Sponsors (55)
The bill gives insurance companies clearer tax rules and greater loss-timing flexibility, which reduces uncertainty for insurers but may raise some insurers' tax bills, add compliance complexity, reduce near-term federal receipts, and create uneven treatment versus other taxpayers.
Applicable insurance companies: Certain debt holdings acquired after Dec 31, 2025 will be taxed as ordinary income/loss on sale, simplifying tax treatment for insurers holding these bonds.
Applicable insurance companies: A new 10-year net capital loss carryforward lets insurers offset future taxable income for losses arising after 2025, smoothing tax liabilities over time.
Face-amount certificate companies registered under the Investment Company Act: The bill explicitly includes them, removing ambiguity about their tax status and reducing regulatory uncertainty for those firms.
Applicable insurance companies and their policyholders: Treating certain debt gains/losses as ordinary could raise insurers' tax bills if ordinary rates exceed capital gains rates, which may translate into higher insurance costs.
Federal budget/taxpayers: Allowing a 10-year carryforward for insurers' net capital losses reduces near-term federal tax receipts, potentially increasing deficits or requiring offsets.
Applicable insurance companies and the IRS: Multiple carve-outs and special eligibility rules (e.g., for §831/§835 electors, foreign insurers, §833 organizations) add compliance complexity and administrative costs.
Based on analysis of 3 sections of legislative text.
Excludes certain debt held by qualifying insurance companies from the capital-asset definition and allows those insurers a 10-year capital loss carryover for losses after 2025.
Official title: To amend the Internal Revenue Code of 1986 to exclude debt held by certain insurance companies from capital assets and to extend capital loss carryovers for such companies from 5 years to 10 years.
Introduced April 1, 2025 by Randy Feenstra · Last progress April 1, 2025
Changes to the tax code exclude certain debt instruments held by qualifying U.S. insurance companies from the definition of "capital asset" and let those companies carry net capital losses forward for up to 10 years. The exclusion and expanded 10-year carryover apply only to qualifying obligations or losses arising after December 31, 2025. The bill defines which insurers qualify, carves out certain small‑insurer, foreign, and tax‑preferred organizations from the special treatment, and ties both changes to taxable years beginning after December 31, 2025.