Lawmakers Extend IRS Funding and Preserve Remaining IRA Allocation
The House voted 370 to 48 on September 1 to approve a Senate-passed government spending bill that would extend IRS funding at its current level through December 11, avoiding a disruptive government shutdown ahead of the upcoming filing deadlines.
President Trump is expected to sign the continuing resolution, which also preserves what remains of the IRS’s Inflation Reduction Act (IRA) funding, estimated at around $10 billion. Government funding had been set to expire September 30, and both parties appeared eager to avoid another government shutdown ahead of the midterm elections.
Lawmakers will need to return for a post-election lame duck session to further extend government funding. House Republicans have proposed a $10.2 billion IRS budget for the fiscal year beginning October 1, 2026, down from $11.2 billion in the current year. Senate appropriators have not yet proposed an IRS funding bill, but the bipartisan appropriations process in the Senate is expected to produce a more generous figure.
Lawmakers could also consider a long-term continuing resolution funding the IRS at its current rate. The remaining special allocation of IRA funding might be an area of contention. Republicans have secured a succession of substantial cuts over the past few funding cycles.
A December government funding package could also provide a potential vehicle for a year-end tax package. There is some bipartisan interest in extending the semiconductor manufacturing credit under Section 48D; the work opportunity tax credit; the seven-year recovery period for motorsports entertainment complexes; and expensing for film, television, and theatrical productions. Other tax legislative priorities include enacting IRS reform, providing tax treaty-like benefits for Taiwan, and reversing the limit on the gambling deduction. The compressed timeframe could make it more difficult to pass substantive tax legislation, such as tax reform for digital assets (see our related Alert).
