Grant Thornton 2026 business tax planning guide

The 2026 tax landscape

The U.S. tax environment in 2026 will be defined by sweeping reforms under the One Big Beautiful Bill Act (OBBBA), which provided what is arguably the most dependable tax code in years. The tax-centric law, enacted in July, delivered on a wide-variety of Republican promises around taxes, ranging from extending and expanding on expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) for individuals, to new employee-focused tax breaks.

The legislation also revived significant taxpayer-friendly business provisions sunsetted or phased out by the TCJA and lessened the impact of scheduled tax increases for multinationals. Republicans prioritized reviving business-friendly provisions that were phased, or phasing, out as part of the tradeoff the TCJA made for a lower corporate rate. Republican tax policymakers argued that permanent revivals of those provisions allows businesses to better plan for the long term and make staffing and investment decisions that lead to greater economic growth. In turn, this growth can offset increased concerns about the $38 trillion-plus federal debt.

Several of the most impactful business provisions enacted under the OBBBA have already taken effect or had retroactive elements to them. These include the revival of full expensing of domestic research and experimentation expenses under Section 174A; 100% bonus depreciation, including for some real property; and a more favorable computation of the business interest expense limitation under Section 163(j).

On the whole, most businesses will benefit from reduced taxes from the OBBBA in 2026 due to the revived provisions, and the law avoided broad tax hikes. Alternative energy companies and universities, however, saw less than favorable tax changes in the OBBBA.

While many of the clean energy credits from the 2022 Inflation Reduction Act (IRA) will remain available in 2026, others — particularly those supporting solar, wind, and non-carbon burning transportation — are being curtailed through accelerated phase-outs, narrowed eligibility and new compliance requirements. Most renewable energy credits and incentives also will be subject to tighter restrictions relating to prohibited foreign entities.

In addition, corporations will have to exceed a new floor on charitable contributions to claim a deduction, and many colleges and universities will face a higher tax on investment income from their endowments.

At the same time 2025’s legislation offered greater predictability on the tax front, the frequent changes in the Trump administration’s tariff policy this year injected great uncertainty into business planning. Tariffs are at their highest levels in close to a century, greatly impacting supply chains and cost structures. A monumental decision is awaited from the Supreme Court this session that will determine the legality of a significant swath of the current tariffs.

This guide is meant to help businesses identify their most impactful tax changes for 2026, which could include:

• Shorter-lived renewable energy incentives
• Expired provisions, including the work opportunity tax credit
• Compliance with new employee deductions for tips and overtime pay
• Modified incentives for employer-provided benefits
• International tax changes
• Modifications for tax-exempt organizations
• State and local tax considerations

Guidance and regulations from the IRS on the OBBBA’s many tax changes will continue to roll out in the coming year, and taxpayers should work with their advisors to monitor the implications.

As well, business owners, executives and other high-net-worth individuals can benefit from our accompanying tax guide.

Renewable energy incentives

Clean electricity production and investment credits

The OBBBA retains the core structure of Section 45Y, the production tax credit (PTC), and Section 48E, the investment tax credit (ITC), for facilities generating electricity with zero greenhouse gas emissions. However, wind and solar projects now require construction to begin by July 5, 2026, or to be placed in service by Dec. 31, 2027, to qualify for these credits.

The law also modifies the domestic content requirements for Section 48E credits. Previously, taxpayers needed to use 100% U.S. iron or steel for certain structural components, and 40% of all other manufactured products needed to be of U.S. origin (20% in the case of offshore wind facilities). The OBBBA increased the requirement around manufactured products to 45% (or 27.5% for offshore wind facilities) for facilities that began construction after June 16, 2025, but before 2026, and it will further increase to 55% for construction beginning after 2026.

In a notable expansion of the Section 45Y production credit, the definition of an “energy community” has been broadened for advanced nuclear facilities. A metropolitan statistical area (MSA) qualifies as an energy community if it has — or had after 2009 — at least 0.17% direct employment related to the advancement of nuclear power, which includes jobs in nuclear facility operations, advanced nuclear power R&D, nuclear fuel cycle R&D, and component manufacturing.

Finally, the law introduced a new investment credit under Section 48E for qualified fuel cell property. Fuel cell systems that begin construction after 2025 are eligible for a 30% credit, with no adjustments or bonus credits, regardless of whether they meet the zero-emissions requirement that applies to other technologies. This carve-out reflects a targeted policy preference for fuel cell technology, particularly in industrial and backup power applications.

New rules for solar and wind construction

One of the most consequential administrative developments following the enactment of the OBBBA was IRS Notice 2025-42, which provided updated guidance on what it means to “begin construction” for purposes of claiming the clean electricity credits under Sections 45Y and 48E. This guidance, required by Executive Order 14315 (July 7, 2025), is especially important in light of the OBBBA’s accelerated termination of the credits for solar and wind projects placed in service after Dec. 31, 2027, unless construction begins prior to July 5, 2026.

The IRS previously issued several notices that allowed taxpayers to establish the beginning of construction date using either the Physical Work Test or the Five Percent Safe Harbor, provided they also met a continuity requirement. These rules have been widely used in the renewable energy industry to secure credit eligibility while allowing flexibility in project timelines.

Notice 2025-42 significantly narrows the options available to solar and wind developers establishing the beginning of construction for purposes of Sections 45Y and 48E by eliminating the Five Percent Safe Harbor. Going forward, only the Physical Work Test may be used to establish that construction has begun.

The Physical Work Test requires that a taxpayer begin physical work of a significant nature on the project site or on project components. The test focuses on the nature of the work, not the amount or cost, and it includes both on-site and offsite work. Qualifying activities include, for example, site grading, foundation pouring or the manufacture of custom components or equipment. Preliminary activities such as planning or design, obtaining permits and licenses and conducting surveys and studies are not considered physical work of a significant nature.

The notice also clarifies that taxpayers must demonstrate continuous progress toward completion once physical work has begun (the “continuity requirement”). This includes maintaining a consistent schedule of development, procurement and construction activity. Projects that experience extended delays or inactivity may be deemed to have failed the continuity requirement, even if physical work was initiated on time. The notice provides a safe harbor whereby the continuity requirement is deemed met if the qualified solar or wind facility is placed in service no later than the last day of the fourth calendar year after the calendar year in which construction began.

For example, if construction begins in June 2026 (as determined under Notice 2025-42), then the safe harbor is met as along as the qualified facility is placed in service no later than Dec. 31, 2030, without regard for certain excusable disruptions.

Notice 2025-42 allows taxpayers with low output solar facilities (maximum net output not greater than 1.5 MW nameplate capacity as measured in alternating current) to continue to rely on the IRS Notices, including the Five Percent Safe Harbor.

The notice applies only to solar and wind facilities that begin construction on or after Sept. 2, 2025, as determined under the IRS Notices, including projects relying on the now-disallowed Five Percent Safe Harbor.

Clean vehicle infrastructure

Section 30C, originally expanded under the Inflation Reduction Act, provides a credit for alternative fuel vehicle refueling property, including electric vehicle (EV) charging stations. The credit previously was available for property placed in service through 2032, but the OBBBA significantly shortened its availability, terminating it for property placed in service after June 30, 2026.

Clean fuel incentives

Sections 40A and 45Z, which provide tax credits for the production and use of biodiesel, renewable diesel and other clean fuels, are designed to support domestic fuel producers and encourage the transition to lower-emission transportation fuels. The OBBBA extended and modified both.

Section 40A previously offered a credit for biodiesel and renewable diesel used as fuel, including a separate credit for small agri-biodiesel producers. The general credit expired for fuel sold or used after Dec. 31, 2024, but the OBBBA extended the small agro-biodiesel producer credit through 2026. The law also doubled the credit rate from 10 cents-per-gallon to 20 cents-per-gallon and made the credit transferable under Section 6418 for fuel sold or used after June 30, 2025. Notably, the law allows small producers to claim both credits for qualifying fuel, provided certain conditions are met.

Section 45Z, which began providing a performance-based credit for clean fuel production in 2025, was due to expire after 2027. The credit amount is based on the fuel’s emissions profile, with higher credits available for fuels with lower lifecycle greenhouse gas emissions. The OBBBA extended Section 45Z through 2029 but added new restrictions. Fuel produced after Dec. 31, 2025, must be exclusively derived from feedstocks produced in the U.S., Mexico or Canada, and fuel with a calculated emissions rate below zero is no longer eligible for the credit.

These changes are intended to prevent over-crediting for certain biofuels and to reinforce regional supply chain integrity. In addition, the OBBBA also eliminated the increased credit amount for sustainable aviation fuel.

Energy efficient commercial buildings deduction

Section 179D provides a deduction for energy-efficient improvements made to commercial buildings, including lighting systems, HVAC and building envelope upgrades, but the OBBBA terminated Section 179D for property that begins construction after June 30, 2026. The deduction ranges from $2.50 per square foot to a maximum of $5.00 per square foot (indexed for inflation) based on meeting certain annual energy and power cost reduction and the prevailing wage and apprenticeship standards. Tax-exempt entities (including governmental entities) can assign the deduction to the designer of such property, in effect creating a permanent deduction to the designer.

Foreign entity restrictions

The OBBBA introduced a multi-layered framework of new restrictions on foreign involvement in clean-energy projects, with implications that extend well beyond ownership and control. These rules apply across a wide range of energy credits, including Sections 45Y, 48E, 45X, 45Z, 45Q and 45U, and are designed to limit the role of certain foreign actors in U.S. energy infrastructure. The restrictions come into play under three main categories: specified foreign entities; foreign-influenced entities; and material assistance from prohibited foreign entities.

Specified Foreign Entities (SFEs) are defined under new Section 7701(a)(51) and include foreign entities of concern, Chinese military companies, foreign-controlled entities or entities otherwise specified in applicable law. In general, this includes entities organized under, or with principal places of business in, China, Russia, Iran and North Korea. Any taxpayer that is an SFE is ineligible for the affected energy credits.

Foreign-Influenced Entities (FIEs) are those under significant influence or control by specified foreign entities. FIEs also are ineligible for the affected energy credits. The OBBBA sets out several tests to determine foreign influence, including:

• Ownership test: Substantial equity ownership or governance control by SFEs (or related entities), including appointing of officers, 25% ownership by a single SFE, or 40% ownership by one or more SFEs, with limited exceptions (generally for publicly traded companies).
• Debt threshold test: 15% or more of an entity’s debt issued to SFEs.
• Effective control test: Resulting from payments made to SFEs pursuant to an agreement or other contract, which might include timing or amount of activities for production of electricity or eligible components.
• Intellectual property agreements test: Agreements entered into or modified after July 4, 2025, with SFEs that allow them to direct sourcing of components, receive long-term royalties and other contractual rights.

Collectively, specified foreign entities and foreign-influenced entities are referred to as prohibited foreign entities. The determination of whether an entity is a prohibited foreign entity is generally made as of the last day of the taxable year. For a taxpayer’s first taxable year beginning after July 4, 2025, the determination is instead made as of the first day of the taxable year.

The third restriction comes in the form of the Material Assistance Rules, which target supply chain relationships. This restriction establishes material assistance cost ratios for qualified facilities, energy storage technologies, eligible components and critical minerals. Material assistance includes direct costs attributable to manufactured products or components sourced from prohibited foreign entities. The ratios are computed as direct costs from non-prohibited foreign entities divided by total direct costs. To qualify for the affected credits, taxpayers must have a material assistance cost ratio greater than the applicable threshold.

For purposes of qualified facilities or energy storage technologies under Section 48E and 45Y, the following are the material assistance cost ratios that apply based on when construction begins:

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For purposes of the production of eligible components, the following are the material assistance cost ratios that apply based on when the component is sold:

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Critical minerals sold before 2030 have a material assistance cost ratio of 0%. That will increase to 25% for 2030, 30% for 2031, 40% in 2032, and 50% for critical minerals sold after 2032. Treasury must issue alternative threshold percentages for each of the applicable critical minerals by Dec. 31, 2027, which must be at least the amounts specified in the OBBBA. These alternative thresholds must take into account domestic geographic availability, supply chain constraints, domestic processing capacity needs and national security concerns.

Prior to Dec. 31, 2026, Treasury is required to issue safe harbor tables or other necessary guidance to assist taxpayers in identifying the percentage of total direct costs of manufactured products and direct material costs of eligible components. Until the publication of that guidance, taxpayers can use the tables in Notice 2025-8 (issued as safe harbors for domestic content bonus credits) and reasonably rely on certifications from suppliers.

Expiring provisions

While the so-called tax extenders package — a group of broad and industry-specific incentives that were renewed as a bloc, typically with bipartisan support — included more than 50 provisions a decade ago, most have been either made permanent or phased out since 2015. This has left just a small handful due to sunset at the end of 2025, including: 

• Work opportunity tax credit (Section 51(c)(4))
• Seven-year recovery period for motorsports entertainment complexes (Section 168(e)(3)(C)(ii) and (i)(15)(D))
• Oil Spill Liability Trust Fund financing rate (Section 4611(f)(2))

Also expiring at the end of 2025 are enhancements to the Affordable Care Act (ACA) premium assistance tax credit (Sections 36B(b)(3)(A)(iii) and (c)(1)(E)), which have been the subject of intense debate this year. Democrats enacted these enhancements under the American Rescue Plan Act in 2021 and extended them in the 2022 IRA, allowing higher-income households to qualify for the credit, lowering the percentage of income that enrollees must pay for benchmark silver plans, and making subsidies more generous for all eligible households.

Republicans’ refusal to extend these enhancements as part of a government funding bill at the beginning of the 2026 fiscal year on Oct. 1 led Democrats to oppose the bill, causing a record 43-day government shutdown. Democrats eventually agreed to a government funding bill through Jan. 30, 2026, without an extension of the enhancements beyond the end of 2025, but the debate continues even as enrollment has opened, and premiums have been set, for 2026.

If these enhancements expire at year-end, households earning more than 400% above the federal poverty line will lose their eligibility for the tax credits, the cost cap for benchmark silver plan will rise from about 8.5% of household income to about 9.8%, and the subsidy formula will revert to pre-2021 rules.

Employee compensation and benefits

Tip and overtime pay deductions

The OBBBA included two new individual tax benefits aimed at fulfilling promises President Trump made during his presidential campaign — no taxes on tips or overtime. While the law’s provisions do not completely eliminate taxes on these income sources, they will require new compliance measures by some employers.

• Tip income deduction: Up to $25,000, phased out at $150,000 MAGI for single filers, $300,000 MAGI for joint filers.
• Overtime compensation deduction: Up to $12,500 for single filers, $25,000 for joint filers, phased out at $150,000 MAGI for single filers and $300,000 MAGI for joint filers .

The new law requires employers to separately report the amount of qualified tips (in addition to specified occupation details) and qualified overtime compensation to workers on a Form W-2 or 1099-NEC, as applicable. This is a significant shift from prior reporting practices, where tips were generally aggregated with wages on Forms W-2 or 1099 without occupation details. However, the IRS provided employers temporary penalty relief for the reporting requirements for payments made in calendar year 2025, so the new requirements will take effect for 2026 payments.

A qualified tip is an amount paid in cash or by charge card to an individual in an occupation that traditionally receives tips, as long as the tip is voluntary. Service charges and automatic tips do not appear to be qualified tips.

Qualified overtime compensation is defined as overtime compensation required under Section 7 of the Fair Labor Standards Act (FLSA) that is in excess of the individual’s regular rate of pay (i.e., only the overtime premium appears to be qualified overtime compensation).

The IRS has issued an early-release draft of its planned withholding tables for 2026, reflecting changes to the tax code made by the OBBBA. These changes include updates to the 2026 federal income tax withholding tables to reflect the permanent extension of the TCJA tax rates and the new employee deductions.

In addition, the draft 2026 Form W-4 instructs employees who expect to claim the qualified tips and overtime deductions to enter the estimated sums and adjust their withholding to account for the new deductions. Employers must use an updated Form W-4, if one is submitted by the employee, and the federal income tax withholding procedures in Publication 15-T to allow the employee to account for their expected deduction and receive more money in each paycheck instead of waiting until filing their income tax return to receive the full benefit of the deductions.

The OBBBA provides that qualified tips may not be received in the course of a trade or business that is an SSTB (as defined in Section 199A(d)(2) — for example, health, law, accounting, performing arts, consulting, athletics or financial services). However, IRS Notice 2025-69 acknowledged that additional guidance is needed for employees and employers to make this determination and provides transition relief until Jan. 1 of the first calendar year following the issuance of final regulations that include this additional guidance.

Until the end of the transition period, the IRS will treat an employee as having received tips in the course of a trade or business that is not an SSTB if the employee is in an occupation that traditionally receives tips (regardless of whether the employer’s trade or business is a SSTB).

Public company compensation deduction

Over the next two years, the law that limits a publicly held corporation’s ability to deduct compensation paid to its employees will change and expand, and companies should plan now for how it will impact their taxes and financial statements.

Section 162(m) limits a publicly held corporation’s income tax deduction in a taxable year to $1 million per covered employee. However, the OBBBA changed the controlled group rules that apply to section 162(m) beginning in 2026, so some companies may find that their controlled group has changed and includes entities that are not corporations. For more information about the new controlled group rules, please see our article on this.

Beginning in 2027, the definition of covered employee also will expand to include five additional employees. The new pool will generally include the top five highest-paid employees of the company and its controlled group for the year, other than the officers already deemed to be covered employees in 2025. Importantly, the new group is not limited to officers; it may include anyone who is an employee for federal income tax withholding purposes. Our story on the new covered employee proposed regulations provides additional detail on who may be a covered employee in 2027.  

Family and medical leave credit

The paid family and medical leave (PFML) credit, a general business credit previously scheduled to expire at the end of 2025, was permanently extended and expanded in the OBBBA. The changes made should allow more businesses to claim the benefit in 2026.

As an alternative to claiming 12.5-25% of the amount of eligible wages paid to qualifying employees on PFML (12.5% base for those paid at least 50% of their wages for at least two weeks, increased by 0.25 percentage points to a maximum of 25%, for each percentage point of pay greater than 50%), businesses will have the option beginning in 2026 to claim an applicable percentage of premiums paid or incurred for insurance policies that provide PFML, even if no employees use the benefit during the year.

The availability of the credit also has been expanded to employers in all states, allowing those in states with mandatory PFML programs to claim the federal tax credit for employer-funded paid leave that exceeds state-mandated benefits. In these states, the credit will apply to the employer-funded portion of leave wages that go beyond what the state mandates or reimburses, once the 50% wage replacement requirement is met.

And in one additional change in the OBBBA, employers will be able to claim the credit for PFML wages for those workers who have been employed for a minimum of six months, down from the previous requirement of one year.

Employee meals and eating facilities

For expenses incurred after Dec. 31, 2025, Section 274(o) disallows any tax deduction for the cost of certain employer-provided meals (such as meals furnished for the employer’s convenience) and on-premises eating facilities (such as a company cafeteria). The OBBBA introduced limited exceptions to this rule; for example, meals provided by a restaurant to its employees, such as staff meals in the food service industry, and certain meals for crews on commercial fishing vessels or at fish processing facilities can still qualify for a deduction despite the general disallowance.

Making plans to bifurcate the various expenses related to the operation of an eating facility and/or the expense of meals provided for the convenience of the employer — which are excludible from the employees’ income under Section 119 — will be key beginning in 2026.

Employer-provided childcare

For taxable years beginning after Dec. 31, 2025, the percentage of qualified childcare expenditures eligible for the employer-provided childcare credit will increase from 25% to 40% (50% for eligible small businesses) and the annual maximum credit amount from $150,000 to $500,000 ($600,000 for eligible small businesses). Beginning in 2026, there also is an opportunity for more businesses to take advantage of this benefit, as small businesses can pool their resources to jointly operate childcare facilities or use intermediaries to qualify for the credit.

International tax planning

The international provisions in the OBBBA introduce a range of changes for multinational companies, modifying key elements of the TCJA-era regime. These include adjusting the international tax effective rates, renaming and reworking of the global intangible low-taxed income (GILTI) regime created in 2017 as “net CFC tested income” (NCTI) and the foreign derived intangible income (FDII) deduction as “foreign derived deduction eligible income” (FDDEI), permanently extending the CFC look-through, enacting a “fix” for downward attribution issues following the 2017 repeal of Section 958(b)(4), and making changes to the foreign tax credit limitation calculation.

Alongside the name changes of FDII and GILTI, the OBBBA made sweeping structural changes to both regimes, taking effect in 2026. These updates represent a significant shift in the U.S. international tax landscape, particularly for multinational groups and cross-border investments.

For much more detail on international tax planning for 2026, see our separate International Tax guide. 

Additional business tax changes

Other upcoming changes from the OBBBA include:

• The advanced manufacturing investment credit (Section 48D) will increase from 25% to 35% for property placed in service after Dec. 31, 2025.
• The ceiling on low-income housing tax credits allocated to states will be increased by 12% beginning in 2026.

A less favorable change for corporate taxpayers is a new floor on charitable contributions. For tax years beginning after Dec. 31, 2025, a deduction will be allowed only if contributions total at least 1% of the corporation’s taxable income, and disallowed contributions under the 1% floor can be carried forward only from years in which the taxpayer exceeds the 10% ceiling for contributions.

Tax-exempt organizations

The most notable change for most tax-exempt organizations in 2026 is the expanded application of excessive compensation restrictions under Section 4960, with the definition of “covered employees” revised to include all employees (including former employees who were employed in 2017 or later years), rather than only the five highest-paid employees in a year (plus anyone previously deemed to be covered). Section 4960 generally imposes on a tax-exempt organization a 21 %excise tax on (1) remuneration paid to a covered employee in excess of $1 million, and (2) any excess parachute payments to a covered employee. 

Private colleges and universities have been under great scrutiny by Republicans over the past year, and the OBBBA reflected this with an increase for some in the tax on their net investment income, effective in 2026. For schools with a student-adjusted endowment (SAE) (total non-exempt assets divided by eligible student count) of $500,000 to $750,000, the rate will continue to be 1.4%. But the bill raised the tax to 4% for schools with SAE of more than $750,000 but not more than $2 million, and to 8% for those greater than $2 million.

However, a larger number of smaller schools are now excluded from the excise tax as the floor on student population for application of the tax increases from 500 to 3,000 students.

State and local tax planning

With the adoption of the OBBBA, states have begun to consider the extent to which they will conform with or decouple from the treatment of several base-narrowing measures. These items include the treatment of R&E expenditures, the bonus depreciation deduction, the expense deduction for small business equipment, the adoption of a full deduction for qualified production property, and the changes to the interest expense deduction limitation.

States that have rolling conformity with the Internal Revenue Code automatically conform to these provisions unless they specifically act to decouple. In reaction to the OBBBA and in recognition that pure rolling conformity would result in significant budget gaps, Maryland, Michigan, Rhode Island and Virginia quickly acted to largely decouple from these OBBBA provisions that would have cost the states revenue, through a variety of mechanisms.

In addition, states that have static conformity with the Internal Revenue Code prior to the adoption of the OBBBA have implicitly decoupled from these provisions through inaction, though many will move their conformity dates forward in their 2026 legislative sessions and decide on conformity to specific OBBBA provisions at that time.

Given the likely differences among the states when dealing with conformity to the OBBBA, taxpayers with a multistate footprint are likely to spend additional time in the coming year with respect to estimated and extension payments, as well as return filings. The uncertainty in this area will be exacerbated by the fact that many states will not affirmatively address the conformity questions until after their original state income tax returns are due.

Multistate businesses also need to continually evaluate where their activities in a particular jurisdiction warrant the commencement of income tax filings. Remote workforce arrangements in which employees are hired to perform work in locations outside employer offices further complicate these nexus determinations and can require strategic adjustments. 

It is essential for businesses to ensure that remote workers properly report the state(s) in which their work is being done, to comply with their income tax filing and withholding obligations.

Financial reporting implications

Tax law changes necessitate updates to ASC 740 provisions, particularly regarding deferred tax assets and liabilities. The shift to EBITDA-based interest limitations and permanent expensing provisions will impact financial statements, making early engagement with auditors and tax advisors essential.

For a detailed discussion of tax and financial reporting implications under the OBBBA, see our previous story (PDF - 276 KB).

Tax regulations

Loper Bright Enterprises v. Raimondo, U.S., No. 22-451, decided in 2024, is a non-tax case that could greatly affect tax disputes. In Loper Bright, the Supreme Court overturned the doctrine expressed in Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984) that federal agency interpretations of law are not entitled to deference (e.g., the deference provided to the Department of Treasury and IRS in the promulgation of tax regulations). Thus, courts may no longer be bound to uphold IRS regulations as authoritative interpretations of ambiguous statutes unless Congress specifically granted rule-making authority.

Although Loper Bright opens the door for taxpayers to challenge existing and future Treasury regulations, the overall impact of the case remains to be seen. Loper Bright arguments questioning Treasury regulations validity have already been included in numerous cases.

The transfer pricing regulations under Section 482 have received particular attention due to the brevity of the Section 482 statute (three sentences) and the hundreds of pages of detailed regulations interpreting that statute.

In late 2024, the Eighth Circuit Court of Appeals cited Loper Bright to overturn the Tax Court case in 3M Company & Subs. v. Commissioner, 136 AFTR 2d 2025 (Oct. 1, 2025), holding that the IRS exceeded its authority with the transfer pricing “blocked income” regulations.

Two pending transfer pricing cases, Abbott Laboratories v. Commissioner, T.C., No. 20193-24 (petition filed Dec. 26, 2024) and McKesson Corp. v. United States, No. 3:25-cv-01102 (N.D. Tex.) (complaint filed May 2, 2025), are asserting that the cost sharing regulations that require the inclusion of stock-based compensation in cost pools are invalid.