President Trump on Monday, May 11 called for a suspension of the Federal gas tax and Senator Josh Hawley (R-MO) introduced a bill (S. 4485) to provide a 90-day holiday from the 18.4 cents-per-gallon gasoline and 24.4 cents-per-gallon diesel fuel taxes, as affordability concerns persist ahead of the midterm elections. Democrats including Senator Mark Kelly (D-AZ) support the idea, but the proposal has been the subject of some skepticism from some within the President's own party, including Senate Majority Leader John Thune (R-SD) and Finance Committee members Thom Tillis (R-NC) and James Lankford (R-OK).

Senator Hawley, who in a May 12 Punchbowl News report bemoaned the lack of action on affordability issues in the Senate aside from housing policy, said Americans deserve relief from the tax at a time when gas prices have surged "while some of the biggest corporations in the world are seeing record profits." The federal gas tax has never been suspended but a holiday has been proposed, including by President Biden in 2022.

Leader Thune said of the proposal following the regular Tuesday party luncheons in the Senate, "You probably know I've not in the past been a huge fan of previous attempts, although when this was tried during the Biden administration, gas prices were going up largely in response to the Biden energy policies. This obviously is a very different set of circumstances."

A reauthorization of the Highway Trust Fund (HTF), which is funded by fuels taxes, is required by September 30 and may be taken up at the committee level in the House next week. An editorial in the May 12 Wall Street Journal, "Affordability Brainstorms, Good and Bad," said a pause in the gas tax would cost $2.1 billion per month that must be made up by general fund revenue, which is already required to cover HTF shortfalls. (The Congressional Budget Office projects that the highway and transit accounts of the Highway Trust Fund will be exhausted in 2028.) "A better idea would be to use this year's surface transportation reauthorization bill to reduce the federal gas tax and devolve more responsibility for transportation spending to the states," the editorial said.

A story in the May 12 Washington Post, "Trump seeks to pause federal gas tax as prices soar amid Iran conflict," said, "Passing the savings on to drivers, rather than oil companies, would be difficult to enforce, according to the Congressional Research Service. The federal tax is collected at the terminal or refinery, not at the pump. The government would have to estimate what prices would have been without the tax suspension, but gas prices depend on many other factors. Savings would also vary dramatically by region, driving habits and vehicle type."

The Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) reconciliation bill is being considered under the FY2026 budget resolution that does not include reconciliation instructions to either the Senate Finance or House Ways and Means Committees with jurisdiction over tax, trade and health care, precluding those items from being added. That means any broader package of affordability proposals, if not bipartisan (and unlikely to be before the election), would have to wait for a potential third Republicans-only reconciliation bill under an FY2027 budget resolution, which both the House and Senate must agree to. There has been discussion of housing proposals, but the shape of a future affordability package is largely unknown at this point. House Speaker Mike Johnson (R-LA) said May 12 that he thinks Republicans can complete consideration of such a bill by the start of the House August recess on July 23, according to a Politico story, "House GOP eyes summer push for another party-line bill."

President Trump stepped into the debate over the housing bill on Monday (May 11) when he took to social media to urge the House to accept the Senate-passed version of the bill without changes. House leaders, however, have been preparing amendments to the Senate bill that reflect widespread opposition in that chamber to parts of the measure, including restrictions on large investors owning single-family homes that Senate leaders added at the White House's request. On Tuesday, House Financial Services Chairman French Hill (R-AR) reaffirmed to reporters that he hoped to "find good bicameral language and modify [the institutional investors provision] that can accomplish the goals of the president as well as maintain member support in both chambers," Politico reported.

Elections — There continue to be new developments in multistate redistricting efforts in the wake of the April 29 Supreme Court decision concerning aspects of the Voting Rights Act and the Virginia Supreme Court's ruling on May 8 nullifying that state's redistricting plan, which had been approved in a voter referendum. South Carolina state lawmakers May 12 were considering whether to begin debate on a redistricting plan as well as legislation to delay the state's June 9 primaries until August to allow redrawn districts to be set but ultimately failed to reach the two-thirds threshold for doing so. A special session could still be called.

A story in the May 12 Washington Post said the Supreme Court on Monday vacated a lower court's 2023 ruling on Alabama's redistricting map and sent the case back to the lower court for consideration under the April SCOTUS decision. Alabama's delegation currently comprises five Republicans and two Democrats, including Ways and Means member Terri Sewell (D-AL), and Republicans want redrawn maps to eliminate one or both Democratic seats.

Tax — The House Ways and Means Tax Subcommittee has scheduled a hearing, "Your Paycheck, Returned: How the Working Families Tax Cuts Delivered for Americans," for Tuesday, May 19 at 10 a.m.

Both Tax Notes and the Daily Tax Report (DTR) cited Treasury Department International Tax Counsel Jim Wang as saying during the American Bar Association Tax Section meeting in Washington that Treasury hopes to issue guidance this summer regarding the controlled foreign corporation (CFC) election with regard to IRC Section 987, which addresses taxable income or loss and currency gain or loss for a qualified business unit whose functional currency differs from that of its tax owner. The stories cited Wang as saying the summer guidance would be limited to the CFC election.

Notice 2026-17, released February 25, announced forthcoming proposed regulations that would permit taxpayers to elect the equity and basis pool method for the computation of unrecognized section 987 gain or loss, like regulations proposed in 1991; and announced that forthcoming regulations would provide an election under which CFCs would not compute or recognize IRC Section 987 gain or loss upon remittances or terminations, except in connection with certain inbound transactions. An EY Tax Alert has details.

Friday, May 15 at 12:00 p.m. is the EY Center for Tax Policy monthly update - May 2026. Register.