Key Takeaways
- Many Republicans joined Democrats to pass an extension of enhanced ACA tax credits, signaling urgency to find some way to restore the expired incentive.
- Lawmakers are working on a bipartisan compromise.
- President Trump may be an obstacle to reaching an agreement.
- States balk at following federal tax code following OBBBA tweaks.
- Tax issues in college sports set to become key issue in Congress.
Symbolic votes are a regular occurrence in Congress, and they’re usually pretty partisan. A vote that’s not expected to become law is an easy way for elected officials to demonstrate their loyalty and provide some talking points for the next election cycle.
Not everyone always follows the script, though. Take Thursday’s vote in the House of Representatives on a Democratic proposal to extend the Affordable Care Act enhanced premium tax credits, which expired at the end of 2025. The vote occurred because several Republicans crossed over to sign onto a discharge petition, a mechanism for the minority party to put a bill on the floor over the House Speaker’s objections. But even more voted to pass the measure—ultimately, with seventeen Republicans voting yes, the bill easily passed 230-196.
The Senate already voted down identical legislation, and there’s no reason to think the Republican leadership would reconsider. Despite its strong support in the House, it’s still mostly a symbolic measure. But the cross-over votes are an indication that there’s momentum towards a bipartisan compromise to settle the issue, at least for the next few years.
A group of moderate legislators from both parties say they’re working hard to come up with an agreement, that they hope to reveal soon. It would likely pair a shorter extension—say, two years—with some smaller changes to the credits, such as a new income limitation. As enacted by the ACA, the credits are available to enrollees in the state exchanges whose income is less than 400% of the federal poverty level, but the expired enhancement removed that condition entirely.
So why hasn’t the agreement happened yet? One hurdle is President Trump. Lawmakers can be hesitant if they’re not sure the president would back them when they’re out on a limb.
But Thursday’s vote showed that many Republicans, though certainly not a majority, are eager to act on this issue regardless of what Trump or the Republican leadership want. They will need to do something quickly to pass a bill before Jan. 15, when open enrollment ends for many of the state exchanges and more complications will arise.
Other tax issues
While the ACA credits are not the only tax issue before Congress, the ongoing impasse has sucked up most of the oxygen in D.C. this winter.
Congressional staffers speaking at the D.C. Bar’s annual tax conference on Wednesday confirmed that smaller tax provisions which could be addressed in a bipartisan way are on the backburner as Congress sorts out the healthcare issue.
“My judgement is that a deal on healthcare is going to have to unlock before there's a meaningful tax vehicle," said Andrew Grossman, Democratic chief tax counsel for the House Ways and Means Committee, adding that it was difficult for House members to let other issues "jump the line" when "15 million people are about to lose their health insurance."
Government funding is set to run out on Jan. 30, unless Congress passes appropriations measures to prevent yet another shutdown. In theory, lawmakers could add smaller tax items to that legislation, but it would require some quick maneuvering to settle so many issues in only a few weeks. Outstanding tax issues include extending the Work Opportunity Tax Credit, an incentive for employers to hire certain disadvantaged groups, which expired at the end of 2025.
Sean Clerget, Republican chief tax counsel for Ways and Means, also said a second reconciliation bill was very unlikely in 2026, as members gear up for the midterm elections. Reconciliation, used to pass the One Big Beautiful Bill Act this summer, allows the Senate to bypass a filibuster, passing measures through a party-line, majority vote.
That leaves only bipartisan negotiations as a way to move bills through, which can be very difficult in today's environment. But, as Thursday's developments show, not impossible.
Recent Tax Pieces:
Abortion Poses a Big Hurdle for ACA Tax Credit Talks: Explained – Erin Durkin, Bloomberg Tax ($):
Referred to as the Hyde amendment, after longtime Illinois GOP Rep. Henry Hyde, this language generally bars federal funding for abortions except in cases of rape, incest, or when the life of the mother is endangered. While the ACA already includes restrictions, anti-abortion groups argue lawmakers must go further and prohibit premium subsidies from going to plans that cover abortion—a change that could affect coverage for millions.
Senate Majority Leader John Thune (R-S.D.) said this week that lawmakers need to “deal with the Hyde issue,” while President Donald Trump called on lawmakers to remain flexible, though the White House later walked back those comments.
More States Expected to Decouple From Trump’s Tax-Cutting Agenda – Michael Bologna, Bloomberg Tax ($):
Now governors and legislators in nearly two dozen states are examining the strategies adopted by these early responders, acknowledging they also must confront the revenue challenges posed by the president’s tax-and-spending law from July. Even states planning to adopt some or all of the federal changes understand they may have to modify their tax codes to streamline administration.
Can Congress Find a Level Playing Field for College Sports? – Marie Sapirie, Tax Notes ($):
IRS to Make Final Conservation Easement Settlement Offer – Benjamin Valdez, Tax Notes ($):
Speaking January 7 at a conference sponsored by the District of Columbia Bar Taxation Community, Kies said it would send “the wrong message” to make the settlement too favorable for taxpayers who participated in the transactions, which involve inflating the value of property and taking large deductions for easements.
Kies later told reporters that the details of the offer are still being finalized but that he hopes to roll it out by the end of the month or in early February.
Federal Tax Policy To Watch in 2026 – Stephen K. Cooper, Law360 Tax Authority ($):
That trend is likely to continue in 2026, tax experts predict, despite growing calls for targeted relief in specific areas, including cryptocurrency taxation, the corporate book minimum tax, technical corrections to the GOP budget law, international tax, affordable housing incentives and healthcare-related provisions.
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