RSC Issues Framework for Second Reconciliation Bill: On Jan. 13, the Republican Study Committee (RSC) released its framework for a second reconciliation bill, which outlines tax and non-tax proposals to address housing, energy and health care issues. The scores listed in the framework were not calculated by the Joint Committee on Taxation (JCT) or the Congressional Budget Office.
- Housing reforms would include elimination of capital gains taxes on home sales to first-time buyers, establishment of tax-advantaged Home Savings and READY disaster recovery accounts, doubling of the 401(k) limits for single-earner households, elimination of the child and dependent care tax credit marriage penalty, and barring non-U.S. residents from using the Low Income Housing Credits.
- Health care changes would include redirecting Affordable Care Act subsidies to Health Freedom Accounts and equalizing the tax treatment for health-sharing ministries, short-term plans, medical cost-sharing and subscription-based medical care.
- Workforce provisions would include introduction of tax-free Jumpstart Accounts for apprenticeships/startups with employer credits and reauthorization of the Work Opportunity Tax Credit (WOTC).
- Other provisions would include indexing of capital gains, repeal of the federal estate tax, imposition of taxes on foreign purchasers of U.S. real estate, expansion of the remittance tax on transfers of funds out of the United States by noncitizens, and taxation of third-party litigation financing.
House and Senate Tax Committee Aides Provide Legislative Outlook for 2026: Speaking at the DC Bar Tax Conference last week, Sean Clerget, chief tax counsel for the House Ways and Means (W&M) Republicans, said that while prospects for a second reconciliation tax bill are slim, legislation clarifying crypto tax and tax administration issues could emerge as an area of bipartisan agreement. Clerget noted that lawmakers on both sides of the aisle are eager to establish consistent tax rules for digital assets, noting the draft legislation released by Reps. Max Miller (R-OH) and Steven Horsford (D-NV). He added that committee Republicans are optimistic about advancing legislation in this space. Andrew Grossman, chief tax counsel for the W&M Democrats, noted that overall momentum for tax legislation may be dependent on whether Congress can secure an agreement on the expired enhanced Affordable Care Act premium tax credits (eAPTCs).
With respect to the W&M Committee’s expected focus for 2026, Clerget indicated that Republicans will concentrate on One Big Beautiful Bill Act (OBBBA) awareness, crypto, health care and tax administration. Democrats, according to Grossman, will focus on health care, the child tax credit (CTC), clean energy tax credits, affordability, retirement, crypto and tax administration.
Treasury Department Sends Section 45Z Proposed Regulations to White House for Review: Prior to the holidays, the Treasury Department sent proposed regulations for the section 45Z clean fuels productions credit to the White House Office of Information and Regulatory Affairs (OIRA) for review. The Treasury Department reportedly requested expedited review, but OIRA is now scheduling stakeholder meetings, which is likely to delay consideration of this long-awaited guidance further. While the Biden administration released draft proposed regulations (IRS Notice 2025-10) in January of 2025, significant changes to the section 45Z credit were enacted as part of OBBBA. The biofuels industry had hoped to see initial guidance implementing the revised credit before the end of the 2025 tax year, during which the credit was effective. While Treasury Department officials continue to state that the guidance will be published “soon,” the precise timeline for OIRA’s review and the Treasury Department’s release of the proposed regulations remains unclear.
Treasury Department Officials Discuss Next Guidance Projects: Last week, James Wang, international tax counsel at the Treasury Department, said the agency plans to issue proposed and final rules in 2026 to allow retroactive application of the international tax transition provisions in OBBBA. He also said the Treasury Department must finalize these regulations within 18 months of the law’s enactment to ensure they apply retroactively. The guidance will cover transition issues addressed in 2025 notices, including foreign tax credit changes, dividend treatment under section 951(a), tax allocation rules and exclusions for outbound sales of intangibles.
Wang noted that while finalizing these rules is a top priority, the Treasury Department also remains focused on deregulation as part of its broader 2026 agenda. Kevin Salinger also noted that the Treasury Department expects to release guidance on all the issues listed in the 2025-2026 Priority Guidance Plan released last fall.
OECD Officials Preview Next Steps: At the 2026 DC Bar Tax Conference, Jeff Mitchell, a senior advisor at the Organisation for Economic Cooperation and Development (OECD), announced plans to release additional Pillar Two guidance addressing joint ventures, local financial accounting standards, hyperinflationary currencies and real estate investment trusts.
Manal Corwin, director of the OECD’s Center for Tax Policy and Administration, said that OECD member countries might resume discussions on Pillar One at the April Inclusive Framework meeting. Achim Pross, deputy director of the OECD’s Center for Tax Policy and Administration, said that over 140 countries have committed to applying the new “side-by-side” system, but that some jurisdictions may need up to a year to enact supporting legislation. He also said countries must retroactively implement the safe harbor exempting U.S.-parented multinational enterprises from Pillar Two GLOBE rules (IIR/UTPR) effective Jan. 1, with legislation possibly needed in six to nine months under OECD review for compliance.
Pillar Two & OBBBA: Major Updates You Need. Treasury guidance incoming, OECD next steps & retroactive rules ahead. Don’t miss the detailed report on what’s shaping 2026 taxes. Click to continue learning more!
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