Budget & Taxes

HR 2423, the Unfair Tax Prevention Act, amends the U.S. tax code to modify how the base erosion tax applies to certain foreign-owned businesses. It directly affects foreign-controlled entities operating under specific foreign tax systems that impose taxes based on ownership chains, such as those linked to foreign corporations. Key provisions include treating these entities as "applicable taxpayers" for tax purposes, changing a deadline from December 31, 2025, to the bill's enactment date, and counting 50% of their cost of goods sold as a tax benefit while excluding certain other tax rules. The changes apply to taxable years beginning after the bill becomes law.

This bill modifies tax rules for health savings accounts (HSAs) to help employees transition from health flexible spending accounts (FSAs) or health reimbursement arrangements (HRAs) to HSAs when switching to a high-deductible health plan. It allows employees to transfer unused FSA/HRA funds directly to an HSA during the plan year, with limits based on existing HSA contribution rules. Employers must report these transfers on employees' W-2 forms as taxable compensation. The changes apply to transfers made after December 2025 and primarily affect workers using employer-sponsored health benefits who switch coverage types.

HR 2418, the Federal Reserve Regulatory Oversight Act, requires the Federal Reserve Board and Federal Reserve Banks to cover non-monetary policy administrative costs through fees instead of direct congressional appropriations. Specifically, it mandates that costs related to supervising banks (including examinations, stress tests, and regulatory reporting), staff training, and operational support must be recovered via fees collected and deposited as offsetting collections to the Fed's budget account. This applies only to non-monetary policy activities (like bank supervision), excluding monetary policy functions such as interest rate decisions. The new rules take effect for expenses paid and fees collected on or after October 1, 2025.

Transportation Freedom Act This bill reduces taxes on auto companies and repeals specified environmental regulations on cars and trucks. The bill establishes a new tax deduction equal to 200% of eligible wages paid or incurred by domestic producers of automobiles or automobile components, subject to limitations. It also allows an entity to reduce (and adjust) its financial statement income (for purposes of calculating liability for the alternative minimum tax) by the amount of eligible wages it elects to deduct. The bill nullifies the 2024 rules of the Environmental Protection Agency (EPA) regarding (1) the finalization of specified greenhouse gas (GHG) programs and the reduction of emissions from certain light-duty and medium-duty vehicles (e.g., cars and trucks that are under a certain weight) starting with model year 2027, and (2) phase three of GHG emission standards for heavy-duty vehicles (e.g., school buses and tractor-trailer trucks). It also repeals the 2024 rules of the National Highway Traffic Safety Administration (NHTSA) regarding corporate average fuel economy (CAFE) standards for certain cars, trucks, and vans.  Additionally, the bill eliminates (1) the option given to California to set standards for car emissions that are more stringent than those set under the Clean Air Act, and (2) the option for other states to adopt California's standards.  NHTSA and the EPA must establish new CAFE and GHG standards, respectively, for vehicles that are economically practicable and technologically feasible. The GHG standards may not require the production or sale of electric vehicles.

This bill phases out federal tax credits for electricity generated from wind and solar power over a four-year period. It reduces the clean electricity production credit to 80% in the first year after enactment, 60% in the second, 40% in the third, and 20% in the fourth, ending at 0% after that. Similarly, it phases out the clean electricity investment credit for qualifying solar and wind facilities based on when they begin operation. These changes directly affect renewable energy producers and developers who currently claim these tax credits under the Internal Revenue Code. The bill takes effect for electricity produced or facilities placed in service after enactment.

HR 2652 provides tax incentives for manufacturers relocating production from foreign countries to the United States. It allows faster tax deductions (accelerated depreciation) for new U.S. manufacturing facilities and excludes gains from selling foreign manufacturing assets during relocation. The bill also makes permanent full tax deductions for eligible manufacturing equipment placed in service after enactment. These provisions directly affect manufacturers moving production to the U.S., aiming to reduce tax costs associated with relocation.

This bill creates a 10% federal tax credit for labor costs associated with installing energy-saving mechanical insulation on qualifying systems. It directly affects businesses or property owners in the U.S. that install insulation meeting specific energy efficiency standards (ASHRAE 90.1) on depreciable mechanical systems, such as HVAC or industrial equipment. The credit applies to labor costs paid or incurred after December 31, 2025, but expires after December 31, 2028. It is structured as part of the general business credit and does not cover material costs, only the labor for installation.

HR 3376 creates the Water Affordability, Transparency, Equity, and Reliability Trust Fund, funded by increasing the corporate tax rate from 21% to 24.5% starting in 2025, with annual funding capped at $35 billion or 1/20th of 20-year infrastructure needs. The bill allocates funds to clean water programs (42%), safe drinking water programs (42.5%), household water well systems (1%), colonias assistance (0.5%), and Indian health services (3%), requiring specific prioritization of low-income and minority communities for many programs. It mandates an EPA study on water affordability, discriminatory practices, and civil rights violations in water service, including data collection on service disconnections affecting vulnerable populations. The bill also includes provisions for lead service line replacement, PFAS contamination response, and job training grants for water system operators with specific requirements to prioritize low-income communities.

This bill adds a new tax credit for homeowners who install qualifying U.S.-grown hardwood products in their primary residence. It expands the existing energy efficient home improvement credit to cover "natural carbon sink expenditures," defined as flooring, paneling, cabinetry, or windows made from deciduous trees grown and processed in the U.S. The credit applies to products installed in a dwelling owned and used as the taxpayer’s principal residence, with the installation expected to last at least five years. The bill also extends the credit’s expiration date from 2032 to 2035.

HR 3063, the Rural Hospital Stabilization Act of 2025, provides federal grants to help financially struggling rural hospitals in remote areas (defined as at least 15 miles from the nearest hospital and 20 miles from urban areas). The bill authorizes up to $5 million per hospital over five years for facility repairs, equipment upgrades, and operational costs like non-leadership payroll and debt payments, while requiring hospitals to demonstrate how projects address financial needs and ensure continued community access. Grants must supplement - not replace - existing funding, and hospitals must submit sustainability plans. The $500 million total funding authorization covers fiscal years after 2025, with a report to Congress on program outcomes within 18 months.