This week (December 8-12)

Congress: The House and Senate are in session.

Friday, December 12 is the EY Center for Tax Policy monthly update - December 2025. Register here .

Last week (December 1-5)

Big picture: There is no additional clarity on the potential for an agreement to extend enhanced Affordable Care Act (ACA) premium tax credits (PTCs) expiring at the end of this month, though the issue continues to dominate the agenda in Washington. Senate Democrats may be planning to request a vote next week on a three-year extension, given that Senate Majority Leader John Thune (R-SD) promised them a vote on the issue, but it is not expected to win the support of 13 Republicans necessary for the bill to pass. Some members are seeking a middle ground, including Senator Susan Collins (R-ME), who Semafor reported as 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 pooling ideas from the three committees that work on health care policy — Ways and Means, Energy and Commerce, and Education and the Workforce. It's unclear whether the bill would extend the enhanced ACA credits, according to press reports. Congress is only scheduled to be in session for another two weeks prior to the holidays. The appropriations process is the other main issue facing lawmakers, with the January 30 deadline for funding the government through the remaining 9 of 12 annual appropriations bills. (Three appropriations bills — Military Construction and Veterans Affairs, Department of Agriculture, and Legislative Branch — were approved for the full duration of fiscal year 2026 in legislation to reopen the government on November 12.) And House tax-writers were given the opportunity to weigh in on issues surrounding the OECD-led global tax agreement during a Ways and Means Tax Subcommittee hearing, as international agreement is awaited on a side-by-side system that would exempt US multinationals from most Pillar Two global minimum tax rules.

Global tax: 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 tax deal and additional 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

Rep. Nathaniel Moran (R-TX) mentioned legislation he is working on to modify BEAT rules to encourage additional repatriation of IP to the US. A WCEY Alert has additional details.

International guidance: Three December 4 notices address OBBBA international tax law provisions:

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

CAMT: 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."

Bonus depreciation: Senator Warren additionally December 2 released a Joint Committee on Taxation analysis on bonus depreciation, including showing that the cost of the provision from the retroactive extension to January 20, 2025, to the date of enactment was $16 billion, which Senator Warren described as a "corporate handout."

Legislation: The House December 1 approved Ways and Means Committee bills including the Fair and Accountable IRS Reviews Act (H.R. 5346) and the Tax Court Improvement Act (H.R. 5349).

On December 1, President Trump signed H.R. 998, the "Internal Revenue Service Math and Taxpayer Help Act," which requires the Internal Revenue Service to provide specific information on a notice as a result of a mathematical or clerical error on a tax return, send a notice related to an abatement of taxes assessed due to error, and implement a pilot program for sending such notices. The House bill was sponsored by Ways and Means member Randy Feenstra (R-IA), while the Senate companion (S. 608) was sponsored by Finance Committee member Senator Warren.

Bill intros: This week, Rep. Jake Auchincloss (D-MA) introduced a bill (H.R. 6335) to impose a tax on digital advertising services; Senator John Cornyn (R-TX) introduced a bill (S. 3332) to increase the exclusion of gain from the sale of a principal residence; and Senator Marsha Blackburn (R-TN) introduced a bill (S. 3378) to establish name, image, and likeness investment accounts for student-athletes.

A Cornyn press release said the More Homes on the Market Act would make housing more available and affordable by amending the tax code to allow sellers to exclude additional funds from capital gains taxes, incentivizing homeowners to sell their homes and increasing market supply.