US Legislative Roundup: Reconciliation 2.0, Crypto Rules and Energy Credits
Congress has gone on summer recess, but the policy pipeline it left behind is anything but quiet. Three separate threads are running simultaneously: Republican lawmakers are sketching a second reconciliation bill aimed at deficit reduction; the SEC has launched a new digital assets initiative and the White House has ordered a re-evaluation of crypto in retirement plans; and a standoff over clean energy tax credits has led two Republican senators to block Treasury Department nominees. For accounting firms, CFOs, and auditors managing US tax exposure, each of these threads carries near-term compliance implications, and they are worth tracking in parallel rather than in isolation.
Reconciliation 2.0: What "2 Big, 2 Beautiful" Could Mean for Tax Policy
The mechanics behind a second reconciliation bill
Budget reconciliation is a Senate procedure that lets the majority party pass certain categories of legislation with a simple majority vote, bypassing the 60-vote threshold required to break a filibuster. With a new federal fiscal year beginning October 1, Republicans have the procedural right to use reconciliation up to two more times before next year's midterm elections. The Republican Study Committee, which describes itself as the House's conservative caucus and counts 189 of the chamber's 219 GOP members, has already formed a Reconciliation 2.0 Working Group to build out a framework. It is soliciting ideas from House members, conservative senators, and aligned outside groups.
The framing is different from July's One Big Beautiful Bill Act. That legislation carried a Congressional Budget Office-estimated price tag of roughly $4.1 trillion, composed of approximately $3.4 trillion in reduced revenue collection and more than $700 billion in additional interest costs on the federal debt. Any successor bill, at least as described by House members, will be focused on deficit reduction rather than further large-scale tax cuts.
Tax items still on the table
Senate Finance Committee Chair Mike Crapo has acknowledged that approximately 200 tax proposals were submitted to bill writers but did not make it into the final OBBBA text. He has not detailed those proposals but has signalled support for a follow-on bill this year. Senator Steve Daines, a Finance Committee member, has pointed to capital gains relief as one possible focus area, including proposals to index capital gains for inflation and to expand or eliminate the exclusion on capital gains from home sales, a topic President Trump has also raised publicly.
The political arithmetic, however, is uncertain. The OBBBA itself was a close-run process. At least one senator, Lisa Murkowski of Alaska, whose vote proved decisive, has been sharply critical of parts of that bill, and several swing-seat House members are unlikely to support the level of spending cuts that more conservative members are targeting. Senior White House and congressional officials have publicly denied that side deals were struck to secure the votes needed to pass the OBBBA, but some members have suggested they voted yes based on expectations of further action.
Accounting and tax implications for firms and CFOs
From a planning standpoint, the practical takeaway for tax advisers and CFOs is straightforward: do not treat the OBBBA as the final word on tax policy for the year. If capital gains indexing or further exclusions on home-sale profits advance, the modelling work done under current law for clients holding appreciated assets may need to be revisited. The same applies to any provisions that surfaced during OBBBA negotiations but were dropped, which could resurface in a stripped-down deficit-reduction bill. Firms running scenario planning for high-net-worth clients or corporate treasury teams should build in a policy uncertainty buffer for the second half of the year. Robust crypto accounting software and digital asset accounting software that can accommodate mid-year rule changes will reduce the manual rework if new provisions are enacted quickly.
Digital Assets: SEC Project Crypto and the Retirement Plan Order
SEC Project Crypto: disclosures, exemptions, and safe harbors
On July 31, SEC Chair Paul Atkins announced a new agency initiative called Project Crypto. The stated goal is to accelerate the development of disclosure rules, exemptions, and safe harbors that are fit for purpose for digital assets. The initiative specifically names initial coin offerings, airdrops, mining and staking rewards, and other network participation income as areas the agency intends to address. This is notable because these are precisely the categories where the current rules, designed for traditional securities, sit uneasily over the realities of on-chain activity.
For accounting firms and auditors, Project Crypto matters for two reasons. First, any new disclosure framework will affect how issuers and intermediaries report digital asset activity, which flows directly into financial statement preparation and audit procedures. Second, any safe harbors for specific transaction types, if they arrive, will reduce legal uncertainty that currently inflates compliance costs and creates divergent treatment across clients. Firms that are already investing in crypto bookkeeping software and digital asset accounting software capable of granular transaction-type classification will be better placed to implement new disclosure requirements quickly once they are finalised.
Retirement plans and alternative assets: the executive order
On August 7, President Trump signed an executive order directing the Department of Labor, in coordination with the SEC, to re-evaluate the rules governing alternative asset investments inside tax-advantaged retirement plans. The order is intended to allow plan fiduciaries to direct retirement plan assets toward alternative investments, explicitly including cryptocurrencies and other digital assets.
This is a significant development for ERISA-governed plans, where the fiduciary duty standard is demanding. The existing regulatory posture has been cautious about crypto in 401(k)-style plans. A formal re-evaluation could ultimately expand permissible asset classes, creating new record-keeping obligations for plan administrators, new audit exposure, and new fair value measurement questions for plan sponsors. At this stage the order is a directive to review, not a change in the rules, but firms advising plan sponsors or conducting plan audits should be monitoring the Labor Department's response closely.
The CLARITY Act and Senator Lummis's tax bill
The House has already passed the CLARITY Act, which overhauls the financial regulatory treatment of digital assets and could also become a legislative vehicle for crypto tax rule changes. In the Senate, Cynthia Lummis of Wyoming has introduced a separate bill that would modify the tax treatment of certain cryptocurrency transactions, including both annual and per-transaction thresholds and specific rules for income types unique to crypto, such as mining and staking rewards.
The political window is deliberately narrow: proponents of digital asset legislation are pushing to enact something before the end of the year, before the electoral dynamics of a midterm cycle make legislating harder. For firms providing crypto accounting software or advisory services, the Lummis bill and the CLARITY Act together represent the most detailed picture currently available of what a US crypto tax framework might look like. Tracking both bills through the Senate, alongside Project Crypto's regulatory output, is now a core compliance monitoring task. You can read more background on the CLARITY Act's recent history in our piece on the CLARITY Act ethics deadlock and our coverage of Goldman Sachs CEO David Solomon's public backing of the legislation.
Energy Credits: A Senate Standoff That Is Blocking Treasury Nominees
How the dispute arose from the OBBBA
One of the more consequential late-stage negotiations in the OBBBA centred on the termination dates for the Section 45Y and Section 48E tax credits, which support wind and solar energy projects. A group of Republican senators, including Charles Grassley of Iowa and John Curtis of Utah, pushed successfully to extend the termination deadline so that wind and solar projects must be placed in service by the end of 2027 to qualify, with an additional four-year runway for projects that begin construction within 12 months of the law's enactment.
A separate group of House Republicans had wanted a faster wind-down of almost all the Inflation Reduction Act's energy tax credits. They were persuaded to accept the extended timeline in part by President Trump's public assurance that the administration would enforce the 2027 end date strictly. That assurance led directly to a July 7 executive order requiring Treasury to issue guidance within 45 days that would "strictly enforce the termination" of the credits, including a review of the long-standing guidance on what it means for a project to "begin construction."
Why the begin-construction definition matters so much
The "begin construction" standard has been defined in Treasury guidance for more than a decade. It gives project developers a clear test for qualifying their investments for the applicable tax credit. Senator Grassley's concern is that a restrictive reinterpretation of the standard, under pressure from the executive order, could raise the bar high enough that many projects with capital already committed cannot meet it before the July 2026 construction-start deadline. If those projects are knocked out, the practical effect would be to narrow the credit availability well beyond what Congress legislated when it set the 2027 service date.
Grassley has stated that the meaning of "begin construction" has been well established and that Congress specifically referenced existing Treasury guidance when writing that term into the OBBBA. He argues that both the law and congressional intent are clear, and that Treasury guidance must stay consistent with them.
The three Treasury nominees caught in the hold
Ahead of the August 18 deadline for Treasury's guidance, Grassley and Curtis placed holds on three Treasury nominees: Brian Morrissey Jr., nominated for Treasury general counsel; Francis Brooke, nominated as assistant secretary for international trade and development; and Jonathan McKernan, nominated as undersecretary of domestic finance. Grassley has said the holds will remain until he is confident that any rules and regulations adhere to the law and congressional intent.
For tax practitioners advising clients with renewable energy investments, the guidance that emerges before or on August 18 will determine whether projects currently in development retain their credit eligibility. Firms should be reviewing client portfolios for Section 45Y and Section 48E exposure now, mapping the construction timelines against both the current guidance standard and any revised definition Treasury may issue, and documenting the factual record supporting each project's begin-construction date. The distinction between what the OBBBA text requires and what a tightened Treasury interpretation might impose could be litigated, making contemporaneous documentation essential.
Practical Priorities for Accounting Firms and CFOs
A checklist for the recess period
With Congress in recess, the action is shifting from Capitol Hill to the agencies. The August 18 Treasury energy credit guidance is the most immediate deadline. Project Crypto at the SEC is an ongoing initiative without a fixed publication date but one that will produce rules affecting digital asset disclosure and reporting. The Labor Department's retirement plan review is at an early stage. And Reconciliation 2.0 is a framework discussion that will not crystallise until Congress returns.
For firms and CFOs, the recess period is the right time to take stock across three areas. First, review any client or corporate positions in renewable energy tax credits, specifically Section 45Y and Section 48E, and assess their exposure to a narrowed begin-construction definition. Second, audit the digital asset transaction classification within existing crypto accounting software or digital asset accounting software to ensure that income types such as staking rewards, airdrops, and mining income are tracked at the transaction level, given that SEC Project Crypto and the Lummis bill both single these out. Third, run a preliminary scenario on how capital gains rule changes, whether indexing for inflation or expanded home-sale exclusions, would affect current-year tax projections for affected clients.
The pace of US digital asset and energy tax legislation in 2026 has been faster than most observers expected. Firms that maintain a living compliance calendar rather than reacting to enacted law after the fact are in a materially stronger position, both for client advisory quality and for managing their own liability.
Frequently Asked Questions
What is Reconciliation 2.0 and could it change crypto tax rules?
Reconciliation 2.0 is the informal name for a potential second budget reconciliation bill that House Republicans are beginning to frame through a newly formed working group. Budget reconciliation allows the majority party to pass certain fiscal legislation with a simple majority in the Senate, bypassing the filibuster. While the primary stated focus is deficit reduction rather than new tax cuts, approximately 200 tax proposals that did not make it into the One Big Beautiful Bill Act remain in circulation, and the CLARITY Act could become a vehicle for crypto tax changes. Capital gains relief, including possible inflation indexing, has been cited by at least one senior Finance Committee member as a potential area of focus.
What does SEC Project Crypto mean for financial reporting?
SEC Chair Paul Atkins launched Project Crypto on July 31 to develop disclosure rules, exemptions, and safe harbors tailored to digital assets. The initiative covers initial coin offerings, airdrops, mining and staking rewards, and other network participation income. Once the SEC publishes its output, it will affect how issuers and intermediaries report digital asset activity in financial statements and filings. Accounting firms and auditors should monitor the initiative closely, as new disclosure categories will require updates to audit procedures and client reporting frameworks.
Why are senators blocking Treasury nominees over energy credits?
Senators Charles Grassley and John Curtis placed holds on three Treasury nominees because they are concerned that a July 7 executive order directing Treasury to "strictly enforce" the termination of wind and solar tax credits could lead to guidance that redefines the established "begin construction" standard in a way that disqualifies projects with capital already committed. The senators argue that the OBBBA specifically incorporated the existing Treasury definition of "begin construction" and that any reinterpretation would contradict both the law and congressional intent. Treasury guidance was due by August 18.
Which tax credits are at stake in the energy dispute?
The credits at issue are Section 45Y, the clean electricity production tax credit, and Section 48E, the clean electricity investment tax credit. Both were originally available through 2034 under the Inflation Reduction Act. The OBBBA moved that end date to 2027 for projects placed in service, with a four-year extension for projects that begin construction within 12 months of enactment. The dispute is over how strictly Treasury will define "begin construction" in guidance it was required to issue by August 18.
How should accounting firms prepare for potential mid-year tax law changes?
The most important step is maintaining a living compliance calendar that tracks agency guidance deadlines alongside legislative milestones, rather than waiting for enacted law. Firms should build scenario models for capital gains rule changes, review client renewable energy credit positions against both the current and any revised begin-construction standard, and ensure that digital asset accounting software is capable of transaction-level income classification for crypto-specific income types such as staking, mining, and airdrop receipts. Contemporaneous documentation of factual positions, particularly on energy credit projects, is essential if Treasury guidance triggers disputes.
Source: Grant Thornton