of constructed assets as they occur, rather than waiting until completed properties are placed in service. Rep. Nathaniel Moran (R-TX) mentioned legislation he is working on to modify BEAT rules to encourage additional repatriation of IP to the US.

Three December 4 notices address international tax law provisions under the OBBBA:

• Notice 2025-75 announces that Treasury and IRS intend to issue proposed regulations regarding the transition rule for dividends
• Notice 2025-77 describes proposed regulations that Treasury and IRS intend to issue providing guidance on the effective date and application of IRC Section 960(d)(4), which disallows a foreign tax credit for 10% of any foreign income taxes paid or accrued (or deemed paid) with respect to any amount excluded from gross income under IRC Section 959(a) by reason of an inclusion in gross income under IRC Section 951A(a)
• Notice 2025-78 announces that Treasury and IRS intend to issue regulations regarding the new rules for calculating DEI, and primarily addresses the meanings of intangible property, "any other property of a type," and sale or other disposition for IRC Section 250

Tax — The staff of the Joint Committee on Taxation has prepared Estimates of Federal Tax Expenditures for Fiscal Years 2025–2029.

Senator Elizabeth Warren (D-MA) and other members warned Treasury against creating an exception to prevent the OBBBA's permitted acceleration of past R&D expenses from creating exposure to the corporate alternative minimum tax (CAMT). "This policy would clearly undermine the purpose of CAMT: to ensure that no billionaire corporation pays a lower tax rate than 15% on the income it reports to shareholders, known as book income," the lawmakers said. "We urge Treasury not to further rig the tax code in favor of billionaire corporations by creating a CAMT carveout for retroactive R&E expensing."

Health care — Senate Democrats may be planning to request a vote next week on a three-year extension of enhanced Affordable Care Act (ACA) premium tax credits (PTCs) expiring at the end of this month, which is not expected to win the support of 13 Republicans necessary for the bill to pass with the required 60 votes in a chamber split between 53 Republicans and 47 Democrats. Senator Brian Schatz (D-HI) quipped in a story in the November 4 Washington Post, "I can't even get 13 people to say they're open to it." As part of the agreement ending the government shutdown, Senate Majority Leader John Thune (R-SD) promised Democrats a vote on an enhanced ACA credits extension bill no later than the second week of December.

Efforts to find a compromise continue. Semafor reported this morning that "Sen. Susan Collins, R-Maine, is pitching a two-year package that would include a $200,000 income cap and eliminate zero-dollar premium packages."

Speaker Mike Johnson (R-LA) said House Republicans would likely release a health care bill next week. He previously suggested the bill could represent a pooling of ideas from the three committees that work on health care policy — Ways and Means, Energy and Commerce, and Education and the Workforce — that have been working on legislation. It's unclear whether the bill would extend the enhanced ACA credits, according to press reports.

On Wednesday (December 3), the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing entitled, "Making Health Care Affordable Again: Healing a Broken System." The hearing primarily focused on the Affordable Care Act's (ACA) enhanced premium tax credits expiring at the end of the year. During the hearing, all Democrats and a few Republicans stated they would support at least a short-term extension of the premium tax credits while lawmakers work on bipartisan reforms. However, most Republicans voiced their opposition to an extension, instead favoring proposals to create new tax-preferred accounts, funding the ACA's cost-sharing reduction payments (CSRs), and increasing transparency in health care to give consumers more control over their health care decisions. Additional details are available in this WCEY Alert.

Elections — The Supreme Court on December 4 allowed Texas Republican state lawmakers to implement their redistricting plan for the 2026 elections, reversing a lower court's ruling that the new map was unconstitutional. The effort could net the state five additional Republican House seats. Texas' action was the start of an ongoing multistate redistricting effort — some in favor of Republicans and others, like California, intended to add Democratic seats in response — after President Trump advocated Republican efforts to help retain the House majority in the 2026 midterms.

"The Supreme Court's order comes days before a Dec. 8 deadline for candidates to file to run for office in Texas … " the New York Times reported. "The ruling outlines the state of play while litigation over the map continues through the lower courts — including potentially returning to the Supreme Court for further consideration. But given the deadline, the order means the map will be used for the key 2026 vote."