White House Executive Orders impacting tax and trade
A range of White House Executive Orders are likely to impact tax and trade policy. In this alert, DLA Piper’s Tax Policy team provides updates and insights on strategic legislative approaches, tax planning perspectives, and legal foresight to help maximize tax policy positions of interest to company stakeholders.
Executive Orders from the week of January 20, 2025
- “Regulatory Freeze Pending Review”
- “America First Trade Policy”
- “The Organization for Economic Co-operation and Development (OECD) Global Tax Deal (Global Tax Deal)”
- “Initial Rescissions of Harmful Executive Orders and Actions”
Tax Executive Orders issuances: Key insights
DLA Piper’s President Trump Executive Orders hub sets out executive actions of the new Administration, as well as our coverage of those actions. In this alert, we also link to tax- and trade-specific Executive Orders as well as potential legislation.
Of note, here is our preliminary interpretation of the Regulatory Freeze EO impacting many of our clients. While we are currently seeking further clarification from counsel on Capitol Hill and in the White House and Treasury, we have learned that the following interpretations and takeaways are accurate as they pertain to each of last week’s EOs, outlined below.
The White House and Treasury may be open to suggestions and input from Hill counsel on the tax policies they should examine more closely – and/or what they should leave as is. Entities that may have a vested interest in calling for the reopening of public comment are urged to contact us. We will incorporate your feedback into our communications with tax counsel on the Hill to work toward your strategic goals.
- These regulations have already been published in the Federal Register, but with a future effective date (eg, DPL regulations have a January 2026 effective date)
- Paragraphs 3 and 4 of the “Regulatory Freeze Pending Review” EO are relevant to the tax space, and preliminary alignment on interpretation is as follows:
- In this case, Treasury has 60 days from date of the EO (ie, January 20, 2025) to take a fresh look at the regulations and, should they so choose, reopen the public comment period. This would afford interested taxpayers a renewed opportunity to provide comments that could lead to change in the regulations in question.
- At this juncture, tax-writing committee counsel on the Hill are aiming to interpret the “methodology” by which OMB and Treasury will evaluate what will receive renewed comments and possible revision and what will not.
- Paragraphs 3 and 4 of the “Regulatory Freeze Pending Review” EO are relevant to the tax space, and preliminary alignment on interpretation is as follows:
Regulations pushed out just prior to January 20, 2025 that have immediate effective dates (for example, 45e regulations): Please see the following (last) paragraph of the EO that reads:
Should actions be identified that were undertaken before noon on January 20, 2025, that frustrate the purpose underlying this memorandum, I may modify or extend this memorandum, to require that department and agency heads consider taking steps to address those actions.
- Capitol Hill tax counsel have noted ambiguity in the above language, which has prompted communication between tax counsel on the Hill, the White House, and the US Office of Management and Budget O(MB)/Treasury (OMB is implicated by the EO for oversight) in an effort to determine the path forward. However, preliminary interpretation of this paragraph suggests that it allows the new Administration to capture regulations pushed out with a pre-January 20, 2025 effective date, thereby affording a pathway to potentially open a public comment period. That period could provide a pathway for changes to regulations with a date already in effect.
- We aim to provide further insight on this, as well as insight into the manner in which the various entities mentioned may determine how to proceed with this process.
General tax bill updates for the week of January 20, 2025
Reconciliation process and timing: There is still no overarching consensus between the House and Senate on whether there will be one large reconciliation bill, rather than two different reconciliation bills. However, we note the below key points:
- March 14, 2025 is the first date by which Congress must address the debt ceiling (the federal government’s authority to borrow ended on January 1, 2025. However, the House and Senate typically have about three months of “extraordinary measures” that can cover the interim period). Because of the debate regarding the “fiscal health” of the country’s circumstances, the debt ceiling is expected to be contentious, and Republicans have been eyeing a reconciliation path forward that could also potentially include immigration measures, among other non-tax priorities.
- House and Senate Republican tax writers largely believe that they would not be able to complete a tax bill by March 14, 2025 and, therefore, would again turn to a two-bill strategy, with a tax reconciliation bill occurring late this year.
- Additionally, we are reviewing budget reconciliation instructions delivered to the various congressional committees, including tax-writing committees, seeking to determine how much revenue does or does not need to be raised for a reconciliation bill. Clarity in this area would give some indication of the degree to which Congress will need to deploy “pay-fors”/revenue raisers in the bill that could have adverse impacts on businesses. Stay tuned for more details.
Key tax/trade bills introduced this week
H.R.557 - To amend the Internal Revenue Code of 1986 to establish a deduction for certain amounts received as a bonus.
H.R.560 - To amend the Internal Revenue Code of 1986 to exclude compensation from secondary employment for certain taxpayers from the income tax and payroll taxes.
H.R.561 - To amend the Internal Revenue Code of 1986 to establish a deduction for certain overtime payments.
S.173 - A bill to amend the Internal Revenue Code of 1986 to increase excise taxes on fuel used by private jets, and for other purposes.
H.R.574 - To amend the Internal Revenue Code of 1986 to permanently allow a tax deduction at the time an investment in qualified property is made, and for other purposes.
S.187 - A bill to amend the Internal Revenue Code of 1986 to permanently allow a tax deduction at the time an investment in qualified property is made.
H.R.591 - To provide an enforcement of remedies against the extraterritorial taxes and discriminatory taxes of foreign countries.
H.R.640 - To amend the Internal Revenue Code of 1986 to repeal the excise taxes on taxable chemicals and taxable substances.
H.R.652 - To amend the Internal Revenue Code of 1986 to allow the deduction under section 199A to apply to qualified BDC interest dividends in the same manner as qualified REIT dividends.
H.R.684 - To amend the Internal Revenue Code of 1986 to repeal the excise tax on repurchase of corporate stock.
H.R.694 - To suspend normal trade relations with the People's Republic of China and to increase the rates of duty applicable with respect to articles imported from the People's Republic of China, and for other purposes.
H.R.703 - To amend the Internal Revenue Code of 1986 to make permanent the deduction for qualified business income.
S.199 - A bill to amend the Internal Revenue Code of 1986 to provide special rules for the taxation of certain residents of Taiwan with income from sources within the United States.
S.206 - A bill to suspend normal trade relations with the People's Republic of China and to increase the rates of duty applicable with respect to articles imported from the People's Republic of China, and for other purposes.
S.224 - A bill to amend the Internal Revenue Code of 1986 to allow intangible drilling and development costs to be taken into account when computing adjusted financial statement income.
Relevant communications
EC141 - A letter from the Chief, Publications and Regulations Section, Internal Revenue Service, transmitting the Service's Major final rule - Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit [TD 10024] (RIN: 1545-BR17) received January 22, 2025, pursuant to 5 U.S.C. 801(a)(1)(A); Public Law 104–121, section 251; (110 Stat. 868); to the Committee on Ways and Means.
Learn more
We look forward to bringing you timely updates in the near future. To learn more about these rapidly evolving developments, please contact Evan Migdail, Melissa Gierach, or Steve Phillips, and please also check out the materials from our webinar on the tax implications of the 2024 US elections.