The US House on 1 September approved the Senate-passed continuing resolution (CR H.R. 6500) to fund the government beyond the end of the current fiscal year on 30 September and through 11 December. The CR also extends highway funding through that date. The legislation now goes to the President for signature and clears the table for must-pass legislation prior to the November midterm elections.

The Senate is still out of session for the August recess and will return to Washington on 14 September. The House is scheduled to be out of session next week for the Labor Day holiday. It is unclear what other legislation may be considered before Congress adjourns early for the lead-up to the November elections.

Congressional action on outstanding tax issues during the lame-duck session after the November elections remains uncertain. One option is a bipartisan bill, which could include tax extenders and potentially other issues, like US-Taiwan tax relief and tax administration proposals, that could be attached to a longer-term government funding measure that will be needed when the CR expires.

Another possible track for tax legislation is a third or fourth reconciliation bill. The House on 22 July approved a FY2027 budget reconciliation resolution (H. Con. Res. 113), providing for a US$95b bill focused on defense funding and with some voter ID and farm aid provisions, but no reconciliation instructions to the tax-writing Ways & Means Committee. The absence of reconciliation instructions seemed to preclude tax issues from being addressed in the next reconciliation bill (3.0). In the Senate, Budget Committee Chairman Ron Johnson (R-WI) also released a FY2027 budget resolution on 7 August with budget reconciliation instructions to several committees, but not to the tax-writing Finance Committee.

House Republican leaders had earlier mentioned the prospect for a budget reconciliation 4.0 process that would include priorities that are likely to be omitted from the reconciliation bill (3.0) currently being prepared, such as additional tax proposals and social program integrity provisions. This option may gain traction if Republicans lose one or both chambers of Congress in the elections, pushing congressional Republicans to consider a reconciliation bill to enact GOP priorities that might not be possible under divided government.

The International Negotiating Committee held its fifth substantive session in New York on 3 to 13 August 2026 to continue negotiations on the United Nations Framework Convention on International Tax Cooperation and its two early protocols covering the taxation of income from cross-border services and the prevention and resolution of tax disputes.

The session marked a shift from conceptual discussions toward more detailed negotiations on the legal design, implementation and operation of the three instruments. Discussion focus areas included the relationship between the proposed instruments and existing international tax agreements, the allocation of taxing rights, the scope of the future institutional arrangements and the extent to which the new framework should establish binding obligations. The sixth substantive session is scheduled to take place in Nairobi from 30 November to 10 December 2026. An EY Global Tax Alert provides details.