Here is a look at recent tax-related happenings on the Hill, including a U.S. Department of the Treasury report showing tariffs helped generate a 2% decline in the federal deficit.
Lately on the Hill
Congress Hunkers Down for the Long Haul
Members of Congress are growing increasingly pessimistic that a government shutdown solution will come anytime soon. While partial government shutdowns have lasted longer (the record being 34 days in the 2019 fiscal year), the current impasse has set the record for the longest full-funding shutdown, surpassing the 16 days a full-funding lapse occurred in fiscal year 2014.1
“This shutdown is going to last a while,” according to Sen. John Kennedy (R-LA). “I think it’s going to be the longest shutdown in the history of ever.”
“If this drags on to Thanksgiving,” said Rep. Andrew Garbarino (R-NY), “there’s going to be a lot of problems with travel.” Garbarino chairs the Committee on Homeland Security overseeing the Transportation Security Administration.
Considering Thanksgiving is still over a month away, both sides of the aisle appear to be in it for the long haul.
Open enrollment for the Health Insurance Marketplace under the Affordable Care Act begins November 1, 2025, and notices will begin to be sent by insurance companies showing rising premiums as an enhanced taxpayer credit for healthcare premiums expires at the end of the year.2
Extending the credits is the central demand from Democrats to reopen the government.
While some Republicans agree that the credits should be extended, many do not want to include a permanent extension of the credit—estimated to cost $350 billion over 10 years—to a short-term resolution to fund the government. The GOP wants to first fund the government, then negotiate on healthcare.
Tariffs Make a Dent in the Deficit & New Tariffs on Heavy Trucks
Following the Congressional Budget Office’s (CBO) 2025 fiscal year (FY) report released earlier this month, Treasury released its report that largely fell in line with that of the CBO’s.
Tariffs helped generate a 2% decline in the federal deficit as compared to FY 2024, falling to $1.78 trillion from the previous year’s deficit of $1.82 trillion. The U.S. brought in nearly $200 billion in tariff revenue during the fiscal year that ended September 30, 2025. A decline in the deficit was realized even though September’s corporate tax receipts fell 41%, due to newly enacted tax provisions of the One Big Beautiful Bill Act (OB3) and federal outlays increased from $6.7 trillion to $7 trillion.3
Last Friday, the administration issued a proclamation imposing tariffs on imports of medium and heavy-duty vehicles and parts effective November 1, 2025. According to the fact sheet, the 25% tariff applies to the full value of vehicles such as large pickup trucks, cargo trucks, and tractors for 18-wheelers unless qualifying under preferential treatment under the United States-Mexico-Canada Agreement (USMCA). Such vehicles will only be subject to tariffs to the extent of the non-U.S. content of the vehicle.
In addition, a 10% tariff applies to the import of buses, transit buses, and motor coaches. A 3.75% offset applies to the aggregate value of all trucks assembled in the U.S. from 2025 through 2030 for medium and heavy-duty truck domestic manufacturers.
From the Courts
Tax Court Cancels Trial Sessions Due to Shutdown
The U.S. Tax Court issued a press release to announce the cancellation of in-person and remote trial sessions for the weeks of October 20, 2025 and October 27, 2025. The clerk’s office will remain open to receive filings. Additional cancellations will be announced, as needed, no later than a week prior to the session’s commencement.
Federal Judge Restrains Shutdown Terminations
Judge Susan Illston of the U.S. District Court for the Northern District of California issued a temporary restraining order against the Trump administration’s firing of more than 4,000 federal workers, including those from Treasury.4
Treasury asserts, however, the ruling cannot apply to it as its affected employees are not represented by the unions suing the administration.5
Illston has previously issued such orders on previous administration-led layoffs, which were upheld by the Ninth Circuit Court but later reversed by the U.S. Supreme Court.6
From Treasury & the IRS
Released Guidance
Revenue Ruling 2025-21 provides the November 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.
Proposed Regulations (REG-109742-25) would modify existing regulations on the determination of whether a qualified investment entity is domestically controlled by removing a rule that looks to the shareholders of certain domestic corporations in determining whether foreign persons hold directly or indirectly stock in a qualified investment entity.
Notice 2025-57 provides transitional guidance and relief for business reporting requirements for car loan interest received from borrowers and other information concerning the loan. The guidance is in implementation of a new taxpayer benefit to deduct interest paid on qualifying vehicle loans introduced by the OB3.
From the States
Michigan Decouples From Certain Federal Tax Provisions
A newly enacted state budget bill departs from five federal tax laws that were included in the OB3 passed in July. Those include immediate deductions for research and experimental expenses, depreciation on qualified production property, 100% bonus depreciation, more favorable calculation for deductible business interest expense, and increased limits for asset deductions under Section 179. The provisions were estimated to cost the state more than $2 billion over the next five years.7
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“Shutdown’s 17th Day Marks Longest Government-Wide Funding Lapse,” bloomberglaw.com, October 17, 2025.
- 2“Premium Notices, Missed Pay Mark Next Phase of US Shutdown,” bloomberglaw.com, October 13, 2025.
- 3“US Tariff Take Helps Trim 2025 Deficit to $1.78 Trillion,” bloomberglaw.com, October 16, 2025.
- 4AFGE v. OMB, N.D. Cal., No. 3:25-cv-08302.
- 5“Treasury, HHS Say Court’s Firing Pause Doesn’t Apply to Them,” bloomberglaw.com, October 17, 2025.
- 6“Trump’s Shutdown-Linked Layoffs Paused by California Judge,” bloomberglaw.com, October 15, 2025.
- 7“Michigan Decouples From GOP Tax Law’s Incentives for Businesses,” bloomberglaw.com, October 7, 2025.