Congress and Treasury Focus on Health Insurance Tax Credits and Tax Regulations

Congress is returning from the Thanksgiving break to focus on completing key appropriations bills and addressing health care tax incentives before the end of the year. The government is currently operating under a continuing resolution that funds most federal agencies through January 30, 2026, with certain exceptions funded through the full fiscal year. A major legislative debate centers on whether to extend the increased Affordable Care Act (ACA) premium tax credits introduced by the American Rescue Plan Act of 2021, which are set to expire at the end of the year. Democratic lawmakers seek permanent extension, while Republican lawmakers propose various alternatives, with Senate discussions expected to lead to a vote on the issue soon. Speaker Johnson has indicated that only legislation gaining broad Republican support will advance in the House, while Democrats consider using a discharge petition to force a vote on the tax credits. The National Defense Authorization Act (NDAA) remains a must-pass bill that occasionally includes unrelated provisions. Recent negotiations to embed financial regulatory reforms related to digital assets in the NDAA have stalled, though tax provisions occasionally appear in the bill and warrant close monitoring. Meanwhile, the Treasury Department and IRS have issued several regulatory updates and guidance documents. These include clarifications on foreign tax credit allocations for specified foreign corporations impacted by the One Big Beautiful Bill Act (OBBBA), which address complex tax timing issues to prevent burdensome results for taxpayers. Other Treasury and IRS updates include a finalized reduction in the user fee for estate tax closing letters and upcoming proposed regulations for a new tax credit concerning contributions to scholarship granting organizations (SGOs) established under the OBBBA. This credit offers a 100% tax credit for qualified contributions, subject to specific state participation and organizational eligibility criteria. The IRS is requesting public comment on these regulations, with feedback due by late December 2025. In judicial developments, the U.S. District Court for the Eastern District of Texas recently heard arguments regarding a consent decree related to the Johnson Amendment, which restricts political campaigning by 501(c)(3) organizations. The proposed consent decree would exempt religious organizations' speech within customary channels tied to religious services. However, groups like Americans United for Separation of Church and State challenge this interpretation, resulting in ongoing legal debate over statutory definitions and procedural issues such as the Anti-Injunction Act. The IRS's 2025-2026 Priority Guidance Plan includes forthcoming guidance on the Johnson Amendment, indicating continued regulatory focus on nonprofit political activity rules. Insurance professionals and policy strategists should monitor these fiscal, tax, and legal developments closely due to their potential implications for health care coverage, tax policy, nonprofit compliance, and broader federal budget negotiations.