Most months, there isn’t much new tax law to report. This is one of those months.
No major tax rules have changed. But there’s still a useful update worth sharing, because what Congress is debating now can tell us something about where tax policy may be headed, even when nothing has changed yet.
The Short Version
Republicans are working on another budget reconciliation bill before the midterm elections.
Reconciliation is the procedural workaround that lets the Senate pass certain budget-related legislation with a simple majority instead of the usual 60-vote threshold. It’s how last year’s major tax bill became law on a strictly partisan vote, and it’s the most likely vehicle for any significant tax legislation between now and then.
GOP taxwriters would like to see tax provisions included in this next bill. Their wish list includes priorities that didn’t make it into last year’s bill, a framework for taxing digital assets, changes to health savings accounts, easings to the corporate alternative minimum tax, and reforms to refundable credits.
That’s the wish list. The problem is that the vehicle for carrying it may not be available this time.
The next reconciliation package now looks likely to be narrow. The current direction from the White House and congressional leadership is to limit the bill to funding for two Department of Homeland Security agencies, Immigration and Customs Enforcement and Customs and Border Protection.
The administration wants the bill enacted by June 1, which puts pressure on lawmakers to move quickly and reduces the appetite for expanding the package.
In other words, taxes probably aren’t in the next bill. But the wish list itself is still informative.
What We’re Watching, and Why
When tax provisions are debated and then deferred, it’s tempting to file the news away as not relevant yet.
We treat it differently.
The items being discussed today are often the items that resurface when the next legislative opportunity appears. The planning value of knowing what may be coming is highest before the rules are final, not after.
A few specific items are on our watch list.
Digital Assets
A clear federal framework for taxing cryptocurrency and other digital assets has been on the wish list for years and keeps getting pushed.
When it does pass, it could create new reporting obligations and may affect how gains, losses, and transactions are documented. Clients with meaningful digital asset positions should expect this issue to land eventually.
Health Savings Accounts
Proposed changes generally aim to expand who can contribute and how the funds can be used.
HSAs are already one of the most tax-efficient accounts in the code. Any expansion could create new planning opportunities for clients who qualify, especially those trying to coordinate healthcare costs, retirement planning, and long-term tax efficiency.
Refundable Credits
Reform here usually means tightening eligibility and increasing verification.
That connects directly to the broader IRS enforcement story we wrote about separately. The trend is toward more scrutiny of these credits, whether through legislation, enforcement, or both.
Corporate Alternative Minimum Tax
Most individual clients aren’t directly affected by the corporate alternative minimum tax.
But executives, business owners, and investors with exposure to companies affected by the rule may still care about how changes could flow through to valuation, cash flow, compensation, or transaction planning.
The Big Takeaway
None of these tax changes appear imminent.
But they’re still worth watching, because tax legislation tends to move in long pauses punctuated by short bursts of activity. The pauses are when planning happens. The bursts are when the rules change.
We watch the legislative calendar so that when something does move, we already know what it means for the clients it affects. More importantly, we’ve already had the conversations that need to happen.
If any of the items above touch your situation and you’d like to talk through the implications, we’re glad to do that.