Here’s a look at recent tax-related happenings on the Hill, including actions on tariffs and a new target date to pass tax legislation.
Lately on the Hill
New Tariff Executive Actions
President Donald Trump took executive action last week, addressing tariffs related to automobiles and automobile parts.
The first is an executive order that states, “to the extent these tariffs apply to the same article, these tariffs should not all have a cumulative effect (or ‘stack’ on top of one another).” The order provides a hierarchy of tariffs, describing which tariffs take precedent over another. For example, tariffs imposed on aluminum or steel imports would not apply in instances when goods are already subject to tariffs imposed on automobile and automobile parts.
The second is a proclamation adjusting the 25% tariffs on automobile parts taking effect May 3, 2025. The change allows manufacturers that assemble automobiles domestically to offset tariffs on imported parts by 3.75% of the manufacturer’s suggested retail price (MSRP). This rate applies through April 30, 2026, dropping to 2.5% through April 30, 2027 and eliminated thereafter. The offset is available to vehicles manufactured after April 3, 2025.
Chinese Goods No Longer Benefit From De Minimis Exception
On May 2, 2025, the de minimis exception on imported Chinese goods was eliminated as provided in Trump’s April 2, 2025 executive order. Items valued at or under $800 had previously not been subject to duties until the executive order—and an amendment thereto—imposed an ad valorem duty of 120% of an item’s value and a $100 per postal item containing goods duty (increasing to $200 per item on June 1, 2025).
China’s Commerce Ministry said last week that it is evaluating offers by the U.S. to open dialogue on trade matters.1
Independence Day New Goal for Tax Legislation
Following last week’s meeting among the “Big Six,” including House and Senate leaders and Treasury Secretary Scott Bessent, the latter told reporters he is aiming for a July 4 target to pass tax legislation. This is an extension of the original Memorial Day goal touted over the last couple of months by House Speaker Mike Johnson (R-LA) and Ways and Means Committee Chair Jason Smith (R-MO). Johnson said he has “accepted reality” of the time frame, reframing the end-of-May goal to getting the legislation passed by the House.2
The Ways and Means Committee, which bears the brunt of the trillion-dollar spending package, is working to have its portion of the reconciliation bill advanced to the broader House next week.3 The committee’s total appropriations for tax cuts is somewhat contingent on other House committees’ ability to find spending cuts totaling $2 trillion, as anything less than that reduces the Ways and Means Committee dollar for dollar, according to the House instructions in the budget resolution.4
Some legislators view the true deadline for a bill to correspond to when the extraordinary measures Treasury has employed to keep the government funded run out. The Congressional Budget Office estimated this would occur in August or September, although Treasury has promised an update soon to the so-called “X-date.” The debt limit was reached at the beginning of this year; the budget resolution Congress passed last month calls for a $4 trillion to $5 trillion increase to the limit.
Republican members of the SALT caucus met with Johnson and Smith to discuss proposals on raising the $10,000 cap on state and local tax deductions. Rep. Nick LaLota (R-NY) said that things were progressing, but a consensus had not been reached.5 With a slim majority held by Republicans in the House, members of the SALT caucus hold a strong position to prevent a tax bill if it does not sufficiently increase the deduction.
Trump Provides FY 2026 Budget Recommendations
Last Friday, Trump released his fiscal year 2026 budget recommendations. The proposal addressed to Sen. Susan Collins (R-ME), chair of the Committee on Appropriations, proposes cuts to non-defense discretionary spending by $163 billion or 22.6%, while increasing defense and border security spending by 13% to more than $1 trillion. The proposals are released in advance of a more detailed fiscal plan that the White House will release at a later date.
The Judicial Report
National Treasury Employees Union v. Trump, D.D.C. 1:25-cv-00935
The Trump administration’s petition to stay a preliminary injunction against its efforts to terminate collective bargaining agreements was denied by Judge Paul Friedman of the U.S. District Court for the District of Columbia. For the time being, the administration must recognize the agreements while appealing the court’s decision.6
From the Treasury & IRS
A Nomination & a Senate Committee Vote for IRS/Treasury Leadership Roles
Trump has nominated Donald Korb as IRS chief counsel. Korb previously served in the role during George W. Bush’s administration. Andrew De Mello, a lawyer in the chief counsel’s office, was tapped to temporarily fill the role in March.
On April 29, 2025, the Senate Finance Committee voted 14 to 13, approving the president’s nomination of Kenneth Kies as Treasury assistant secretary for tax policy. The nomination now moves to the full Senate for confirmation.
Employees Resigning at IRS Appeals Office
According to Liz Askey, chief of the IRS Independent Office of Appeals, more than 300 staffers have accepted the deferred resignation offer. This represents a nearly 20% decrease in staffing levels for the appeals office, according to data provided by Askey. Another 100 requests have yet to be processed.7
Released Guidance
Revenue Procedure 2025-19 provides inflation-adjusted amounts for health savings accounts (HSAs) and health reimbursement arrangements (HRAs) for 2026. The annual limitation on HSA deductions for individuals with self-only coverage increases to $4,400 and increases for individuals with family coverage to $8,750. The maximum amount that may be made newly available for an excepted benefit HRA is $2,200.
Revenue Procedure 2025-20 provides domestic asset/liability percentages and investment yields for foreign life, property, and liability insurance companies to compute their minimum effectively connected net investment income under Code Section 842(b).
VA-2025-03 provides tax relief for taxpayers in certain counties of Virginia due to severe winter storms and flooding that began on February 10, 2025. Affected individuals and businesses have until November 3, 2025 to file tax returns and make tax payments.
The State Tax Brief
See our recent newsletter on a variety of state and local tax FORsights™ for additional information.
House Committee Looks to Expand P.L. 86-272
The House Judiciary Committee has included text from the Interstate Commerce Simplification Act of 2025 in its portion of the Republican budget reconciliation bill. The provision would amend Public Law 86-272, which has long prohibited states from imposing income taxes on interstate commerce when a business’s only activity in the state is limited to the solicitation of orders of tangible personal property.
The act would expand the term “solicitation of orders” to mean “any business activity that facilitates the solicitation of orders even if that activity may also serve some independently valuable business function apart from solicitation.”
Indiana: House Bill (HB) 1427 repeals the personal property tax exemption amount for the 2025 assessment as increased by Senate Bill (SB) 1. SB 1, signed into law on April 15, 2025, increased the 2025 exemption amount from $80,000 to $1 million, further increasing to $2 million in 2026. HB 1427 would keep the $80,000 exemption for 2025 before increasing to $2 million in 2026. The measure has passed in both the Indiana House and Senate and awaits a signature or veto by the governor.
Pennsylvania: In Pennsylvania, Senate Bill 656 was introduced that would require Pennsylvania companies that are unitary—currently filing on a separate company basis—to file on a water’s edge combined basis beginning January 1, 2026. While the definition of unitary business is complex, it generally includes corporations under common control that have closely related business operations such that it may be viewed as a single economic enterprise. It would exclude corporations whose sales activities on an annual basis are less than 20% domestically (in the United States). The legislation also contains transition rules for net operating losses because of the switch from separate to unitary filing.
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“China Hints at Possible Thaw With US in Weighing Trade Talks,” bloomberglaw.com, May 2, 2025.
- 2“Johnson Says He Accepts July Time Frame for Trump’s Tax Bill,” taxnotes.com, May 1, 2025.
- 3“Byrd’s the Word as House Republicans Stumble,” punchbowl.news, May 2, 2025.
- 4“Ways and Means Markup of Tax Bill Likely Week of May 5,” taxnotes.com, April 30, 2025.
- 5“SALT Caucus ‘Far Away’ From Deal After Meeting With Speaker,” taxnotes.com, May 1, 2025.
- 6“Trump Loses Bid to Void Federal Worker Union Deals During Appeal,” bloomberglaw.com, May 1, 2025.
- 7“Hundreds at IRS Appeals Office to Take Deferred Resignations,” bloomberglaw.com, April 30, 2025.