Here’s a look at recent tax-related happenings on the Hill, including updates on tariffs and the progress of a budget reconciliation bill.
Lately on the Hill
Tariff Updates to Electronics & Foreign Shipping
As the recent flurry of executive action on tariffs slowed down last week, President Donald Trump did clarify his Presidential Memorandum expanding the exception for semiconductors and other electronics related to the imposition of the reciprocal tariffs on China and other countries. Trump explained that the exempted products are only receiving a temporary pause and are “just moving to a different Tariff ‘bucket.’” The revised tariff regime is expected in the coming days or weeks.1
Meanwhile, the Office of the U.S. Trade Representative released proposed tariff actions targeting Chinese shipping. “China’s dominance severely disadvantages U.S. companies, workers, and the U.S. economy generally,” the proposal claims, “through lessened competition and commercial opportunities and through the creation of economic security risks from dependencies and vulnerabilities.”
A couple of the proposals would subject Chinese vessel operators and owners, beginning October 14, 2025, to a $50 fee per net ton. The fee increases each year for the next three years by $30 and a single vessel could be charged up to five times per year. Vessel operators that are not Chinese vessel operators would pay the higher of $18 per net ton or $120 per container. This fee would also incrementally increase over the next three years. Fees may be suspended for up to three years if vessel operators can verify they have ordered and take delivery of a U.S.-built vessel.
These newly proposed tariff actions on foreign shipping adjust initial proposed actions outlined in our FORsights™ article, “President Trump Declares Sweeping Tariffs.”
Budget Reconciliation Work Advancing During Recess
While Congress remains on recess through the end of this week, work is still being done in preparation for a budget reconciliation bill. The proposal to increase taxes on high-income earners to pay for tax cuts has received significant attention.
Proposals include raising the top marginal tax rate back to 39.6%, the rate imposed before the Tax Cuts and Jobs Act of 2017 lowered it to 37%, or adding a new top 40% bracket for those earning $1 million or more.2 Trump is reportedly open to the idea, albeit at a higher earning amount than $1 million.3
The elimination of the tax-exempt status of municipal bonds has also been floated as a revenue-raising measure. However, the idea met stiff resistance from seven members of the House Financial Services Committee in a letter sent to Ways and Means Chair Jason Smith (R-MO).
“Tax-exempt municipal bonds have a proven track record of responsible, community-driven investment,” argues the letter signed by the Republicans including Chair French Hill (R-AR). “They are a fiscally sound tool that enables state and local governments to meet the growing needs of their communities without increasing federal spending or burdening local taxpayers. Therefore, we urge your support in preserving the federal tax-exemption for municipal bonds.”4
Executive Action Extends Federal Hiring Freeze
On April 17, 2025, the White House issued a Presidential Memorandum extending the hiring freeze on federal civilian positions—with exceptions—for an additional three months, through July 15, 2025. According to the accompanying fact sheet, the government is working on a hiring plan that will prohibit the hiring of more than one employee for every four employees that cease working for the federal government.
U.S. & Italy to Strengthen Economic Ties
Trump and Italian Prime Minister Giorgia Meloni issued a joint statement bolstering the alliance on security, economic, and technological issues. The statement was provided following a meeting between the leaders in Washington, D.C., last week.
“Italy will contribute to the maritime renaissance of the U.S. shipbuilding sector,” the statement provided, “while the U.S. will look into the investment opportunities offered by the increasingly positive Italian business environment, including through the incentives granted by the new Single Special Economic Zone (SEZ) established in Italy.”
The Judicial Report
White House Tariffs Being Challenged in Court
The state of California has filed suit against the Trump administration in the U.S. District Court for the Northern District of California. The suit challenges the president’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA), which has been asserted under various executive actions on tariffs.5
A press release from California Gov. Gavin Newsom states, “The IEEPA gives the President authority to take certain actions if he declares a national emergency in response to a foreign national security, foreign policy, or economic threat. The law, which was enacted by Congress in 1977, specifies many different actions the President can take, but tariffs aren’t one of them. In fact, this is the first time a president has attempted to rely on this law to impose tariffs.”
Likewise, Emily Ley Paper, Inc. has sued the administration in the U.S. District Court for the Northern District of Florida Pensacola Division on similar grounds. The suit was filed by the New Civil Liberties Alliance, claiming it filed the first complaint challenging the “unlawful attempt to require Americans to pay a heavy tariff on all products they import from China.”6
From the Treasury & IRS
New IRS Commissioner Appointed
Michael Faulkender has been appointed as acting IRS commissioner while retaining his current position as U.S. Department of the Treasury deputy secretary. Gary Shapley had been briefly appointed to the role before Treasury pivoted to Faulkender.
Released Guidance
Revenue Procedure 2025-18 provides issuers of qualified mortgage bonds and mortgage credit certificates with the average purchase price for U.S. residences and average purchase price safe harbors for residences in statistical areas in each state, District of Columbia, Puerto Rico, the Northern Mariana Islands, American Samoa, the Virgin Islands, and Guam.
Revenue Ruling 2025-10 provides the May 2025 applicable federal rates (AFR), adjusted AFR, adjusted federal long-term rate and long-term exempt rate, percentages for determining the low-income housing credit, and the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or reversionary interest.
Notice 2025-21 sets forth the corporate bond monthly yield curve and corresponding spot segment rates, the 24-month average corporate bond segment rates, and the 30-year Treasury securities interest rates and weighted average rates.
Notice 2025-23 announces the IRS’ intent to remove the rules (T.D. 10028) requiring participants and material advisors to report partnership basis-shifting transactions. The notice provides immediate relief from penalties for failure to file required disclosure statements. Also, Notice 2024-54 is withdrawn, which had announced the IRS’ previous intention to publish proposed regulations governing partnership related-party basis-shifting transactions. Taxpayers and material advisors may rely on this notice until new proposed regulations are published, which will allow for retroactive application to January 14, 2025.
NC-2025-01 extends tax relief for taxpayers in North Carolina due to the ongoing situation related to Hurricane Helene. The previously extended deadline to May 1, 2025 has been extended to September 25, 2025 for individuals and businesses to file tax returns and make tax payments that were due between September 25, 2024 and September 25, 2025.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1“Trump Warns Tariffs Coming for Electronics After Reprieve,” bloomberglaw.com, April 13, 2025.
- 2“Senate Taxwriters Discussing Hike in Top Tax Rate, Grassley Says,” taxnotes.com, April 16, 2025.
- 3“Millionaire Tax Hike Gains Steam as Trump Signals Openness,” bloomberglaw.com, April 15, 2025.
- 4“Lawmakers Ask House W&M Chair to Support Tax-Exempt Bonds,” taxnotes.com, April 17, 2025.
- 5“California Officials Sue Trump Administration Over Tariffs,” taxnotes.com, April 17, 2025.
- 6“NCLA Sues to Stop Trump Admin. from Imposing Emergency Tariffs That Congress Never Authorized,” nclalegal.org, April 3, 2025.