The Internal Revenue Service (IRS) has introduced significant modifications to tax regulations that are poised to impact businesses, fuel distributors, and health insurance consumers. These changes are part of the provisions outlined in the recently passed legislation known as the One, Big, Beautiful Bill. In an announcement made on December 22, 2025, the IRS, in conjunction with the Treasury Department, highlighted new refund rules for dyed fuel, addressing longstanding concerns for fuel operators navigating federal excise taxes.
Under the current regulations, diesel fuel or kerosene is taxed upon its initial removal from a terminal, even if it is subsequently marked for non-taxable use through dyeing. The new regulations will allow for a mechanism to recover the initial tax payment once the fuel qualifies for exemption. The IRS has specified that formal guidance on filing these refund claims will be provided in early 2026. Until that guidance is available, taxpayers have been advised to refrain from submitting claims; processing will not occur for any claims made before the release of this guidance, even if the fuel is removed after December 31, 2025. Importantly, refunds will only be issued to the entity that originally paid the excise tax, a stipulation that remains unchanged unless further adjustments are made by Congress.
On December 23, 2025, the IRS announced updates to its guidance on business interest deductions, which reflect major revisions to Section 163(j) of the tax code. Starting with tax years post-December 31, 2024, businesses will be permitted to reintroduce depreciation, amortization, and depletion into their Adjusted Taxable Income, effectively relaxing the limitations on deductible interest expenses. The changes will become more pronounced in 2026, as the IRS clarified that interest costs capitalized during the year will generally be subject to the Section 163(j) limitation, with certain exceptions.
Additionally, certain foreign income inclusions related to controlled foreign corporations will be excluded from the Adjusted Taxable Income calculation, a move aimed at providing greater clarity to business operations.
Another significant update released the same day pertains to health care, specifically the adjustments to the Premium Tax Credit. This credit, which assists low- and moderate-income households in obtaining insurance via the Health Insurance Marketplace, will see alterations that eliminate repayment caps on excess advance credits for tax years after December 31, 2025. The IRS has also removed outdated guidance concerning temporary rules that are no longer applicable.
These updates indicate a broader transformation at the IRS, focused on simplifying outdated tax rules and expanding deductions and credits in certain areas. The agency has urged taxpayers to remain patient as it works to translate the comprehensive legislation into actionable guidance.
For both businesses and individuals, the implications of the One, Big, Beautiful Bill are becoming increasingly concrete. The transition from legislation to enforcement is underway, and taxpayers can expect to see the practical consequences reflected in their tax returns in the near future.
