US Congress has passed H.J.Res.142, a joint resolution to nullify legislation enacted by the District of Columbia City Council to decouple from certain One Big Beautiful Bill Act (OBBBA) provisions, including:
- Modifications of the limit on interest that businesses may expense under Internal Revenue Code (IRC) Section 163(j).
- The allowance of first-year expensing for new investments in qualified production property as provided for in new IRC Section 168(n).
- Modifications to the treatment of research and experimentation expenses under IRC Section 174 and new Section 174A.
The US Constitution provides Congress with plenary legislative authority over the District of Columbia as the federal capital, but Congress has granted limited home rule authority while “reserving the right, at any time, to exercise its constitutional authority as legislature for the district.” Generally, for noncriminal legislation, Congress has 30 business days to pass a resolution nullifying a bill passed by the District of Columbia local government. In practice, Congress has rarely exercised such authority. In fact, it is so rare that Eleanor Holmes Norton, the spokesperson for District Delegate to Congress, has claimed that there is a dispute as to whether the 30-day review period has already expired.
Presuming the joint resolution is valid, District of Columbia officials have warned it will cost approximately $650 million over five years and could force the suspension of income tax filing deadlines to this fall because of necessary changes to tax forms, the District of Columbia’s tax processing system, and third-party tax processing software. Nevertheless, such action is consistent with the Trump administration’s public complaints about states failing to conform to the OBBBA.
