18 May 2026 This Week in Tax Policy for May 18 Congress: The House and Senate are in session before a scheduled recess for Memorial Day the week after. The House is no longer scheduled to be voting on Monday and Tuesday (May 18-19). As a result, the Ways and Means Tax Subcommittee hearing, "Your Paycheck, Returned: How the Working Families Tax Cuts Delivered for Americans," has now been scheduled for Wednesday, May 20 at 10 a.m. Big picture: The Senate is processing a reconciliation bill to fund the Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies of the Department of Homeland Security (DHS), which does not include tax items under the terms of the FY2026 budget resolution. Republicans, in the House at least, are eyeing as a remaining option to address affordability proposals and other economic issues a potential third Republicans-only reconciliation bill, to be considered perhaps as early as June/July, that could include provisions related to the SAVE America Act voter ID bill, defense funding, and possibly tax proposals. Congressional tax committee leaders and Treasury officials provided insights into what to expect for the remainder of the year on tax issues during the Tax Council Policy Institute (TCPI) annual symposium in Washington May 14, where the biggest news was on expectations for IRS and OECD guidance. A gas tax holiday has been proposed given a spike in fuel prices, but the outlook for the measure is uncertain. Reconciliation: With the current ICE/CBP measure being kept narrow, any broader package of affordability proposals, if not bipartisan (and unlikely to be before the election), will 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 and there has been no insight provided on what tax proposals may be included. Morning Tax on May 14 said House Ways and Means Committee Chairman Jason Smith (R-MO) demurred when asked about the potential contents of such a bill, while Rep. Kevin Hern (R-OK) said his guess is that the bill would include "a lot of health care." 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." It has long been the case that a third reconciliation bill would probably require deep spending cuts to make it through the House with all-Republican votes, and there is some question over whether it would primarily be a deficit reduction or tax cut bill. Punchbowl News on May 13 reported on Senate Republicans "striking a different and more cautious tone" than House leaders, with Majority Leader John Thune (R-SD) saying the current focus is on Reconciliation 2.0. And a bill with tax and health provisions would open the Senate vote-a-rama to limitless amendment votes on those issues, possibly including an extension of lapsed enhanced Affordable Care Act (ACA) premium tax credits. "That's just one example of a policy that could easily get more than 50 votes in the Senate with the midterms looming," the report said. Congressional tax agenda: At the TCPI symposium, Chairman Smith did not focus on another reconciliation bill, but instead said of the near-term agenda, "Everything that we move forward on Ways and Means needs to be bipartisan. Because I want to legislate." He said there are proposals on health care, trade, and tax that can be accomplished on a bipartisan basis and that he intends to act on them over the coming months. Looking back to consideration of the "One Big Beautiful Bill Act" (OBBBA/OB3), Chairman Smith also suggested the threat of the IRC Section 899 provision was successful in helping reach a global agreement on a side-by-side system to exempt US companies from most global minimum tax requirements. When IRC Section 899 was raising strong concerns in the tax community, "our whole purpose was to force those foreign governments to come to the table and to recognize our tax system," he said. "And that's, in fact, what we did." Senate Finance Committee Ranking Member Ron Wyden (D-OR) — who Chairman Smith said he has a positive working relationship with — said during his appearance at the conference that he hopes the side-by-side agreement will hold, and that, regarding 899, US policymakers should have some type of toolbox and retaliatory tool available. Ranking Member Wyden is working on a tax administration package with Chairman Mike Crapo (R-ID) and agreed with the assertion that the best opportunity for consideration of a bipartisan package is probably in the lame-duck session to follow the midterm elections. In providing an indication of where Democrats may turn when looking for revenues in the future — targeting billionaires — Wyden also stated that he will continue to focus on tax policies targeting the "ultra wealthy," such as deferral and non-recognition, and said that is his preference versus raising rates. Gas tax holiday: President Trump on Monday, May 11 called for a suspension of the Federal gas tax and Senator Josh Hawley (R-MO) and Rep. Nicole Malliotakis (R-NY) have introduced bills (S. 4485/H.R. 8753) 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. Some Democrats support the idea, and there is some skepticism from members of the President's own party. Senate Majority Leader John Thune (R-SD) said Tuesday, May 12, "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. The federal gas tax has never been suspended but a holiday has been proposed, including by President Biden in 2022. 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." Cryptocurrency: If there are policy add-ons to a follow-on reconciliation bill, or a bipartisan bill after the elections, one new-starter tax issue that could evolve in time for inclusion is cryptocurrency tax legislation. Chairman Smith has been prepping a proposal but said he is holding out for Democratic support, and Ranking Member Richard Neal (D-MA) has said there is a knowledge gap on the issue in the House and a need for additional member education. A bipartisan, closed-door Ways and Means Committee roundtable on digital assets tax issues with academics and private-sector tax experts was held on Thursday, May 14. Rep. Max Miller (R-OH), who has released a cryptocurrency proposal with Rep. Steven Horsford (D-NV), was quoted in the Daily Tax Report as saying, "I believe we have a great shot at this" in a lame-duck session after the elections. Other members suggested that Congress remaining silent on cryptocurrency tax issues would be problematic. "We can't do nothing," said Rep. Judy Chu (D-CA). TCPI: At the TCPI symposium, both Treasury Assistant Secretary for Tax Policy Ken Kies and Deputy Assistant Secretary for Tax Policy Kevin Salinger discussed the five Treasury corporate alternative minimum tax (CAMT) notices, which Kies said will be followed by specific regulatory proposals. Salinger said the target for release of the reproposed package is February 2027. On foreign entity of concern (FEOC) regulations for energy credits, Salinger said Treasury is aiming to issue comprehensive guidance by the end of the year. On the regulatory outlook for the remainder of the year, Salinger said Treasury is hoping to release guidance on several issues under the OBBBA/OB3 — finalizing proposed regulations and proposing regulations to follow notices — including on the:
"That is kind of our road map of OB3 implementation by the end of the year," he said. Asked about the deregulatory agenda, Salinger said the objective is not to pull regulations simply for the sake of doing so, but to make the tax system more administrable, comprehensible and pro-growth. That can mean withdrawing rules, narrowing them, and replacing rigid rules with standards, safe harbors and reasonable method approaches. He cited actions thus far on the CAMT, basis shifting, the stock buyback excise tax, digital asset reporting rules, the withdrawal of the DPL (disregarded payment loss) rules, FIRPTA, etc. "The common theme here is a posture of regulatory restraint," he said. "We are not drafting regulations around the worst actor." Bill introductions: On May 13, Senators Ben Ray Luján (D-NM) and Katie Britt (R-AL) introduced the Advancing Water Reuse Act, to provide a federal tax incentive (30% Investment Tax Credit) for manufacturers and other industrial entities to invest in water reuse systems and infrastructure, that aren't able to meet current demands. A release said the credit would cover projects including those that support "installation or expansion of onsite water recycling systems at manufacturing, food processing, and other industrial entities, including data center facilities." A story on the bill in the May 14 Wall Street Journal, "Bipartisan Senate Push Aims to Reduce Water Waste at Data Centers," said: "Environmental and residential groups are hoping to scrap plans for data centers in their communities altogether, however. Large data centers can guzzle up to 5 million gallons of water daily, which is equivalent to the daily usage of a town with about 10,000 to 50,000 residents, according to a study on the Environmental and Energy Study Institute's website. Data centers use so much water to cool electrical equipment." Global tax: The OECD on May 18 will release guidance that will help multinationals that are facing challenges associated with jurisdictions' readiness for the upcoming June 30 global minimum tax filing deadlines. Speaking at the TCPI tax conference in Washington on May 15, Manal Corwin, director of the OECD's Center for Tax Policy and Administration, said negotiators "reached a common understanding among themselves to mitigate the impact of any potential delays in the availability of fully operational portals to receive the GIR [global information return]." According to reports, the agreement will address multinational concerns over late-filing penalties resulting from inconsistent global minimum tax implementation. The OECD director was quoted as saying that on May 18, a publication will include a list of countries that have global minimum tax rules effective for 2024, and that will have their global information return portals operational by May 31.
Document ID: 2026-1088 | |||
