The House January 8 approved a three-year extension of the enhanced Affordable Care Act (ACA) premium tax credits (PTCs) that expired at the end of December, pursuant to a Democratic discharge petition that had been joined by four Republicans in late 2025. Thursday's vote was 230-196, with 17 Republicans backing the extension. Notable was the support of Reps. Derrick Van Orden (R-WI), Rob Wittman (R-VA) and Mike Carey (R-OH), a Ways and Means member, Punchbowl News reported, because those members "have been mostly silent during the Obamacare subsidies debate."

Some members argued that the financial pain of the lapsed credits compelled their favorable vote. Rep. Max Miller (R-OH), a Ways and Means Committee member, said in a social media post, "Obamacare has failed, but pulling the rug out from under Ohio families without an alternative would be irresponsible. That's why I supported a short-term extension of ACA credits as a bridge, not a destination, while Congress works toward affordable, sustainable healthcare solutions."

The measure isn't expected to pass the Senate, as 60 votes are required and only four Republicans voted in favor of a similar Democratic bill to provide a three-year extension in December. Having a House-passed bill could help propel a Senate agreement, however. A group of senators working on a solution to the expired enhanced ACA credits issue that includes Susan Collins (R-ME), Bernie Moreno (R-OH), and Angus King (I-ME) is reportedly looking to have a proposal in the coming days that could include a two-year extension of the credits with an income limit and minimum payment requirement, according to press reports. Tax Notes reported that the senators "met with moderate House members January 8 to pitch their proposal for extending the expired provision, and participants left the meeting optimistic on the progress toward a deal."

Appropriations — The House January 8 also approved the Commerce, Justice, Science/Energy and Water Development/Interior and Environment appropriations package (H.R.6938) on a 397-28 vote. A procedural vote related to Senate consideration of the package will be held after the Senate reconvenes on Monday, January 12. Government funding for nine of 12 annual appropriations bills expires January 30 (with the other three having received full-year funding in the November continuing resolution).

As has long been observed, long-term bills on ACA credits or government funding could provide a vehicle for a bipartisan tax/trade/health package that addresses tax extenders, expired trade programs with Africa and Haiti, US-Taiwan tax relief, etc. Democratic congressional aides at the 2026 D.C. Bar Tax Conference held Wednesday-Thursday, January 7-8, suggested that a resolution of the ACA credits issue needs to precede action on any business tax matters. Republicans are split on the ACA issue, so a deal isn't as imperative on that side, but GOP aides suggested that tax-writing committee leaders on their side of the aisle would welcome the opportunity to act on a bipartisan tax-plus package. There was also discussion of positive prospects for a bipartisan cryptocurrency tax bill coming out of the House Ways and Means Committee.

Tax — Also at the D.C. Bar conference, Kevin Salinger, Deputy Assistant Secretary for Tax Policy at the Treasury Department, said that while final rules under IRC Section 987 have sound policy reasoning behind them, it has been very difficult for taxpayers to deal with the rules. Therefore, in soon-to-be forthcoming guidance, Treasury plans to give taxpayers the option of following a modified version of the 1991 rules' method to calculate 987 gain or loss. He said the government doesn't intend to pull the final IRC Section 987 regulations — as they provide a certain amount of certainty and stability, and some taxpayers have updated their systems — but Treasury will allow taxpayers to go back to a modified version of the 1991 set of rules. Salinger said Treasury also plans to deal with controlled foreign corporations (CFCs), given the outstanding question of whether IRC Section 987(3) applies to CFCs.

The IRC Section 987 rules address determining the taxable income or loss and currency gain or loss for a qualified business unit (a QBU) whose functional currency differs from that of its tax owner. Several regulations on the application of these rules have been issued and withdrawn since 1991. See EY Tax Alert from December 13, 2024, "Final and proposed regulations on qualified business units retain foreign exchange exposure pool method under Section 987, with simplifying elections."

An EY Tax Alert, "Proposed regulations implement deduction for interest on qualified passenger vehicle loans and lender reporting requirements," is available here.

Congress — President Trump has been invited to deliver the State of the Union Address to Congress on February 24.