This week (January 26-30)

Congress: The Senate will be back in session — now scheduled for Tuesday because of the snow and ice storm — to consider spending legislation reflecting the remaining appropriations bills before the January 30 deadline for government funding. The House is currently scheduled to be out of session this week.

Last week (January 19-23)

Government funding: The House last week passed the remaining four appropriations bills facing a January 30 deadline. Released as the Consolidated Appropriations Act, 2026, on January 20, the House approved the package in two votes: the Defense, Labor-Health and Human Services-Education, and Transportation-Housing and Urban Development appropriations bills were approved 341-88, and the Homeland Security measure passed 220-207. The package includes health extenders, pharmacy benefit manager (PBM) provisions, and an extension of two expired trade programs, the African Growth and Opportunity Act and the Haiti Economic Lift Program, through 2026. The additions were remarkable because of the difficulty of members agreeing to the spending bills on their own. But tax items were turned away.

Punchbowl News reported that the House Ways and Means and Senate Finance committees tried to add US-Taiwan tax relief legislation but were rebuffed by congressional leaders, possibly because of the fragility of the final spending deal. The omission marks another chapter in the widely supported US-Taiwan tax legislation that was embedded in the 2024 House-passed tax bill (H.R. 7024) that wasn't passed by the Senate. The US-Taiwan bill was approved by the House (H.R. 33) at the start of 2025 but couldn't be included in the budget reconciliation bill because the process requires proposals to have a measurable revenue impact, which the Taiwan package does not have. (Standalone Senate passage of the US-Taiwan bill likely can't happen without devoting significant floor time because of objections of Senator Rand Paul (R-KY) to tax treaties generally.) At the Rules Committee, a request by Ways and Means members Reps. Max Miller (R-OH) and Steven Horsford (D-NV) to add their bill (H.R. 6985) to roll back the "One Big Beautiful Bill Act" (OBBBA) 90% deduction limit for gambling losses, and to restore the 100% deduction, was rejected.

Looking ahead: As Congress appears on a glide path to approving the remaining appropriations bills by the January 30 deadline with some trade and health care add-ons, there is continued speculation about how tax and other outstanding priorities could move sometime this year. There have been indications that House Republicans, at least, could pursue a health care-focused second budget reconciliation bill, despite Ways and Means Committee Chairman Jason Smith (R-MO) expressing skepticism it can pass. His Senate counterpart, Finance Committee Chair Mike Crapo (R-ID), is not enthused about the approach. "I prefer that we not got through reconciliation unless we have to," he said in a January 20 Bloomberg Daily Tax Report story.

The trade program extensions were once thought to be candidates to move in a bipartisan tax/health/trade bill that could address tax extenders like the Work Opportunity Tax Credit (WOTC), 7-year recovery period for motor sports entertainment complexes, and IRC Section 181 expensing rules for film, television, and theater productions. The US-Taiwan tax relief and gambling deduction rollback were also thought to potentially be included in such a package, which could eventually be assembled, though the current outlook is unclear.

Budget: During a January 22 Fox interview, President Trump confirmed that he will be releasing a budget and said, "We're negotiating the budget right now." House Appropriations Committee Chairman Tom Cole (R-OK) was quoted this week as saying he doesn't expect an Administration budget until March. "I don't think it'll be in February from my discussions with" Office of Management and Budget Director Russell Vought, he said.

Cryptocurrency: House Ways and Means Committee Chairman Jason Smith (R-MO) said January 21 he hopes to hold a committee markup "very soon" on crypto tax legislation, Politico reported. "I'm not going to put a timeline on it, but we have been doing policy briefings with our members for months now," Smith said. In December, Reps. Miller and Horsford circulated a draft bill addressing issues including a de minimis rule, staking, and wash sales. The draft bill includes a provision "intended to establish a per-transaction de minimis threshold of $200, consistent with the foreign currency transaction exception under IRC Section 988, to eliminate low-value gain recognition arising from routine consumer payment use of regulated payment stablecoins." Last week, Senate Banking Committee Chairman Tim Scott (R-SC) canceled a markup of landmark cryptocurrency market structure legislation that had been set for Thursday (January 14), after a key industry stakeholder dropped his support for the latest version of the bill. The Politico report on the tax piece cited Rep. Horsford as saying tax writers are waiting to see how crypto market structure legislation will fare in the Senate. "Obviously, we're waiting for the Senate to act on the regulatory bill, and we'll see as that proceeds, where this fits in the schedule," he said. "We're trying to make it bipartisan and complementary."

IRS: An EY Tax Alert, "IRS issues interim guidance on bonus depreciation," is available here.

Global tax: EY's detailed review of the OECD's Side-by-Side Package on Pillar Two Global Minimum Tax is now available here.