Here is a look at recent tax-related happenings on the Hill, including recent trade developments with China.
Lately on the Hill
USTR Seeking Comments on Balanced Trade Relationship With China
The United States Trade Representative (USTR) is seeking public comment on the development of the U.S.-China Board of Trade, a new government-to-government mechanism to manage bilateral trade between the U.S. and China. The administration is seeking public comment on tariff modifications for specific nonsensitive products on each side that could promote a balanced trade relationship between the U.S. and China.
European Parliament Provides Its Approval of U.S. Trade Deal
On June 16, 2026, the European Parliament approved the trade framework struck between the European Union (EU) and U.S., consisting of two pieces of legislation that still must be adopted by the EU leaders at the European Council on June 26, 2026.1 The agreement removes EU tariffs on U.S. imports of industrial goods and some agricultural products and provides a 15% tariff ceiling on most EU goods imported into the United States. The trade deal was announced in August 2025 and is intended to stabilize EU-U.S. trade relations while providing the EU safeguards should the U.S. fail to uphold its side of the agreement.2 The agreement has an expiration date of December 31, 2029, unless extended after an EU Commission review.
EU Proposing to Streamline Reporting
The European Commission is expected to propose an exemption for large multinational companies subject to the EU’s 15% global minimum tax from reporting their cross-border tax arrangements.3 This comes as the commission seeks to reduce administrative burdens on companies by reducing duplicative compliance for large multinationals. The proposal would merge the reporting obligations, e.g., country-by-country reporting and reporting related to the global minimum tax, under the Organisation for Economic Co-operation and Development rules. The proposed bill is expected to be released on June 24, 2026.
From the Courts
Supreme Court Declines Review of Chinese Tariff Decision
On June 15, 2026, the U.S. Supreme Court declined to review a Federal Circuit ruling in HMTX Industries, LLC v. United States4 from a September 25, 2025 decision that upheld the USTR’s authority under Section 307 to “take escalatory, modified trade actions” when it modified tariffs on Chinese imports in response to retaliatory actions by China following the first round of tariffs. The modification by the USTR increased the tariffs on Chinese imports from a $50 billion action to a $550 billion action, which HMTX Industries, LLC and three other companies argued was a “radical transformation” beyond the authority granted under §307. The Federal Circuit disagreed and confirmed that the USTR had broad executive authority to escalate tariffs under §301 and §307. The Supreme Court’s recent action to deny review of the decision leaves the Chinese tariff regime intact.5
From Treasury & the IRS
Treasury Plans to Allow Amended Return for Controlled Foreign Corporations to Opt Out of Computing Foreign Currency Gains & Losses
Jim Wang, U.S. Department of the Treasury’s international tax counsel, indicated the department is working to release the proposed regulations for Internal Revenue Code (IRC) §987, wherein a controlled foreign corporation may elect to opt out of calculating foreign currency gains and losses for their qualified business units.6 According to Wang, the department does “intend to allow the election to be made on amended returns for 2025.”
Released Guidance
Qualified Opportunity Zones: Notice 2026-40 announces Treasury and the IRS intend to issue proposed regulations addressing qualified opportunity zones (QOZs), including transitional guidance reflecting amendments made by the One Big Beautiful Bill Act (OB3). The notice outlines how changes to designation periods, applicable start dates, and the 25% limitation on QOZ designations will operate, and clarifies that new designation periods beginning January 1, 2027 are determined without regard to previously designated zones. It also provides transition rules for investors and funds, including the treatment of deferred gains, revised deferral and inclusion timing for post-2026 investments, and conditions under which property acquired after 2026 or after a zone’s designation expires may continue to qualify.
July 2026 AFR: Revenue Ruling 2026-12 provides the July 2026 applicable federal rates (AFR), adjusted AFR, adjusted federal long-term rate and long-term tax-exempt rate, percentages for determining the low-income housing credit, and the federal rate for determining the present value of an annuity, and interest for life or for a term of years, or a remainder or reversionary interest.
Update to Rates and Yield Curves: Notice 2026-38 provides the corporate bond monthly yield curve and corresponding spot segment rates derived from May 2026 data, the 24‑month average corporate bond segment rates applicable for June 2026, and the 30‑year Treasury securities interest rates and weighted average rates.
State Tax Updates
Rhode Island Millionaire Tax
On June 12, 2026, Gov. Dan McKee signed Rhode Island’s fiscal year 2027 budget into law. For tax years beginning on or after January 1, 2027, Rhode Island will impose an additional tax on taxable income exceeding $1 million, starting at 1% in 2027 and increasing to 2% in 2028 and 3% in 2029, with the threshold adjusted for inflation beginning in 2028. This millionaire’s tax increases the state’s top marginal rate from 5.99% to 8.99%.
Massachusetts 2026 Budget Bill
On June 12, 2026, Massachusetts Gov. Maura Healey approved the fiscal 2026 supplemental budget bill H. 5470. The bill delays the conformity of key deductions under the OB3. For tax years beginning on or after January 1, 2026, Massachusetts will conform to the full expensing of research and experimental (R&E) expenditures under IRC §174A. For the 2025 tax year, Massachusetts disallows the immediate expensing of R&E expenditures under IRC §174A.7 Starting in 2027, Massachusetts will conform to the increased federal business interest expensing limitation under IRC §163(j) as well as the increased dollar limitation for expensing depreciable business assets under IRC §179. In addition, beginning in 2027, Massachusetts will conform to the special depreciation allowance for qualified production property under IRC §168(n) and the renewed and enhanced opportunity zones under IRC §1400Z-2. The bill also applies the 4% surtax that applies to Massachusetts taxable income of more than $1 million to the state’s pass-through entity (PTE) excise tax rate. Accordingly, a PTE’s Massachusetts taxable income above the surtax threshold would be subject to the PTE excise tax rate of 5% and the additional surtax.
Arizona Budget Bill Adopted
On June 13, 2026, Gov. Katie Hobbs signed H.B. 4168 into law.8 By updating its IRC conformity date to January 1, 2026, Arizona adopts the full immediate expensing of R&E expenditures under IRC §174A, the increased federal business interest expensing limitation under IRC §163(j), and the increased dollar limitation for expensing depreciable business assets under IRC §179. Furthermore, for 2025 only, Arizona will conform to the special depreciation allowance for qualified production property under IRC §168(n).
Florida Conformity
Florida Gov. Ron DeSantis signed House Bill 7031 on June 11, which revised the state’s corporate income tax conformity to the IRC as amended and in effect on January 1, 2026, except for certain sections of the IRC.9 The bill retains the adoption of IRC as of January 1, 2025 for IRC §§168(k), 174(a), 163(j), 274, and 179. The bill specifically does not adopt the new sections under IRC §168(n) related to the special depreciation allowance for qualified production property or IRC §174A for the full immediate expensing of R&E expenditures.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1“EU Lawmakers Approve US Trade Deal Ahead of Trump Deadline (2),” news.bloombergtax.com, June 16, 2026.
- 2“European Parliament Approves U.S. Trade Deal,” taxnotes.com, June 17, 2026.
- 3“EU to Cut Tax Reporting for Big Multinationals in Overhaul,” news.bloombergtax.com, June 15, 2026.
- 4HMTX Industries, LLC v. United States, No. 25-1012.
- 5“Supreme Court Won’t Review Broad Power to Modify Tariffs,” taxnotes.com, June 16, 2026; “Trump’s First-Term China Tariffs Survive Supreme Court Challenge,” news.bloombergtax.com, June 15, 2026.
- 6“Treasury to Allow Currency Gain, Loss Election on Amended Return,” news.bloombergtax.com, June 13, 2026.
- 7“Massachusetts Phases In Conformity to OBBBA Deductions,” taxnotes.com, June 16, 2026.
- 8“Arizona Governor, Legislature Approve Conformity Bill and Budget,” taxnotes.com, June 17, 2026.
- 9“Florida Conforms Corporate Tax Code to IRC,” news.bloombergtax.com, June 16, 2026.