Breaking overnight: In a vote that took place shortly after 2 a.m. this morning as the chamber headed toward a scheduled two-week recess, the Senate voted by unanimous consent to pass a bill funding all of the Department of Homeland Security except for Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP). If the House passes the measure, it will end a standoff that has shut down funding for the Coast Guard, FEMA and Transportation Security Administration (TSA) worker pay. Before the Senate voted, Speaker Mike Johnson (R-LA) was noncommittal Thursday when reporters asked if House Republicans would move a funding bill that excludes money for ICE. He said using budget reconciliation to fund ICE was an option if bipartisan talks faltered.

Senate Majority Leader John Thune (R-SD) called the outcome "unfortunate," Politico reported. "The Dems wanted reforms. We tried to work with them on reforms. They ended up getting no reforms but, you know, we're going to have to fight some of those battles another day." In a statement, Appropriations Committee Ranking Member Patty Murray (D-WA), said, "Finally, Republicans have relented, and we are now on track to fund the areas we agree on and get TSA agents paid, get our airports moving again, and fund important disaster relief and cybersecurity work."

Reconciliation — The Senate's action leaves open the potential for Republicans to use the budget reconciliation process to enact immigration enforcement provisions. There are increasing signs that some Republicans may want to include tax provisions in a second budget reconciliation bill to follow the "One Big Beautiful Bill Act" (OBBBA), the prospects for which have gained steam in the past two weeks as a process to enact other policies opposed by Democrats, including ICE provisions, the SAVE America Act voter ID bill, and a $200 billion war supplemental.

House Ways and Means Committee Chairman Jason Smith (R-MO), who has been one of the members most outspoken in expressing skepticism that a second bill could get the requisite votes in the House, said at a Wednesday event that, should a reconciliation package materialize, it will include tax provisions, Punchbowl News reported. House Budget Committee Chairman Jodey Arrington (R-TX), who has long advocated for a second reconciliation bill, was cited by the press as raising the issue of improper Earned Income Tax Credit (EITC) payments to offset the cost, and is among members who want to target waste, fraud and abuse in federal programs.

Energy tax — The Senate March 25 failed to advance a Congressional Review Act resolution (S. J. Res. 107) to overturn IRS Notice 2025-42 on "Beginning of Construction Requirements for Purposes of the Termination of Clean Electricity Production Credits and Clean Electricity Investment Credits for Applicable Wind and Solar Facilities." In introducing the resolution in February, Senator Catherine Cortez Masto (D-NV), Senate Democratic Leader Chuck Schumer (D-NY), and Senate Finance Committee Ranking Member Ron Wyden (D-OR) said while previous BoC guidance included physical work on or off the job site and any project in which 5% of the total cost had already been spent, the Notice largely revokes the 5% standard.

Meanwhile, Senate Democrats are putting up the proposed reversal of OBBBA energy tax credit rollbacks as another plank of the affordability agenda heading into the midterm elections. At the League of Conservation Voters Capital Dinner on March 25, Leader Schumer said his party passed "the greatest legislation that changed climate and worked for clean energy greater than any legislation ever passed," then Republicans took it away. "We will put it back and go even further," he said.

Leader Schumer further said, "Democrats will provide legislative certainty for clean energy projects, so workers and investors can rebuild the clean energy project ecosystem … We also must work to make it easier for clean energy projects to move through the permitting process, including transmission and distribution infrastructure — the wires that move all that clean energy." He said data centers must pay their fair share.

Tax — The House Ways and Means Committee March 25 unanimously approved five noncontroversial bills on issues including disaster tax relief, educator tax deductions and tax administration. The disaster relief bill (H.R. 5366) — under which "qualified net disaster losses" would be deductible to the extent they exceed $500 per casualty and without regard to whether aggregate net personal casualty losses exceed 10% of a taxpayer's adjusted gross income — was named after the late Rep. Doug LaMalfa (R-CA), who was a co-sponsor of the bill and to whom members of both parties paid tribute. A WCEY Alert has details.

Committee approval of two tax administration bills — the Taxpayer Experience Improvement Act (H.R. 7971), to boost IRS customer service policies, and the IRS Whistleblower Program Improvement Act (H.R. 7959) — has spurred speculation about whether a compromise tax administration package could come together with the Senate. Finance Committee Chairman Mike Crapo (R-ID) and Ranking Member Wyden on February 26 introduced the "Taxpayer Assistance and Service Act," which includes an upgrade to the "where's my refund" tools as well as whistleblower provisions.

Bill intros — Punchbowl News reported this morning that Ways and Means Committee members Max Miller (R-OH) and Steven Horsford (D-NV) are set to unveil a revised version of their legislative proposal on cryptocurrency tax issues, after previously circulating a discussion draft in December 2025.

Tax legislation introduced March 24-25 includes:

• S. 4171, Senator Ted Budd (R-NC), to exclude from gross income de minimis gains or losses from certain sales or exchanges of virtual currency
• S. 4175, Senator Wyden, to extend the clean electricity production credit and the clean electricity investment credit based on increases in the price of and demand for electricity
• S. 4185, Senator Sheldon Whitehouse (D-RI), to end the tax-free treatment of certain corporate reorganizations that involve large corporations
• S. 4196, Senator Chris Van Hollen (D-MD), to return the estate, gift, and generation skipping transfer tax to 2009 levels
• S. 4207, Senator Marsha Blackburn (R-TN) to promote new business innovation
• H.R. 8085, Rep. Pramila Jayapal (D-WA), to impose a tax on the net value of assets of a taxpayer

S. 4207, the Ensuring Better Interest Treatment and Deductibility (EBITDA) Act, would allow inclusion of global income (Subpart F income, GILTI inclusions, and IRC Section 78 gross-up amounts) in Adjusted Tax Income (ATI) for purposes of the IRC Section 163(j) interest deduction limitation. "This anti-competitive provision shrinks the ATI base and reduces allowable interest deductions, even when such global income is fully subject to U.S. tax," the sponsors, which also include Senator Shelley Moore Capito (R-WV), said of the current limitation. "This limitation undercuts the key pro-growth outcome in the" OBBBA. The House version (H.R. 8101) is sponsored by Ways and Means member Ron Estes (R-KS).

S. 4185, the Stop Subsidizing Giant Mergers Act, targets a "major exception for certain types of mergers: if a corporate reorganization is structured so that the acquiring firm is exchanging stock, then the appreciation in value of the target firm's stock and/or assets may be fully tax exempt," the sponsors, which also include Senator Josh Hawley (R-MO), said in a news release. A similar bill was co-sponsored last Congress by then-Senator and now-Vice President JD Vance.

S. 4196, the Strengthen Social Security by Taxing Dynastic Wealth Act, would increase the top estate and gift tax rate from 40% to 45% and exempt the first $3.5 million of an individual's estate from estate taxes ($7 million for married couples), and would deposit all of the revenues from the estate, gift, and generation-skipping transfer taxes into the Social Security OASI/DI Trust Fund, Senator Van Hollen said.

H.R. 8085, the Ultra-Millionaire Tax Act, would establish a 2% annual tax on the net worth of households and trusts valued at over $50 million and an additional 1% annual surtax (3% total annual tax) on the net worth of households and trusts above $1 billion, Rep. Jayapal said in a news release. The bill has more than 45 House co-sponsors. The Senate bill was introduced yesterday by Senator Elizabeth Warren (D-MA), who said, "While multi-millionaires and billionaires are getting richer and richer, families are getting squeezed by a rigged economy. My bill is about basic fairness and making the ultra-wealthy pay their fair share. It's time for the government to stop listening to the richest of the rich and start working for working people."

Health care bills introduced March 25 include:

• S. 4189, Senator Jeanne Shaheen (D-NH), to reduce the price of insulin, and provide patient protections with respect to the cost of insulin
• S. 4204, Senator Blackburn, to establish a rural health center innovation awards program and a rural health department enhancement program
• H.R. 8091, Ways and Means member Beth Van Duyne (R-TX), to modernize payments for ambulatory surgical centers under the Medicare program

S. 4189, the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act, would "cap the cost of insulin at $35 per month for Americans on private and employer insurance and create a pilot program to provide insulin at the same cost to Americans without insurance," the sponsors, which also include Senator Raphael Warnock (D-GA), said.

H.R. 8091, the Outpatient Surgery Access Act of 2026, would "modernize Medicare payments for ambulatory surgical centers and promote site-neutral policies that support lower-cost outpatient care for seniors," the sponsors, including Rep. John Larson (D-CT), said.

What to Expect in Washington will not be published over the next two weeks with Congress scheduled to be in recess, though other WCEY Alerts will be issued as events warrant.