Key Takeaways
- There might be some movement towards a bipartisan extenders bill this year.
- It could include items such as hiring incentives and new rules for crypto and taxes.
- The current mood in Congress works against any compromise.
- OBBBA takes bite out of charitable donations.
- Dems hope to restore cut IRA energy credits.
Democrats and Republicans are locked in bitter partisan warfare over issues like the military conflict in Iran and funding for the Department of Homeland Security. Is the time right for a truce on taxes?
It sounds far-fetched, but there’s been more talk among lawmakers that a bipartisan extenders bill—what used to be a routine vehicle to delay the expiration of uncontroversial tax measures—could be doable this year.
There are enough potential items to make it worthwhile. But this movement will have to overcome some significant obstacles.
One of the items that expired at the end of 2025 is the premium credit enhancement for the Affordable Care Act exchanges. While there were negotiations to come up with some alternative to give relief for enrollees, that effort appears to be defunct. While most lawmakers say they want to do something to lower healthcare premiums, there’s a strong divergence over how to do that, and the issue has become yet another partisan battlefield.
But other credits that have recently expired include the Work Opportunity Tax Credit, an incentive to hire disadvantaged groups with strong bipartisan support. Some have also pushed to renew tax benefits for racetracks and filming equipment. In and of themselves, those are provisions which lawmakers from both parties could support.
Another issue that doesn’t break down traditional partisan lines is the taxation of cryptocurrencies. Rep. Max Miller, R-Ohio, unveiled legislation earlier this year to update and clarify several of the tax rules regarding digital assets. While some on the left are wary that industry-favorable tweaks could turn into gigantic tax loopholes, generally lawmakers are open to crafting some solid rules in a space where confusion and ambiguity currently reigns supreme. A crypto bill could become a package to include many small tax provisions.
While the pieces are there, putting them together could be difficult. Democrats are loath to help Republicans on any tax matters after the GOP shut Democrats out of the writing of the One Big Beautiful Bill Act. And with Republicans also testing the waters for another reconciliation bill, Democrats could have even more reason to stand firm in opposition.
Recent Tax Pieces:
OBBBA Will Cut Charitable Giving by $5.7B Annually, Report Says – Kelsey Brooks, Tax Notes ($):
The OBBBA made substantial changes to tax laws affecting charitable giving by amending section 170 to add a 0.5 percent floor on itemized deductions for individual taxpayers and a 1 percent floor for corporations’ charitable deductions for tax years beginning after December 31, 2025.
Democrats Float Energy Savings Plan With Tax Credits Rolled In – Kellie Lunney, Bloomberg Tax ($):
The package, which more than 100 Democrats already have signed onto, aims to reduce energy costs and provide certainty and parity for renewable energy projects that have come under attack from the Trump administration. It isn’t likely to go anywhere this year with Republicans controlling Congress.
The Tax Angle: Enhanced ACA Credits, Energy Apprentices – Stephen K. Cooper, Law360 Tax Authority ($):
Oregon's Sen. Ron Wyden, the committee's ranking Democrat, as well as Sen. Bill Cassidy, R-La., a Senate Finance Committee member, told Law360 that talks have completely broken down between the political parties on Capitol Hill.
Powerful Tax-Writing Panels to Lose Experience After Midterms – Chris Cioffi, Bloomberg Tax ($):
Reps. Vern Buchanan (R-Fla.), Danny Davis (D-Ill.), Lloyd Doggett (D-Texas), and David Schweikert (R-Ariz.)—all longtime members of the powerful panel that drives major legislation on taxes, trade, and health care—will be departing, meaning the loss of decades of experience.
Everybody’s Tax: The Misguided Drive to Hollow Out the Income Tax – Joseph Thorndike, Tax Notes ($):
And neither party has done much to close the escape routes at the top. To be sure, Democrats talk about doing something; for years, party members have been advancing plans to change the treatment of unrealized income, for instance. Kamala Harris embraced one such proposal during her 2024 run for the White House.
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