Key Takeaways
- So far, there’s been little sign of progress on the contentious Obamacare credit subsidies.
- One senator involved in negotiations says he’s found a way forward.
- Proposal would extend open enrollment for ACA plans through March.
- Trump sues IRS over leaked tax information.
- White House advocates state income tax repeal.
Even though it dominated the discussion in the last few months of 2025, the expired Affordable Care Act credit enhancements have fallen off the political radar this January—even as pricier healthcare plans have become a reality for millions.
Ongoing negotiations between key members of both parties seemed to hit a standstill, and after the Jan. 15 end of open enrollment for most plans came and went the issue seemed to recede into the background.
But there were some signs of life this week, after Sen. Bernie Moreno, R-Ohio, outlined what he said was a proposal to the other side that he thought could bridge the divide.
The deal would extend the subsidies through 2026, with open enrollment periods also extended through March, according to reports of his comments. The subsidies would also have an income limit of 700 percent above the federal poverty line, rather than the 400 percent limit currently in effect. And there would be a $5 minimum monthly premium—responding to Republican criticisms that zero-cost plans are encouraging fraud on the state exchanges. Moreno said there would be additional audits to prevent fraud, and to also ensure that the credits did not subsidize abortion services.
Even if there’s an agreement between the parties, it’s not yet clear if they have a vehicle to get it passed through Congress. The two chambers are currently dealing with how to keep the government funded, and there haven’t been plans to enact a bipartisan “extenders” package of tax fixes, as has happened in prior years.
The crush of higher premiums for 2026 is putting pressure on both parties to get something done, however.
Recent Tax Pieces:
Trump Sues Treasury and IRS for $10 Billion Over Tax Data Leak – Kristen A. Parillo, Tax Notes ($):
Between 2018 and 2020, Littlejohn stole and leaked to media outlets (including The New York Times and ProPublica) the tax returns and return information of thousands of wealthy taxpayers, including Trump and billionaire hedge fund manager Kenneth C. Griffin, who filed his own lawsuit against Treasury and the IRS in 2022. Littlejohn pleaded guilty in October 2023 to one count of illegal disclosure but is appealing the five-year prison sentence he received in January 2024.
White House Report on State Income Tax End Draws Scrutiny – Daniel Moore and Michael J. Bologna, Bloomberg Tax ($):
The White House projected a 1% to 1.6% increase in GDP for the average state and a $4,000 increase in average wages.
But economic analysts from across the ideological spectrum panned the CEA’s pitch, suggesting it isn’t economically or politically realistic.
Absent Congress, Protecting LIHTC-Funded Housing Has Fallen to States – Cady Stanton, Tax Notes ($):
Housing projects funded by the low-income housing tax credit (LIHTC) are supposed to be affordable for at least 30 years. But a number of units were exiting affordability requirements after 15 years, leading low- and middle-income tenants to lose access to affordable housing at a time when there were fewer units available.
At the height of the problem, more than 11,000 units a year were no longer subject to rent restrictions meant to target low- and middle-income tenants eligible for LIHTC-subsidized housing. Instead, the units could be converted to market rate housing through a process known as the qualified contract provision.
Addressing the problem has been a low priority for federal lawmakers, who recently expanded the program without addressing its flaws. That missed opportunity comes as concerns about housing affordability are a top political issue.
Dark Money Fears Grow as Future of Johnson Amendment in Question – Trevor Sikes and Kelsey Brooks, Tax Notes ($):
The possible catalyst for this change lies before a federal judge, who is set to rule on whether to grant an agreement by the government to lift Johnson Amendment restrictions against the plaintiffs — two Texas churches and two religious nonprofit organizations — in National Religious Broadcasters v. Bessent, No. 6:24-cv-00311 (E.D. Texas). The Campaign Legal Center is among a group of nonprofits that think the proposed settlement would lead to a new class of religious “super dark money” groups.
Bipartisan Crypto Bill Downplayed by Senior House GOP Tax Aide – Zach C. Cohen, Bloomberg Tax ($):
“We will continue to push for that bill to be included in any must-pass vehicle,” said Kate Lindsey, senior tax policy adviser for Senate Finance Committee Republicans.
Aides are also incorporating feedback on a bipartisan tax administration discussion draft Finance Committee leaders released last year, in hopes of introducing it as formal legislation, Schaefer and Lindsey said.
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