The Internal Revenue Service (IRS) has introduced significant tax rule changes that will impact businesses, fuel distributors, and health insurance consumers. Announced on December 22, 2025, these updates stem from provisions in the One, Big, Beautiful Bill, which aims to streamline tax processes and improve compliance.
New Refund Rules for Dyed Fuel
One of the most notable changes involves refund rules for dyed fuel, a longstanding issue for fuel operators navigating federal excise tax regulations. Under the current law, diesel fuel or kerosene is taxed upon removal from a terminal, even if it is later designated for non-taxable use by being dyed. The new statute allows taxpayers to recover that initial tax payment when the fuel qualifies for exemption.
The IRS has indicated that formal guidance on filing refund claims will be available in early 2026. Until then, taxpayers are advised to refrain from submitting claims, as they will not be processed before the release of this guidance, even if the fuel removal occurs after December 31, 2025. Importantly, refunds will only be issued to the party that initially paid the excise tax, a limitation that remains unchanged unless Congress acts further.
Adjustments to Business Interest Deductions and Health Care Credits
On December 23, 2025, the IRS updated its guidance regarding business interest deductions, particularly focusing on Section 163(j) of the tax code. Starting with tax years after December 31, 2024, businesses will be able to include depreciation, amortization, and depletion back into their Adjusted Taxable Income. This adjustment effectively relaxes the cap on deductible interest expenses.
The IRS clarified that interest costs capitalized during the year generally fall under the Section 163(j) limitation, with specific exceptions. Furthermore, certain foreign income inclusions associated with controlled foreign corporations will not be included in the Adjusted Taxable Income calculation.
Additionally, a revision on health care was released the same day, concerning the Premium Tax Credit, which aids low- and moderate-income households in purchasing insurance through the Health Insurance Marketplace. The changes, also part of the One Big, Beautiful Bill, eliminate repayment caps on excess advance credits for tax years following December 31, 2025. The IRS has also rescinded outdated guidance related to temporary rules that have already expired.
These updates indicate a broader transition occurring at the IRS, as the agency works to untangle complex legacy tax rules while expanding deductions and credits in certain areas. IRS officials have emphasized the importance of patience as they convert this sweeping legislation into actionable guidance.
For both businesses and individual taxpayers, it is clear that the implications of the One, Big, Beautiful Bill are beginning to materialize. As the IRS moves from legislation to enforcement, the practical effects of these changes are expected to be reflected on tax returns sooner than anticipated.
