While the July 4, 2025, enactment of the new tax law known as the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21) may still be visible in the rearview mirror, lawmakers on Capitol Hill are already moving forward on other tax-related priorities, including OBBBA follow-up tax legislation. House Speaker Mike Johnson (R-LA) has said he aims to again use budget reconciliation as the legislative vehicle to enact another, though perhaps smaller, tax bill in the fall after the start of fiscal year 2026 on Oct. 1, 2025.
Capitol Hill
2 Big 2 Beautiful
The thing about tax policy is that it tends to stick around for a while. Once a legislative proposal is introduced, even if it doesn’t initially make it over the finish line, it often resurfaces until it does – or may get repealed even if it did. Tax policy is an ever-evolving space, and there are several particular provisions this year, which didn’t make the final cut in the enacted OBBBA that Republican lawmakers are reportedly discussing revisiting in efforts toward an OBBBA follow-up that congressional staffers are calling “2 Big 2 Beautiful.”
Some of these potentially revived provisions include increasing the now permanent 20% section 199A qualified business income deduction to 23% as well as the controversial section 899 so-called retaliatory tax if talks to exclude U.S. companies from the Organization for Economic Co-operation and Development (OECD) Pillar Two taxes don’t work out as planned. Additionally, there could be OBBBA technical corrections in the next bill as the tax community’s feedback continues rolling in.
SECURE 3.0
Separately, there are also bipartisan, bicameral tax policy priorities for which lawmakers on both sides of the aisle are expressing support, including another round of retirement tax breaks being referred to as “SECURE 3.0,” following the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (P.L. 116-94) and the second act, pun intended, so-called SECURE 2.0 (P.L. 117-328) in 2020.
To that end, the re-introduced bipartisan, bicameral Small Nonprofit Retirement Security Act resurfaced this month and aims to remedy the exclusion of nonprofit organizations from accessing retirement plan start-up tax credits under the SECURE Act. If enacted, nonprofits could apply these tax credits against their payroll tax liability, giving them access to the same retirement incentives available to for-profit organizations.
Gambling losses
Additionally, both Democratic and Republican lawmakers have criticized the OBBBA’s change to the tax treatment of wagering losses, which imposes a 90% deduction cap after Dec. 31, 2025. House Ways and Means Chair Jason Smith (R-MO) has said members on both sides of the aisle are committed to eliminating the cap before the new law goes into effect next year.
Appropriations
Much of what is to come in the tax policy space will be impacted by ongoing negotiations on federal government appropriations. Stopgap funding for government agencies is set to expire at the end of the fiscal year on Sept. 30, 2025, and lawmakers are working with a limited calendar as August recess begins with both chambers adjourned until after Labor Day.
Currently, the House has passed two of the 12 annual appropriations bills; the Senate has passed none. It remains to be seen whether history repeats itself, requiring another continuing resolution to keep the lights on.
Notably, House appropriators are proposing $9.5 billion in funding for the IRS for fiscal 2026 – a $2.8 billion budget cut from current levels. That’s more than the Trump administration’s proposed cut of $2.5 billion.
GENIUS Act
On July 18, 2025, President Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (P.L. 119-27). The bipartisan legislation establishes the first U.S. regulatory framework for payment stablecoins and their issuers. The GENIUS Act was approved in the Senate on June 17, 2025, by a 68-to-30 vote and in the House on July 17, 2025, by a vote of 308-to-122.
Filing Relief for Natural Disasters Act
Additionally, the president on July 24, 2025, signed into law the Filing Relief for Natural Disasters Act (P.L. 119-29), which provides the IRS authority to postpone federal tax deadlines for taxpayers affected by a qualified state-declared disaster, upon written request by the state governor, rather than having to wait for a federal disaster declaration. Further, the legislation increases to 120 days the automatic 60-day extension of such federal tax deadlines applying to certain taxpayers impacted by the state disaster. The bill cleared the House by a 388-to-0 vote on March 31, 2025; the Senate approved the bill by unanimous consent on July 10, 2025.
IRS
The tax community continues to express concerns about a reduction in IRS funding and staff, with the agency seeing over 20,000 employees leave since February of this year. The staff cuts coupled with the implementation of the new tax law are going to be a challenge for the IRS, according to Terry Lemons, former IRS communications and liaison chief. “What I really think is going to happen here is that there’s going to be added burden on the tax professional community to help educate clients and taxpayers about what this bill really means, because I think you’ll see less communication coming out of the IRS with these staff cuts,” Lemons said at a recent American Institute of CPAs Town Hall.
2026 tax filing season
Notably, IRS Commissioner Billy Long has reportedly already predicted a late start to the 2026 filing season as the agency needs “every day” possible to prepare for the implementation of the OBBBA. The IRS intends to start the 2026 tax filing season around Feb. 17, 2026, according to Long. This 2025 tax filing season started on Jan. 27, 2025.
Partnership basis adjustment
Calls continue for the IRS to withdraw a controversial revenue ruling issued last year by the Biden administration as part of a guidance package intended to limit abuse of partnership basis adjustment rules by related parties. Rev. Rul. 2024-14 announced the IRS would apply the codified economic substance doctrine under section 7701(o) to disallow tax benefits from three types of related-party basis-shifting transactions. However, since the IRS’s announcement last April that it is withdrawing the other two items within the Biden administration’s June 2024 guidance package, taxpayers and practitioners alike are wondering if Rev. Rule 2024-14 will be next.
Treasury and the IRS announced in Notice 2025-23, released last April, that proposed regulations would be issued that would remove final regs (T.D. 10028), which identified several types of partnership related-party basis adjustment transactions as reportable transactions of interest. Further, it alerts taxpayers that Notice 2024-54, in which Treasury and the IRS announced the intent to issue future proposed regs that would have reduced or eliminated the benefits of basis-shifting transactions between related parties, will also be withdrawn.
Rev. Rul. 2024-14 “applies a flawed interpretation of the economic substance doctrine in a manner that lacks clear statutory grounding,” causing confusion and reducing consistency and clarity in the tax code, Ways and Means Committee Republicans wrote in a July 23 letter to Long. “For so long as the ruling remains, taxpayers must guess between two mutually exclusive outcomes – basis adjustments as required by the law or basis adjustments required by the ruling.”
Tariffs
The Trump administration on July 27 announced a deal with the EU that will subject most imports to the U.S. to a 15% tariff rate and incudes the EU purchasing $750 billion in U.S. energy and making new investments of $600 billion in the U.S., all by 2028.
Additionally, the Trump administration announced on July 23 a U.S.-Japan deal, which also subjects imports from Japan to a baseline 15% tariff rate along with a $550 billion investment from Japan to expand core U.S. industries.
Tariff talks and looming deadlines remain ongoing with China, Canada and Mexico.
Be sure to visit our OBBBA central-source webpage for more information. If you have questions about how this may impact your tax situation, please contact your Baker Tilly tax advisor.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
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