WASHINGTON, D.C. — The Internal Revenue Service closed out the year with a flurry of policy moves that could quietly reshape how businesses, fuel distributors, and health insurance consumers handle their federal taxes, all tied to provisions in the One, Big, Beautiful Bill.
In a December 22 announcement, the Treasury Department and IRS signaled that new refund rules are coming for dyed fuel, a long-standing pain point for fuel operators caught in the technicalities of federal excise taxes. Under current law, diesel fuel or kerosene can be taxed when first removed from a terminal, even if it is later designated for non-taxable use by being dyed. The new statute creates a pathway for recovering that initial tax payment when the fuel ultimately qualifies for exemption.
The IRS said formal guidance on how to file those refund claims will arrive in early 2026. Until then, taxpayers are being told to hold off. Claims will not be accepted or processed before the guidance is released, even if the fuel removal occurs after December 31, 2025. Importantly, the agency reiterated that refunds can only be issued to the party that originally paid the excise tax, a limitation that remains locked in absent further changes from Congress.
A day later, on December 23, the IRS updated its guidance on business interest deductions, reflecting major adjustments to Section 163(j) of the tax code. Beginning with tax years after December 31, 2024, businesses will once again be able to factor depreciation, amortization, and depletion back into Adjusted Taxable Income, effectively loosening the cap on deductible interest expense.
The changes go further in 2026. The IRS clarified that interest costs capitalized during the year generally fall under the Section 163(j) limitation, with narrow exceptions. The rules also carve out certain foreign income inclusions tied to controlled foreign corporations, keeping them out of the Adjusted Taxable Income calculation.
Another update released the same day focused on health care, with revised IRS FAQs addressing changes to the Premium Tax Credit. That credit, which helps low- and moderate-income households pay for insurance through the Health Insurance Marketplace, was altered by the One Big, Beautiful Bill to eliminate repayment caps on excess advance credits for tax years after December 31, 2025. The IRS also removed outdated guidance tied to temporary rules that expired years ago.
Taken together, the updates point to a broader shift underway at the IRS: untangling legacy tax rules, expanding deductions and credits in some areas, and asking taxpayers to be patient as agencies translate sweeping legislation into workable guidance.
For businesses and individuals alike, the message is clear. The fine print of the One, Big, Beautiful Bill is now moving from statute to enforcement, and the practical consequences will start showing up on tax returns sooner than many may expect.
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