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What actually matters in this document.
Text
HIGHLIGHTS
OF THIS ISSUE
Bulletin No. 2026–2
January 5, 2026
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
EMPLOYEE PLANS, INCOME TAX
Rev. Proc. 2026-7, page 316.
Notice 2026-5, page 309.
Areas in which rulings will not be issued, Associate Chief
Counsel (International).
ADMINISTRATIVE, INCOME TAX
Notice 2026-3, page 307.
Notice 2026-3 provides relief from the additions to tax under
sections 6654 and 6655 for underpayment of estimated
income tax, and assists in implementing section 70437 of
the One, Big, Beautiful Bill Act, which added a new limited
payment deferral election in section 1062(a) applicable in
the case of a sale or exchange of qualified farmland property to a qualified farmer (qualified sale or exchange). In
the interest of sound tax administration, the IRS will waive
a portion of the addition to tax under sections 6654 and
6655 attributable to a qualified sale or exchange for which
an election under section 1062(a) (section 1062 election)
is properly made. The amount of the relief depends on the
amount of tax the payment of which is deferred by the section 1062 election.
EMPLOYEE PLANS
Notice 2026-2, page 304.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment rates
for November 2025 used under § 417(e)(3)(D), the 24-month
average segment rates applicable for December 2025, and
the 30-year Treasury rates, as reflected by the application of
§ 430(h)(2)(C)(iv).
Rev. Rul. 2026-1, page 299.
This revenue ruling provides tables of covered compensation
under § 401(l)(5)(E) of the Internal Revenue Code and the
Treasury Regulations thereunder, effective January 1, 2026.
Finding Lists begin on page ii.
This notice provides guidance on changes relating to health
savings accounts (HSAs) enacted by Pub. L. 119-21, 139
Stat. 72 (July 4, 2025), commonly known as the One, Big,
Beautiful Bill Act (OBBBA). These changes generally expand
the availability of HSAs under section 223 of the Internal Revenue Code (the Code). This notice provides answers to common questions related to these changes.
EMPLOYMENT TAX
Notice 2026-6, page 313.
Notice 2026-6 extends the transition period provided in Revenue Ruling 2025-4 for an additional year to calendar year
2026 for States administering paid family and medical leave
(PFML) programs and employers participating in such programs. The Notice provides States and employers additional
time to make the necessary changes to their systems to
comply with the tax and information reporting responsibilities
set forth in Revenue Ruling 2025-4.
INCOME TAX
Rev. Proc. 2026-6, page 314.
Rev. Proc. 2026-6 provides the exclusive procedure for a State
to make an election to be a “covered state” prior to identifying
scholarship granting organizations (SGOs) in the State in accordance with § 25F(g) of the Internal Revenue Code, as added by §
70411 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (Advance Election). Pursuant to this revenue procedure, if a State chooses to
make an Advance Election, the State must submit Form 15714,
Advance Election to Participate Under Section 25F for 2027, in
accordance with section 4 and the Form 15714 instructions, on
or after January 1, 2026, and before the final date on which the
State is permitted to submit the list identifying SGOs (as will be
specified in future guidance).
The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
January 5, 2026
Bulletin No. 2026–2
Part I
Section 401.—Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(l)-1: Permitted disparity in employer-provided contributions or benefits
Rev. Rul. 2026-1
This revenue ruling provides tables
of covered compensation under section 401(l)(5)(E) of the Internal Revenue
Code for the 2026 plan year.
Section 401(l)(5)(E)(i) defines covered
compensation with respect to an employee
as the average of the contribution and benefit bases in effect under section 230 of
the Social Security Act (“Act”) for each
year in the 35‑year period ending with the
year in which the employee attains Social
Security retirement age.
Section 401(l)(5)(E)(ii) of the Code
states that the determination for any year
preceding the year in which the employee
attains Social Security retirement age
shall be made by assuming that there is
no increase in covered compensation after
the determination year and before the
employee attains Social Security retirement age.
Section 1.401(l)-1(c)(34) of the Treasury Regulations (“Regulations”) defines
the taxable wage base as the contribution
and benefit base under section 230 of the
Act.
Section 1.401(l)-1(c)(7)(i) of the Regulations defines covered compensation
for an employee as the average (without
indexing) of the taxable wage bases in
effect for each calendar year during the
35-year period ending with the last day of
the calendar year in which the employee
attains (or will attain) Social Security
retirement age. A 35‑year period is used
for all individuals regardless of the year
of birth of the individual. In determining
an employee’s covered compensation for
a plan year, the taxable wage base for all
calendar years beginning after the first
day of the plan year is assumed to be the
same as the taxable wage base in effect
as of the beginning of the plan year. An
employee’s covered compensation for
a plan year beginning after the 35-year
period applicable under § 1.401(l)‑1(c)
(7)(i) is the employee’s covered compensation for a plan year during which the
35-year period ends. An employee’s covered compensation for a plan year beginning before the 35-year period applicable
under § 1.401(l)‑1(c)(7)(i) is the taxable
wage base in effect as of the beginning of
the plan year.
Section 1.401(l)-1(c)(7)(ii) provides
that, for purposes of determining the
amount of an employee’s covered compensation under § 1.401(l)-1(c)(7)(i), a
plan may use tables, provided by the Commissioner, that are developed by rounding
the actual amounts of covered compensation for different years of birth.
For purposes of determining covered
compensation for the 2026 year, the taxable wage base is $184,500.
The following tables provide covered
compensation for 2026.
ATTACHMENT I
2026 UNROUNDED COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
Bulletin No. 2026–2
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
299
2026 COVERED
COMPENSATION
UNROUNDED
$ 4,488
4,704
5,004
5,316
5,664
6,060
6,480
7,044
7,692
8,460
9,300
10,236
11,232
12,276
January 5, 2026
CALENDAR
YEAR OF
BIRTH
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
January 5, 2026
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2022
2023
2024
2025
2026
2027
2028
2029
2030
300
2026 COVERED
COMPENSATION
UNROUNDED
13,368
14,520
15,708
16,968
18,312
19,728
21,192
22,716
24,312
25,920
27,576
29,304
31,128
33,060
35,100
37,212
39,444
43,992
46,344
48,816
51,348
53,952
56,628
59,268
61,884
64,560
67,308
69,996
72,636
75,180
77,880
80,532
83,244
86,052
91,884
95,172
98,616
102,180
105,924
109,620
113,244
116,784
120,300
Bulletin No. 2026–2
CALENDAR
YEAR OF
BIRTH
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993 and later
Bulletin No. 2026–2
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060 and later
301
2026 COVERED
COMPENSATION
UNROUNDED
123,780
127,188
130,500
133,704
136,800
139,764
142,620
145,404
148,164
150,864
153,444
155,928
158,280
160,500
162,720
164,940
167,064
169,092
171,024
172,908
174,792
176,424
178,032
179,508
180,840
182,040
183,108
183,804
184,260
184,500
January 5, 2026
ATTACHMENT II
2026 ROUNDED COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
1937
1938 – 1939
1940
1941
1942
1943
1944
1945
1946 – 1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970 – 1971
1972
1973
1974
1975
1976
1977 – 1978
1979
January 5, 2026
2026 COVERED
COMPENSATION
ROUNDED
$ 39,000
45,000
48,000
51,000
54,000
57,000
60,000
63,000
66,000
69,000
72,000
75,000
78,000
81,000
84,000
87,000
93,000
96,000
99,000
102,000
105,000
111,000
114,000
117,000
120,000
123,000
126,000
132,000
135,000
138,000
141,000
144,000
147,000
150,000
153,000
156,000
159,000
162,000
165,000
302
Bulletin No. 2026–2
CALENDAR
YEAR OF
BIRTH
1980 – 1981
1982
1983 – 1984
2026 COVERED
COMPENSATION
ROUNDED
168,000
171,000
174,000
1985 – 1986
1987 – 1988
1989 – 1990
1991 and later
177,000
180,000
183,000
184,500
DRAFTING INFORMATION
The principal author of this revenue
ruling is Tom Morgan of the Office of
Bulletin No. 2026–2
Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). However, other personnel
from the Internal Revenue Service partici-
303
pated in the development of this guidance.
For further information regarding this revenue ruling, contact Mr. Morgan at (202)
317-6700 (not a toll-free number).
January 5, 2026
Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2026-2
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the interest rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to single-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
Applicable Month
December 2025
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during specified periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.1 However, an election may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Section 1.430(h)(2)-1(d) provides
rules for determining the monthly corporate bond yield curve,2 and § 1.430(h)
(2)-1(c) provides rules for determining
the 24-month average corporate bond
segment rates used to compute the target
normal cost and the funding target. Consistent with the methodology specified in
§ 1.430(h)(2)-1(d), the monthly corporate
bond yield curve derived from November 2025 data is in Table 2025-11 at the
end of this notice. The spot first, second,
and third segment rates for the month of
November 2025 are, respectively, 4.07,
5.15, and 6.01.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to
§ 430(h)(2)(C)(iv) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. Those percentages are
95% and 105% for plan years beginning
in 2024, 2025 and 2026. For this purpose,
any 25-year average segment rate that is
less than 5% is deemed to be 5%. The
25-year average segment rates for plan
years beginning in 2024, 2025 and 2026
were published in Notice 2023-66, 202340 I.R.B. 992, Notice 2024-67, 2024-41
I.R.B. 726 and Notice 2025-47, 2025-40
I.R.B. 441, respectively.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate bond segment rates applicable for
December 2025 without adjustment for
the 25-year average segment rate limits
are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
First Segment
Second Segment
Third Segment
4.61
5.26
5.70
The adjusted 24-month average segment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code. The
24-month averages applicable for December 2025, adjusted to be within the applicable minimum and maximum percent-
ages of the corresponding 25-year average
segment rates in accordance with § 430(h)
(2)(C)(iv), are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning In
Applicable Month
First Segment
Second Segment
Third Segment
2024
December 2025
4.75
5.26
5.70
2025
December 2025
4.75
5.26
5.70
2026
December 2025
4.75
5.25
5.70
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).
2
For months before February 2024, the monthly corporate bond yield curve was determined in accordance with Notice 2007-81, 2007-44 I.R.B. 899. Section 1.430(h)(2)-1(d) generally adopts
the methodology for determining the monthly corporate bond yield curve under Notice 2007-81 but includes two enhancements to take into account subsequent changes in the bond market.
Those enhancements are described in the preamble to TD 9986 (89 FR 2127).
1
January 5, 2026
304
Bulletin No. 2026–2
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in § 431(c)(6)(A), based on the
plan’s current liability. Section 431(c)
(6)(E)(ii)(I) provides that the interest
rate used to calculate current liability for
this purpose must be no more than 5 percent above and no more than 10 percent
below the weighted average of the rates
of interest on 30-year Treasury securities
during the four-year period ending on the
last day before the beginning of the plan
year. Notice 88-73, 1988-2 C.B. 383,
provides guidelines for determining the
weighted average interest rate. The rate
of interest on 30-year Treasury securities
for November 2025 is 4.70 percent. The
Service determined this rate as the aver-
age of the daily determinations of yield
on the 30-year Treasury bond maturing in August 2055 determined each
day through November 12, 2025 and
the yield on the 30-year Treasury bond
maturing in November 2055 determined
each day for the balance of the month.
For plan years beginning in December
2025, the weighted average of the rates
of interest on 30-year Treasury securities
and the permissible range of rates used to
calculate current liability are as follows:
For Plan Years Beginning In
Treasury Weighted Average Rates
30-Year Treasury Weighted Average
Permissible Range 90% to 105%
December 2025
4.32
3.89 to 4.54
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Section 1.417(e)-1(d)(3) provides
guidelines for determining the minimum
present value segment rates. Pursuant to
that section, the minimum present value
segment rates determined for November
2025 are as follows:
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
Month
November 2025
Minimum Present Value Segment Rates
First Segment
Second Segment
4.07
5.15
DRAFTING INFORMATION
The principal author of this notice
is Tom Morgan of the Office of Associ-
Bulletin No. 2026–2
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
305
Third Segment
6.01
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free calls).
January 5, 2026
Table 2025-11
Monthly Yield Curve for November 2025
Derived from November 2025 Data
Maturity
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
16.0
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0
Yield
3.98
3.98
3.98
3.99
4.02
4.05
4.10
4.15
4.21
4.27
4.34
4.41
4.48
4.55
4.62
4.69
4.76
4.82
4.89
4.95
5.00
5.06
5.11
5.16
5.21
5.25
5.30
5.34
5.37
5.41
5.44
5.47
5.50
5.53
5.56
5.58
5.61
5.63
5.65
5.67
January 5, 2026
Maturity
20.5
21.0
21.5
22.0
22.5
23.0
23.5
24.0
24.5
25.0
25.5
26.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
30.0
30.5
31.0
31.5
32.0
32.5
33.0
33.5
34.0
34.5
35.0
35.5
36.0
36.5
37.0
37.5
38.0
38.5
39.0
39.5
40.0
Yield
5.69
5.71
5.73
5.74
5.76
5.77
5.78
5.79
5.81
5.82
5.83
5.84
5.85
5.86
5.87
5.88
5.88
5.89
5.90
5.91
5.92
5.93
5.94
5.94
5.95
5.96
5.96
5.97
5.98
5.99
5.99
6.00
6.00
6.01
6.02
6.02
6.03
6.03
6.04
6.04
Maturity
40.5
41.0
41.5
42.0
42.5
43.0
43.5
44.0
44.5
45.0
45.5
46.0
46.5
47.0
47.5
48.0
48.5
49.0
49.5
50.0
50.5
51.0
51.5
52.0
52.5
53.0
53.5
54.0
54.5
55.0
55.5
56.0
56.5
57.0
57.5
58.0
58.5
59.0
59.5
60.0
Yield
6.05
6.05
6.06
6.06
6.06
6.07
6.07
6.08
6.08
6.09
6.09
6.09
6.10
6.10
6.10
6.11
6.11
6.11
6.12
6.12
6.12
6.13
6.13
6.13
6.14
6.14
6.14
6.14
6.15
6.15
6.15
6.15
6.16
6.16
6.16
6.16
6.17
6.17
6.17
6.17
306
Maturity
60.5
61.0
61.5
62.0
62.5
63.0
63.5
64.0
64.5
65.0
65.5
66.0
66.5
67.0
67.5
68.0
68.5
69.0
69.5
70.0
70.5
71.0
71.5
72.0
72.5
73.0
73.5
74.0
74.5
75.0
75.5
76.0
76.5
77.0
77.5
78.0
78.5
79.0
79.5
80.0
Yield
6.18
6.18
6.18
6.18
6.18
6.19
6.19
6.19
6.19
6.19
6.20
6.20
6.20
6.20
6.20
6.20
6.21
6.21
6.21
6.21
6.21
6.21
6.22
6.22
6.22
6.22
6.22
6.22
6.22
6.23
6.23
6.23
6.23
6.23
6.23
6.23
6.24
6.24
6.24
6.24
Maturity
80.5
81.0
81.5
82.0
82.5
83.0
83.5
84.0
84.5
85.0
85.5
86.0
86.5
87.0
87.5
88.0
88.5
89.0
89.5
90.0
90.5
91.0
91.5
92.0
92.5
93.0
93.5
94.0
94.5
95.0
95.5
96.0
96.5
97.0
97.5
98.0
98.5
99.0
99.5
100.0
Yield
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6.24
6.24
6.24
6.24
6.25
6.25
6.25
6.25
6.25
6.25
6.25
6.25
6.25
6.26
6.26
6.26
6.26
6.26
6.26
6.26
6.26
6.26
6.26
6.27
6.27
6.27
6.27
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6.28
6.28
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Bulletin No. 2026–2
Relief from Additions to Tax
under Sections 6654 and
6655 for Underpayment
of Estimated Income Tax
by Taxpayers Making an
Election under Section
1062
Notice 2026-3
SECTION 1. OVERVIEW
This notice provides relief from the
additions to tax under sections 6654
and 6655 of the Internal Revenue Code
(Code)1 for underpayment of estimated
income tax by a taxpayer that makes a
valid election under section 1062(a) (section 1062 election).
SECTION 2. SCOPE
The relief provided in this notice
applies for the purpose of calculating any
installment of estimated income tax of a
taxpayer that makes a valid section 1062
election, with respect to the taxable year
of the sale or exchange of qualified farmland property that is the subject of the
section 1062 election. The amount of the
relief depends on the amount of income
tax for which payment is deferred by the
section 1062 election.
SECTION 3. BACKGROUND
.01 Section 1062.
(1) Generally. Section 70437 of Public Law 119-21, 139 Stat. 72 (2025),
commonly known as the One, Big, Beautiful Bill Act (OBBBA), redesignated
pre-OBBBA section 1062 as section
1063 and inserted a new section 1062.
Section 1062(a) now allows a taxpayer
who has gain from the sale or exchange
of qualified farmland property to a qualified farmer (qualified sale or exchange)
to elect (by making a section 1062 election) to pay the applicable net tax liability determined under section 1062(d)(1)
(A) in four equal installments. Section
1
1062(b)(1) provides that, if a section
1062 election is made, the first installment must be paid on the due date (determined without regard to any extension of
time for filing the return) for the return
of tax for the taxable year in which the
qualified sale or exchange occurs, and
each succeeding installment must be
paid on the due date (determined without regard to any extension of time for
filing the return) for the return of tax for
the taxable year following the taxable
year with respect to which the preceding
installment was made.
(2) Applicable net tax liability. Section
1062(d)(1)(A) defines “applicable net tax
liability” with respect to a qualified sale or
exchange as the excess (if any) of (i) such
taxpayer’s net income tax for the taxable
year, over (ii) such taxpayer’s net income
tax for such taxable year determined without regard to any gain recognized from
the qualified sale or exchange. Section
1062(d)(1)(A) defines “net income tax”
for these purposes to mean the regular
tax liability (as defined in section 26(b))
reduced by the credits allowed under subparts A, B, and D of part IV of subchapter
A of chapter 1 of the Code.
(3) Qualified farmland property. Section 1062(d)(2)(A) defines the term “qualified farmland property” as real property
located in the United States that (i) during
substantially all of the 10-year period
ending on the date of the qualified sale or
exchange has been used by the taxpayer
either as a farm for farming purposes
or leased by the taxpayer to a qualified
farmer for farming purposes, and (ii) is
subject to a covenant or other legally
enforceable restriction which prohibits the
use of such property other than as a farm
for farming purposes for 10 years after
the date of the qualified sale or exchange.
Section 1062(d)(2)(A) further provides
that property that is used or leased by a
partnership or S corporation is treated as
used or leased by each person who holds
a direct or indirect interest in such entity.
Section 1062(d)(2)(B) provides that the
terms “farm” and “farming purposes”
have the respective meanings given such
terms under section 2032A(e). See section
2032A(e)(4) and (5).
(4) Qualified farmer. Section 1062(d)
(3) defines the term “qualified farmer” as
any individual who is actively engaged in
farming (within the meaning of 7 U.S.C.
§§ 1308-1(b) and (c)).
(5) Acceleration of payment. Section 1062(b)(2)(A) provides that if there
is an addition to tax for failure to timely
pay any installment required under section 1062, then the unpaid portion of all
remaining installments is due on the date
of such failure. Additional circumstances,
described in section 1062(b)(2)(B) and
(C), may also accelerate the due date of
unpaid installments.
(6) Election procedures. Section
1062(e) requires that a taxpayer making
a section 1062 election include with the
return for the taxable year of the qualified
sale or exchange a copy of the covenant
or other legally enforceable restriction
described in section 1062(d)(2)(A)(ii).
Forthcoming guidance will provide further instructions on how a taxpayer may
properly make a section 1062 election.
.02 Section 6654.
(1) Estimated income tax and liability
for addition to tax. Generally, the Code
requires taxpayers to pay Federal income
taxes as they earn income. To the extent
these taxes are not withheld from wages
or other income, a taxpayer normally
must pay estimated income tax. Individual taxpayers who fail to make a sufficient
or timely payment of estimated income
tax are liable for an addition to tax under
section 6654(a). With some exceptions,
section 6654(l)(2) provides that the provisions of section 6654 generally apply to
certain estates and trusts.
(2) Quarterly payments of estimated
income tax for most individual taxpayers.
Section 6654 provides that, in the case of
an individual, estimated income tax is generally required to be paid in four installments, each in the amount of 25 percent of
the required annual payment. Generally,
under section 6654(d)(1)(B), the required
annual payment is the lesser of (i) 90 percent of the tax shown on the return for the
taxable year; or (ii) 100 percent of the tax
shown on the return of the individual for
the preceding taxable year (110 percent
if the individual’s adjusted gross income
Unless otherwise specified, all “section” references are to sections of the Code.
Bulletin No. 2026–2
307
January 5, 2026
on the previous year’s return exceeded
$150,000), provided that the preceding
taxable year was 12 months in duration and
the individual filed a return for that year.
An individual taxpayer whose income
varies during the taxable year may be able
to use the annualized income installment
method described in section 6654(d)(2) to
determine estimated income tax liability
as their income accumulates, rather than
dividing the required annual payment by
four as if the income were earned equally
throughout the year. Generally, section
6654(d)(2)(B) allows an individual taxpayer to reduce the amount of estimated
income tax installments that are due earlier in the year and increase the amount of
estimated income tax installments that are
due later in the year.
(3) Due dates for installments of
estimated income tax. Pursuant to section 6654(c)(2), estimated income tax
installments for an individual calendar-year taxpayer generally are due on
April 15, June 15, and September 15 of the
taxable year, and on January 15 of the following year. Pursuant to section 6654(k)
(1), for an individual fiscal-year taxpayer,
the due dates of installments of estimated
income tax are determined by substituting
corresponding months. Section 6654(h),
(i), and (j) provides special rules regarding installment amounts and due dates for
taxpayers described therein.
(4) One annual payment of estimated
income tax for qualifying farmers or fishermen. Special rules apply in the case of
an individual taxpayer who is a farmer
or fisherman and satisfies the requirements of section 6654(i) for a taxable year
(qualifying farmer or fisherman). Under
section 6654(i)(1), a qualifying farmer or
fisherman has only one required installment payment (instead of four quarterly
payments) due on January 15 of the year
following the taxable year if at least twothirds of the taxpayer’s total gross income
was from farming or fishing in either that
taxable year or the preceding taxable year.
For a qualifying farmer or fisherman who
does not make the required estimated
income tax installment payment by January 15 of the year following the taxable
year, section 6654(i)(1)(D) provides that
the taxpayer is not subject to an addition
to tax for failing to pay estimated income
tax if the taxpayer files the return for the
January 5, 2026
taxable year and pays the full amount of
tax reported on the return by March 1 of
the year following the taxable year. The
definition of “qualified farmer” under
section 1062(d)(3) differs from the definition of “farmer or fisherman” under
section 6654(i)(2). For purposes of section 6654, section 6654(i)(2) provides
that an individual is a farmer or fisherman
for any taxable year if (A) the individual’s gross income from farming or fishing
(including oyster farming) for the taxable
year is at least 66 and 2/3 percent of the
total gross income from all sources for the
taxable year, or (B) the individual’s gross
income from farming or fishing (including
oyster farming) shown on the return of the
individual for the preceding taxable year
is at least 66 and 2/3 percent of the total
gross income from all sources shown on
such return.
(5) Exceptions to the addition to tax. An
individual taxpayer will not be subject to
the addition to tax under section 6654(a)
if an exception applies. Under section 6654(e)(1), no addition to tax will be
imposed on an individual taxpayer if the
taxpayer owes less than $1,000 in tax,
after subtracting tax withheld on wages.
Under section 6654(e)(2), an individual
will not be subject to an addition to tax
if (i) the individual did not have any tax
liability for the previous taxable year, (ii)
the preceding taxable year was 12 months,
and (iii) the individual was a citizen or
resident of the United States throughout
the preceding taxable year. Under section 6654(e)(3)(A), the addition to tax
will not be imposed with respect to any
underpayment to the extent the Secretary
of the Treasury or the Secretary’s delegate
(Secretary) “determines that by reason of
casualty, disaster, or other unusual circumstances the imposition of such addition to tax would be against equity and
good conscience.”
.03 Section 6655.
(1) Estimated income tax and liability for addition to tax. Section 6655(a)
imposes an addition to tax for failure by
a corporation to make a sufficient and
timely payment of estimated income tax.
Section 6655(c) and (d)(1)(A) generally
provides that, in the case of a corporation,
estimated income tax is required to be
paid in four installments and the amount
of any required installment is 25 percent
308
of the required annual payment. Generally, under section 6655(d)(1)(B), the
required annual payment is the lesser of
two amounts described in section 6655(d)
(1)(B)(i) and (ii). The amount described in
section 6655(d)(1)(B)(i) is 100 percent of
the tax shown on the return for the taxable year. The amount described in section 6655(d)(1)(B)(ii) is 100 percent of
the tax shown on the taxpayer’s return
for the preceding taxable year, so long
as the preceding taxable year was twelve
months long and the return for such year
showed a liability for tax. However, pursuant to section 6655(d)(2), in the case of
a large corporation (as defined under section 6655(g)(2)), the amount described in
section 6655(d)(1)(B)(ii) may not be used
to reduce the amount of an installment
payment other than the first installment
payment for the taxable year. A taxpayer
that is a corporation with income that varies during the taxable year may be able
to use the annualized income installment
method or the adjusted seasonal installment method described in section 6655(e)
to lower the amount of one or more
required estimated income tax installments.
(2) Due dates for installments of
estimated income tax. Pursuant to section 6655(c)(2), estimated income tax
installments of a corporation that uses the
calendar-year for its taxable year generally are due on April 15, June 15, September 15, and December 15 of the taxable
year. Pursuant to section 6655(i), for a
corporation that uses a fiscal year for its
taxable year, the due dates of installments
of estimated income tax are determined
by substituting corresponding months. In
special circumstances, other rules specified in section 6655 or elsewhere may also
apply.
SECTION 4. LIMITED WAIVER OF
ADDITION TO TAX
.01 Reasons for waiver. The Department of the Treasury (Treasury Department) and the Internal Revenue Service
(IRS) are aware that taxpayers may be
concerned that, in order to avoid the addition to tax under section 6654 or 6655 for
failure to make a sufficient and timely payment of estimated income tax, they must
pay the full amount of applicable net tax
Bulletin No. 2026–2
liability, or a substantial portion of it, as
estimated income tax for the taxable year
of the qualified sale or exchange. Doing
so would be contrary to the purpose of the
section 1062 election, which is to allow
payment of the liability in installments
over four years. Without a limited waiver
of the addition to tax, a taxpayer making
a section 1062 election might be deprived
of the full benefit of the provision.
.02 Limited Waiver.
In the interest of sound tax administration, the IRS will waive a portion of the
addition to tax under sections 6654 and
6655 attributable to the qualified sale or
exchange for which the section 1062 election is made for taxpayers who both qualify to make a section 1062 election and
properly make a section 1062 election.
The limited waiver applies with respect to
the applicable net tax liability the payment
of which is deferred by the section 1062
election. Accordingly, a taxpayer may
exclude 75 percent of the applicable net
tax liability (with respect to the qualified
sale or exchange as to which the taxpayer
has properly made the section 1062 election) from the calculation of the required
annual payment for purposes of determining estimated income tax installment
amounts for the taxable year of the qualified sale or exchange for which the section
1062 election is made. In determining the
required annual payment for the taxable
year of the qualified sale or exchange, the
taxpayer must include the portion of the
applicable net tax liability that is required
to be paid on the due date of the income
tax return for the taxable year of the qualified sale or exchange (25 percent of the
applicable net tax liability with respect to
the qualified sale or exchange as to which
the taxpayer has properly made the section 1062 election).
A proper section 1062 election is a
prerequisite to receiving the relief provided in this notice, but an acceleration of installment due dates under section 1062(b)(2) will not affect this waiver.
The waiver will apply automatically to
any taxpayer who qualifies for the waiver
and does not self-report an addition to
tax under section 6654 or 6655 on their
income tax return for the taxable year
of the qualified sale or exchange. A taxpayer who otherwise satisfies the criteria
for relief under this notice, but who has
Bulletin No. 2026–2
already filed an income tax return reporting an addition to tax under section 6654
or 6655, may request an abatement of the
addition to tax by filing Form 843, Claim
for Refund and Request for Abatement
and noting “Abatement requested pursuant to Notice 2026-3” at the top of the
claim. A taxpayer that satisfies the criteria
for relief under this notice but receives a
penalty notice from the IRS should also
request an abatement of the addition to
tax by filing Form 843.
.03 Form instructions to be modified.
The instructions to forms relevant to estimated income tax requirements, including Form 1040-ES, Estimated Tax for
Individuals, Form 1041-ES, Estimated
Income Tax for Estates and Trusts, Form
2210, Underpayment of Estimated Tax
by Individuals, Estates, and Trusts, Form
2210-F, Underpayment of Estimated Tax
by Farmers and Fishermen, Form 2220,
Underpayment of Estimated Tax by Corporations, will be modified, as necessary,
to reflect the relief granted by this notice.
If necessary, the modified instructions will
be posted on https://www.irs.gov.
SECTION 5. DRAFTING AND
CONTACT INFORMATION
The principal author of this notice is
Alexander Wu of the Office of the Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the IRS participated
in its development. For further information, please contact Alexander Wu at (202)
317-6845 (not a toll-free number).
Expanded Availability of
Health Savings Accounts
under the One, Big,
Beautiful Bill Act (OBBBA)
Notice 2026-5
I. PURPOSE
This notice provides guidance on
changes relating to health savings
accounts (HSAs) enacted by Pub. L. 11921, 139 Stat. 72 (July 4, 2025), commonly
309
known as the One, Big, Beautiful Bill
Act (OBBBA). These changes generally
expand the availability of HSAs under
section 223 of the Internal Revenue Code
(the Code). This notice provides answers
to common questions related to these
changes.
II. BACKGROUND
A. Section 223 in general
Section 223 of the Code permits eligible individuals to establish an HSA. HSAs
are accounts that can receive tax-favored
contributions by or on behalf of eligible
individuals. Amounts in an HSA may be
used on a tax-free basis to pay or reimburse medical expenses. Among the
requirements to qualify as an eligible
individual under section 223(c)(1) is that
the individual be covered under a high
deductible health plan (HDHP) and have
no disqualifying health coverage. As
defined in section 223(c)(2), an HDHP
is a health plan that satisfies certain
requirements, including requirements
with respect to minimum deductibles and
maximum out-of-pocket expenses. Only
eligible individuals under section 223(c)
(1) are allowed to make contributions to
an HSA or to receive contributions from
an employer to their HSA.
Generally, under section 223(c)(2)(A),
an HDHP is not permitted to provide benefits for any year until the minimum annual
deductible for that year is satisfied and is
not permitted to require a payment of an
annual deductible plus other annual outof-pocket expenses (other than premiums)
above the out-of-pocket maximum for the
year. However, section 223(c)(2)(C) provides a safe harbor for the absence of a
deductible for preventive care. Under section 223(c)(2)(C), “[a] plan shall not fail
to be treated as a high deductible health
plan by reason of failing to have a deductible for preventive care (within the meaning of section 1861 of the Social Security
Act (SSA), except as otherwise provided
by the Secretary).”
The statutory minimum annual deductible and out-of-pocket maximum are
adjusted annually for inflation. The minimum annual deductible for 2025 is $1,650
for self-only coverage and $3,300 for family coverage, and the out-of-pocket maxi-
January 5, 2026
mum for 2025 is $8,300 for self-only coverage and $16,600 for family coverage.1
B. OBBBA changes to section 223
1. Telehealth and Other Remote Care
Services.
Section 71306 of the OBBBA makes
permanent a safe harbor for the absence
of a deductible for telehealth and other
remote care services that was initially
enacted on a temporary basis as part of
the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136, 134
Stat. 281 (Mar. 27, 2020) (CARES Act).
The CARES Act provision was effective
March 27, 2020, and applied for plan
years beginning on or before December
31, 2021. Subsequent legislation extended
the application through taxable years
beginning before January 1, 2025. The
OBBBA permanent extension applies retroactively for plan years beginning after
December 31, 2024.
2. Bronze and Catastrophic Plans
Treated as HDHPs
Section 71307 of the OBBBA amended
section 223(c)(2) of the Code to provide
that the term “high deductible health
plan” includes any plan described in subsection (d)(1)(A) or (e) of section 1302 of
the Patient Protection and Affordable Care
Act (ACA) that is available as individual coverage through an Exchange. Section 1302(d)(1)(A) of the ACA describes
a bronze level plan, which is required to
provide a level of coverage that is designed
to provide benefits that are actuarially
equivalent to 60 percent of the full actuarial value of the benefits provided under
the plan. Section 1302(e) of the ACA
describes a catastrophic plan, which is a
health plan solely offered in the individual market that does not provide bronze or
higher levels of coverage and that generally provides essential health benefits only
after an individual has incurred the maximum cost sharing under section 1302(c)
(1) of the ACA (other than required pre-
ventive health care and coverage for at
least three primary care visits). In addition, to be a catastrophic plan, enrollment
must be restricted to individuals who
have not attained the age of 30 before the
beginning of the plan year or individuals
who are exempt from the requirements of
section 5000A because they do not have
access to affordable coverage or are otherwise experiencing a hardship with respect
to the capability to obtain coverage under
a qualified health plan (QHP).
Before the OBBBA was enacted, many
bronze plans did not qualify as HDHPs
because the plans’ out-of-pocket maximum exceeded the statutory limits for
HDHPs or because they provided benefits that were not preventive care without a deductible. Similarly, catastrophic
plans could not be HDHPs because they
were required to provide three primary
care visits before the minimum deductible
was satisfied and to have an out-of-pocket
maximum that exceeded the statutory limits for HDHPs.
This provision amending the definition
of an HDHP applies for months beginning
after December 31, 2025.
3. Direct Primary Care Service
Arrangements
An individual who is covered under
an HDHP is eligible to contribute to an
HSA, provided that the individual is not
covered under any disqualifying coverage
while the individual is covered under the
HDHP. An HSA may be used to pay for
medical care under section 213(d) of the
Code; however, an HSA generally may
not be used to pay for insurance, with certain exceptions.
The Treasury Department and the
Internal Revenue Service (IRS) understand that direct primary care service
arrangements (DPCSAs) typically charge
a fixed periodic fee and provide for an
array of primary care services and items,
such as physical examinations, vaccinations, urgent care, laboratory testing,
and the diagnosis and treatment of some
sicknesses and injuries. For the purposes
of eligibility to contribute to an HSA, this
type of DPCSA generally would constitute a health plan that provides coverage
before the minimum annual deductible is
satisfied and that is not disregarded coverage or preventive care. Therefore, prior
to the effective date of section 223(c)(1)
(E) (as added by OBBBA), an individual
generally was not eligible to contribute to
an HSA if the individual was enrolled in
a DPCSA.
Section 71308(a) of the OBBBA
amended section 223(c)(1) of the Code
to provide that a DPCSA as defined in
section 223(c)(1)(E)(ii) is not “treated
as a health plan for purposes of [section 223(c)(1)](A)(ii)”, which generally
limits eligible individuals to individuals who are enrolled in an HDHP and
are not covered under any other health
plan. Thus, enrollment in such a DPCSA
will not cause an individual to fail to
be an eligible individual for that reason. For purposes of this rule, the term
“direct primary care service arrangement” means, with respect to any individual, an arrangement under which such
individual is provided medical care (as
defined in section 213(d)) consisting
solely of primary care services provided
by primary care practitioners (as defined
in section 1833(x)(2)(A) of the SSA,
determined without regard to clause (ii)
thereof), if the sole compensation for
such care is a fixed periodic fee. “Primary care practitioner” is defined in section 1833(x)(2)(A) of the SSA to mean
an individual who is a physician who has
a primary specialty designation of family medicine, internal medicine, geriatric
medicine, or pediatric medicine, or who
is a nurse practitioner, clinical nurse
specialist, or physician assistant. For
purposes of section 223(c)(1)(E) of the
Code, the term “primary care services”
does not include (1) procedures that
require the use of general anesthesia, (2)
prescription drugs other than vaccines
(therefore, vaccines are permitted primary care services), and (3) laboratory
services not typically administered in an
ambulatory primary care setting.
For calendar year 2026, the annual deduction limit for contributions to HSAs under section 223(b)(2)(A) for an individual with self-only coverage is $4,400 and $8,750 for family coverage.
For calendar year 2026, an HDHP is defined under section 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,700 for self-only coverage and $3,400 for family
coverage, and for which the annual out-of-pocket expenses (excluding premiums) do not exceed $8,500 for self-only coverage and $17,000 for family coverage (other than bronze and catastrophic plans). Rev. Proc. 2025-19, 2025-18 IRB 1430.
1
January 5, 2026
310
Bulletin No. 2026–2
The term “direct primary care service arrangement” does not include any
arrangement if, with respect to an individual for a month, the aggregate fees
for all DPCSAs for the individual for
a month exceed $150 (or $300 for any
such arrangement that covers more than
one individual). The aggregate limit is
adjusted annually for inflation for taxable
years after 2026.
Section 71308 of the OBBBA also
amended section 223(d)(2)(C) of the Code
to provide that any expense for coverage
under “any direct primary care service
arrangement” is not subject to the general
restriction that prohibits an HSA from
being used to pay for insurance.
The provision relating to DPCSAs
applies to months beginning after December 31, 2025.
III. QUESTIONS AND ANSWERS
A. Telehealth and Remote Care
Services
Q-1. May an otherwise eligible individual contribute to an HSA for 2025 if,
before the OBBBA was enacted on July
4, 2025, the individual was enrolled in
a health plan that provided coverage for
telehealth or other remote care services
before the minimum deductible was satisfied, but the health plan otherwise satisfied the requirements to be treated as an
HDHP?
A-1. Yes, an otherwise eligible individual may contribute to an HSA for 2025 if,
before the OBBBA was enacted on July 4,
2025, the individual was enrolled in a health
plan that provided coverage for telehealth or
other remote care services before the minimum deductible was satisfied, if the health
plan otherwise satisfied the requirements to
be treated as an HDHP. This is true regardless of whether the contribution is made
before or after July 4, 2025.
Q-2. Which benefits will the IRS treat
as telehealth and other remote care services that may be offered by an HDHP
without a deductible?
A-2. A plan will not fail to be an
HDHP solely because it offers telehealth
benefits without a deductible for a service that is included on the list of telehealth services payable by Medicare that
is published annually by the Department
of Health and Human Services (HHS)
under section 1834(m)(4)(F) of the
SSA.2 For services that are not included
on the HHS list, taxpayers should apply
the principles of section 1834(m) of the
SSA, its implementing regulations at 42
CFR 410.78, and other guidance issued
by HHS defining “telehealth services”
and related terms.
Q-3. If in-person services, medical
equipment, or drugs are furnished in connection with a telehealth or other remote
care service, may they be provided by an
HDHP without a deductible under section
223(c)(2)(E) of the Code?
A-3. No, telehealth or other remote
care services do not extend to in-person
services, medical equipment, or drugs furnished in connection with those services
unless they would otherwise be treated as
telehealth services under guidance provided in Q&A-2.
B. Bronze and Catastrophic Plans
Treated as HDHPs
Q-4. Will a bronze or catastrophic plan
that does not satisfy the minimum annual
deductible requirement or maximum outof-pocket expenses requirement under
section 223(c)(2)(A)(i) and (ii) be treated
as an HDHP?
A-4. Yes, for months beginning after
December 31, 2025, a bronze or catastrophic plan will be treated as an HDHP
if the plan is available as individual coverage through an Exchange established
under section 1311 or 1321 of the ACA
even if the plan does not satisfy the minimum annual deductible requirement
or maximum out-of-pocket expenses
requirement for an HDHP under section
223(c)(2)(A)(i) and (ii) of the Code.
Q-5. Will a bronze or catastrophic plan
that is available as individual coverage
fail to be treated as an HDHP because an
employer-sponsored health reimbursement arrangement (HRA) such as an
individual coverage HRA (ICHRA) or a
qualified small employer HRA is used to
purchase the coverage?
A-5. No, a bronze or catastrophic plan
that is available as individual coverage
will not fail to be an HDHP because an
employer-sponsored ICHRA is used to
purchase the coverage.3 However, generally, an HRA (including an ICHRA) is
permitted to reimburse only premiums for
the HRA to be a health plan that would
not disqualify an employee from being an
eligible individual. See Notice 2008-59,
2008-29 IRB 123, Q&A-1.
Q-6. Will a bronze plan or catastrophic
plan purchased off-Exchange on the individual market be treated as an HDHP if
the same plan is available as individual
coverage through an Exchange?
A-6. Yes. A bronze plan or catastrophic
plan purchased off-Exchange on the individual market will be treated as an HDHP
if the same plan is available as individual coverage through an Exchange. This
includes plans sold exclusively off-Exchange without a cost-sharing reduction
load that are otherwise identical to plans
sold on-Exchange with a cost sharing
reduction load.4
Q-7. If the individual enrolls in a
bronze or catastrophic plan that is available as individual coverage on the individual market but not on an Exchange, and
the individual has no reason to believe the
coverage is not available on an Exchange,
may the individual contribute to an HSA?
A-7. Yes. In the interest of sound tax
administration, because the ability of an
individual to determine whether a particular plan is available on an Exchange is
limited, the IRS will treat an individual
as an eligible individual if the individual
enrolls in a bronze or catastrophic plan that
is available as individual coverage on the
individual market but not on an Exchange,
and the individual has no reason to believe
that the bronze or catastrophic plan is not
available on an Exchange.
See https://www.cms.gov/medicare/coverage/telehealth/list-services; see 90 Fed. Reg. 49266, 49317 (Nov. 5, 2025), https://www.federalregister.gov/documents/2025/11/05/2025-19787/
medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other#p-573.
3
See 29 CFR 2510.3-1(l) (establishing safe harbor conditions for when an employer payment of premiums for individual health insurance will not cause the individual health insurance
coverage to become group health insurance coverage or coverage offered in connection with a group health plan under the Employee Retirement Income Security Act of 1974, Public Law
93-406, 88 Stat. 829, as amended).
4
See https://www.cms.gov/files/document/offering-exchange-only-plans-without-csr-loading.pdf.
2
Bulletin No. 2026–2
311
January 5, 2026
Q-8. Will bronze plans offered as Small
Business Health Options Program (SHOP)
coverage be treated as HDHPs?
A-8. Generally, no. SHOP coverage
that may be offered by a small employer is
not individual coverage and therefore does
not meet the criteria to be treated as an
HDHP under section 223(c)(2)(H). However, such a plan can still be an HDHP if it
otherwise satisfies the applicable requirements, including the minimum annual
deductible requirement and maximum
out-of-pocket expenses requirement under
sections 223(c)(2)(A)(i) and (ii). Note,
however, that an employer-sponsored
ICHRA may be used to purchase a bronze
plan or catastrophic plan that is available
as individual coverage. See Q&A-5.
Q-9. If a bronze plan available as individual coverage on an Exchange provides
benefits that are greater than the actuarial
equivalent to 60 percent of the full actuarial value of the benefits provided under the
plan, may it be treated as an HDHP?
A-9. Yes. Bronze plans described under
section 1302(d)(1)(A) of the ACA (that is,
a plan providing a level of coverage that
is designed to provide benefits that are
actuarially equivalent of 60 percent of
the full actuarial value of the benefits that
are provided under the plan) are treated
as HDHPs under section 223(c)(2)(H)
of the Code. However, compliance with
other provisions of the ACA may affect
the real actuarial value of a bronze plan.
The Treasury Department and the IRS
have consulted with HHS and are aware
that some bronze plan variants may have
an actuarial value that exceeds 60 percent
because of factors such as the de minimis variance provided for under section
1302(d)(3) of the ACA or cost-sharing
reductions offered to American Indians
and Alaska Natives under section 1402(d)
of the ACA. These plans are still considered bronze plans under section 1302(d)
(1)(A) of the ACA by HHS and are treated
as HDHPs under section 223(c)(2)(H) of
the Code.
Q-10. An individual generally is not
an eligible individual who may contribute
to an HSA if the individual has received
medical services at an Indian Health Services (IHS) facility at any time during the
previous three months. See Notice 201214, 2012-8 IRB 41. Does Notice 2012-14
apply to individuals who receive medical
services at an IHS facility and enroll in
a bronze plan variant with cost-sharing
reductions offered to American Indians
and Alaska Natives under section 1402(d)
of the ACA, which may have special coverage requirements related to IHS facilities?
A-10. No. Notice 2012-14 does not
apply to individuals who receive medical services at an IHS facility and enroll
in a bronze plan variant with cost-sharing
reductions offered to American Indians
and Alaska Natives under section 1402(d)
of the ACA. Thus, such individuals may
be eligible individuals even if they have
received medical services at an IHS facility during the previous three months.
C. Direct Primary Care Service
Arrangements
DPCSA not treated as a health plan
Q-11. Does a DPCSA under section
223(c)(1)(E) of the Code include an
arrangement that provides certain healthcare items and services to individuals on
the condition that they are members in
the arrangement and have paid a fixed
periodic fee, but bills separately for those
items and services (through insurance or
otherwise)?
A-11. No, the sole compensation for
care provided under a DPCSA must be the
fixed periodic fee. Thus, a DPCSA under
section 223(c)(1)(E) does not include an
arrangement that provides certain healthcare items and services to individuals on
the condition that they are members in
the arrangement and have paid a fixed
periodic fee, but bills separately for those
items and services (through insurance or
otherwise).
Q-12. Does a DPCSA under section
223(c)(1)(E) of the Code include an
arrangement in which providers participating in the arrangement, which otherwise qualifies as a DPCSA, offer certain
healthcare items and services outside of
the arrangement to individuals regardless of membership in the arrangement
and separately bill both members and
non-members for those items and services
(through insurance or otherwise)?
A-12. Yes.
Q-13. May a DPCSA under section
223(c)(1)(E) include an arrangement that
has fees that are billed for periods of more
than a month but no more than a year?
A-13. Yes, a DPCSA under section
223(c)(1)(E) may include an arrangement that has fees that are billed for periods of more than a month, but no more
than a year provided the aggregate fees
are fixed, periodic, and do not exceed the
monthly limit (on an annualized basis).
For example, for 2026, the fee for a single individual could be $1,800 for a year;
$900 for six months; or $450 for three
months.
Q-14. If an arrangement provides services other than the primary care services
described in section 223(c)(1)(E), may
an individual who is a member in the
arrangement decline to use such services
and treat the arrangement as a DPCSA
under section 223(c)(1)(E)?
A-14. No. Whether an arrangement qualifies as a DPCSA under section 223(c)(1)(E) depends on the terms of
the arrangement, not the services used by
an individual.
Q-15. May an HDHP offer primary care
benefits other than those allowed under
section 223(c)(2)(C)-(G) (for example,
telehealth and preventive care) by paying
fees for, or providing membership in, a
DPCSA without a deductible or before the
minimum deductible has been satisfied?
A-15. No. Certain DPCSAs are not
treated as a health plan for purposes of
section 223(c)(1)(A)(ii), which generally
defines eligible individuals who may contribute to an HSA as individuals who are
enrolled in an HDHP and are not covered
under any other health plan. However, section 223 does not provide that an HDHP
may offer a benefit that consists of paying
fees for, or providing membership in, a
DPCSA without a deductible or before the
deductible has been satisfied.5
Q-16. If an individual is enrolled in
both a DPCSA and an HDHP, may the
HDHP count fees paid by the individual
for the individual’s membership in the
Bronze plans are treated as HDHPs under section 223 regardless of which services they cover before the deductible. It is the Treasury Department’s and IRS’s understanding that ACA
section 1301(a)(3) allows QHPs to provide coverage through a direct primary care medical home plan. Nothing in this notice is intended to provide any interpretive guidance with respect to
ACA section 1301(a)(3).
5
January 5, 2026
312
Bulletin No. 2026–2
DPCSA toward the annual deductible and
out-of-pocket maximum for the HDHP?
A-16. No. In this situation, the fees for
membership in a DPCSA paid by the individual would not be amounts paid out-ofpocket for items and services that are covered by the HDHP and therefore would
not count toward the minimum annual
deductible and out-of-pocket maximum
for the HDHP.
Q-17. Section 223(c)(1)(E) defines
“primary care practitioners” by reference
to section 1833(x)(2)(A) of the SSA. Does
section 223(c)(1)(E) of the Code define
“primary care services” by reference to
the services identified by the Health Care
Procedure Coding System (HCPCS) codes
under section 1833(x)(2)(B) of the SSA?
A-17. No. Although section 223(c)(1)
(E)(ii)(I) of the Code defines “primary
care practitioners” by reference to section 1833(x)(2)(A) of the SSA, it does not
define “primary care services” by reference to the definition at section 1833(x)
(2)(B) of the SSA. In addition, section
223(c)(1)(E)(iii) of the Code specifically
excludes from “primary care services” (1)
procedures that require the use of general
anesthesia, (2) prescription drugs other
than vaccines, and (3) laboratory services
not typically administered in an ambulatory primary care setting.
HSA distributions for the reimbursement
of fees for a DPCSA
Q-18. Are DPCSA fees treated as
amounts paid for qualified medical
expenses under section 223(d)(2) that
may be reimbursed by an HSA if they
were paid by an individual’s employer,
including by salary reduction through a
section 125 cafeteria plan?
A-18. No. These payments by the
employer are not expenses of the HSA
beneficiary. The payments are compensation excluded from employees’ gross
income under section 106.
Q-19. May DPCSA fees be reimbursed
from an HSA before the coverage period
for the arrangement?
A-19. Generally, yes. An HSA is permitted to treat an expense for a DPCSA as
incurred on (1) the first day of each month
of coverage on a pro rata basis, (2) the first
day of the period of coverage, or (3) the
date the fees are paid. Thus, for example,
Bulletin No. 2026–2
an HSA may immediately reimburse a
substantiated fee for a DPCSA that begins
on January 1 of that enrollment year, even
if the enrolled individuals paid the fee
prior to the first day of the enrollment year.
Q-20. What requirements must an
arrangement meet in order to qualify as a
DPCSA whose fees are treated as amounts
paid for qualified medical expenses under
section 223(d)(2) that may be reimbursed
by an HSA?
A-20. For purposes of section 223(d)
(2), a DPCSA is an arrangement under
which an individual is provided medical
care (as defined in section 213(d)) consisting solely of primary care services
provided by primary care practitioners (as
defined in section 1833(x)(2)(A) of the
SSA, determined without regard to clause
(ii) thereof), if the sole compensation for
such care is a fixed periodic fee, and such
care does not include (1) procedures that
require the use of general anesthesia, (2)
prescription drugs other than vaccines,
or (3) laboratory services not typically
administered in an ambulatory primary
care setting. For purposes of section
223(d)(2), there is no specific limit on the
amount of the fixed periodic fee as there
is for purposes of determining whether
a DPCSA is a health plan under section
223(c)(1)(E). Thus, fees for a DPCSA that
do not satisfy the monthly dollar limit in
section 223(c)(1)(E)(ii)(II) will be treated
as medical expenses reimbursable from an
HSA in accordance with section 223(d)
(2)(C)(v) but will disqualify the covered
individual from eligibility for making
HSA contributions while the individual is
enrolled.
IV. REQUEST FOR COMMENTS
The Treasury Department and the
IRS request comments on all aspects of
this notice. Written comments should be
submitted on or before March 6, 2026.
Consideration will be given, however, to
any written comment submitted after that
date, if such consideration will not delay
the issuance of guidance. The subject line
for the comments should include a reference to Notice 2026-5. Comments may
be submitted electronically via the Federal eRulemaking Portal at https://www.
regulations.gov (type IRS-2025-0335 in
the search field on the regulations.gov
313
homepage to find this notice and submit
comments). Alternatively, comments may
be submitted by mail to: Internal Revenue
Service, CC:PA:01:PR (Notice 2026-5),
Room 5503, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044. All commenters are strongly encouraged to submit
comments electronically. The Treasury
Department and the IRS will publish for
public availability any comment submitted electronically, or on paper, to the IRS’s
public docket on https://www.regulations.
gov.
V. EFFECT ON OTHER
DOCUMENTS
Notice 2012-14 is modified with
respect to the guidance regarding eligibility to contribute to an HSA within three
months of receiving medical care from the
Indian Health Services.
VI. DRAFTING INFORMATION
The principal author of this notice is
Alexander Krupnick of the Office of Associate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes), though other Treasury Department and IRS officials participated in its
development. For further information on
the provisions of this notice, contact Mr.
Krupnick at (202) 317-5500 (not a tollfree number).
Extension of Transition
Period to Calendar
Year 2026 for Certain
Requirements in Revenue
Ruling 2025-4
Notice 2026-6
SECTION 1. PURPOSE
This notice extends for an additional
year the transition period provided in Revenue Ruling 2025-4 for States administering paid family and medical leave (PFML)
programs and employers participating in
such programs with respect to the portion
of medical leave benefits a State pays to an
January 5, 2026
individual that is attributable to employer
contributions.
SECTION 2. BACKGROUND
On January 15, 2025, the Department of Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
issued Revenue Ruling 2025-4, 2025-7
I.R.B. 758, providing guidance on the
income and employment tax treatment
of contributions and benefits paid in certain situations under a State paid family
and medical leave (PFML) statute. Revenue Ruling 2025-4 includes seven separate holdings. Holding (4) concludes, in
part, that amounts paid to an employee
by a State as medical leave benefits that
are attributable to the employer’s contribution pursuant to a State’s PFML statute are included in an employee’s gross
income under § 1051 except as otherwise
provided in that section, are wages for
Federal employment tax purposes under
§§ 3121(a) and 3306(b), and are thirdparty payments of sick pay as defined in
§ 3402(o). Holding (4) also concludes that
States must comply with the employment
tax and reporting requirements that apply
to such payments under § 32.1 and other
guidance.
With respect to both the Federal
income and employment tax obligations
and related information reportion requirements discussed in holding (4), Revenue
Ruling 2025-4 provides that calendar year
2025 is a transition period for purposes
of IRS enforcement and administration,
intended to provide States and employers
time to configure their reporting and other
systems and to facilitate an orderly transition to compliance with those rules.2
SECTION 3. DISCUSSION
A number of States with PFML statutes requested that the transition period
in Revenue Ruling 2025-4 be extended
for an additional year or that the effective
date be amended because the required
changes cannot occur within the current
timeline.
The Treasury Department and the
IRS understand that States may need
additional time to make the necessary changes to their systems and state
budgets to comply with their Federal
income tax and employment tax obligations, as well as related information
reporting responsibilities under § 32.1.
For this reason, calendar year 2026 will
be regarded as an additional transition
period for purposes of IRS enforcement and administration with respect
to components (1) and (2) of the transition period set forth in Revenue Ruling
2025-4. Accordingly:
(1) For medical leave benefits a State
pays to an individual in calendar year
2026, with respect to the portion of the
medical leave benefits attributable to
employer contributions, (a) a State or an
employer is not required to follow the
income tax withholding and reporting
requirements applicable to third-party
sick pay, and (b) consequently, a State or
employer will not be liable for any associated penalties under § 6721 for failure to
file a correct information return or under
§ 6722 for failure to furnish a correct
payee statement to the payee.
(2) For medical leave benefits a State
pays to an individual in calendar year
2026, with respect to the portion of the
medical leave benefits attributable to
employer contributions, (a) a State or an
employer is not required to comply with
§ 32.1 and related Code sections (as well
as similar requirements under § 3306)
during the calendar year; (b) a State or
an employer is not required to withhold
and pay associated taxes; and (c) consequently, a State or employer will not be
liable for any associated penalties.
SECTION 4. EFFECTIVE DATE
This notice is effective for medical
leave benefits paid from States to individuals during calendar year 2026.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice is
the Office of Associate Chief Counsel
(Employee Benefits, Exempt Organizations, and Employment Taxes). For further information regarding this notice, call
(202) 317-6798 (not a toll-free call).
26 CFR 601.601: Rules and regulations.
(Also Part I, § 25F.)
Rev. Proc. 2026-6
SECTION 1. PURPOSE
This revenue procedure provides the
exclusive procedure for a State1 to make
an election to be a “covered state”2 prior
to identifying scholarship granting organizations (SGOs) in the State in accordance
with § 25F(g) of the Internal Revenue
Code (Code)3 (Advance Election). Making an Advance Election allows a State to
inform potential SGOs of a State’s participation under section 25F before submitting its SGO list, giving SGOs additional
time to prepare for the commencement of
this new credit in 2027.
SECTION 2. BACKGROUND
.01 Overview of § 25F Credit. Section
25F provides a nonrefundable income
tax credit (§ 25F credit) allowable to a
taxpayer for qualified contributions to an
SGO made by an individual who is a citizen or resident of the United States (within
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Treasury Regulations.
Revenue Ruling 2025-4 also includes holding (5), and provides transition relief for calendar year 2025 to employers with respect to an amount an employer voluntarily pays of any part
of the employee’s otherwise required contribution to a State PFML program (i.e., employer pick-up). This notice does not extend the third component of the transition relief announced in
Revenue Ruling 2025-4 to an employer pick-up for calendar year 2026, and consequently, contemplates that employers will treat contribution amounts they voluntarily pay on behalf of their
employees to a State PFML program as wages for Federal employment tax purposes under §§ 3121(a), 3306(b), and 3401(a) and report such amounts on the employee’s Form W-2, Wage
and Tax Statement, in accordance with § 6051.
1
For purposes of this notice, the term “State” means one of the 50 States or the District of Columbia.
2
Section 25F(c)(1), as added by § 70411 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act, defines a “covered state” as one of the 50
States, or the District of Columbia, that, for a particular calendar year, both voluntarily elects to participate under § 25F and identifies the scholarship granting organizations in the State, in
accordance with § 25F(g).
3
Unless otherwise provided, all “section” or “§” references are to sections of the Code.
1
2
January 5, 2026
314
Bulletin No. 2026–2
the meaning of § 7701(a)(9)). Section
25F(c)(3) defines a “qualified contribution” as a charitable contribution of cash
to an SGO that uses the contribution to
fund scholarships for eligible students (as
defined in § 25F(c)(2)) solely within the
State in which the organization is listed
pursuant to § 25F(g). In order for a contribution made by a taxpayer to an SGO in
a State to be a qualified contribution eligible for a § 25F credit, a State must have
voluntarily made an election to participate
under § 25F and must have identified the
SGO as one that satisfies the requirements
of § 25F(c)(5) for the applicable calendar
year in accordance with § 25F(g).
.02 Statutory Requirements for Elections to Participate under § 25F. Section
25F(g)(1) provides that a State that voluntarily makes an election to participate
under § 25F must provide to the Secretary of the Treasury or the Secretary’s
delegate a list of the SGOs that meet
the requirements described in § 25F(c)
(5) and are located in the State (State
SGO list). The State SGO list must be
submitted by January 1 of the calendar
year for which the election to participate under § 25F is being made (or, with
respect to calendar year 2027, as early as
practicable). Section 25F(g)(2) provides
that each State SGO list must include a
certification that the individual, agency,
or entity submitting such list on behalf
of the State has the authority to perform this function. See sections 2.04
and 3 of Notice 2025-70, 2025-50 I.R.B.
773 (December 8, 2025), for additional
information and a request for comments
regarding State SGO lists and the certifications necessary for elections to participate under § 25F.
.03 Future guidance. The Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
intend to publish future guidance under
§ 25F(g) on how a State submits its State
SGO list with all required certifications.
The future guidance will provide that any
State making an Advance Election will be
required to perfect its election by submitting its State SGO list in accordance with
such guidance. Future guidance also will
address how to make an election to participate under § 25F for calendar year 2027
at the same time the State submits the
State SGO list, and how to make elections
Bulletin No. 2026–2
(including Advance Elections) to participate under § 25F for subsequent calendar
years.
SECTION 3. SCOPE
.01 Advance Elections. This revenue
procedure applies to States that choose to
make an Advance Election for calendar
year 2027. Section 4 of this revenue procedure provides the exclusive procedure
for a State to make an Advance Election
for calendar year 2027.
.02 Perfection of Advance Election.
As the Treasury Department and the IRS
intend to specify in future guidance, each
State making an Advance Election for
calendar year 2027 will need to perfect
its election by submitting its State SGO
list, along with all required information
and certifications, before the final date
on which the State is permitted to submit
the State SGO list (as will be specified
in future guidance). Because a State that
makes an Advance Election is required
by § 25F(g) to provide its State SGO list
as part of its election, a failure to submit
the list by the deadline would not meet the
statutory requirements, and, as a result, no
organization in that State would qualify
as an SGO under § 25F for calendar year
2027.
SECTION 4. PROCEDURE FOR
MAKING ADVANCE ELECTION
FOR 2027
.01 Submission of Advance Election. If
a State chooses to make an Advance Election for calendar year 2027, the State must
submit Form 15714, Advance Election to
Participate Under Section 25F for 2027,
in accordance with this section 4 and the
Form 15714 instructions, on or after January 1, 2026, and before the final date on
which the State is permitted to submit
the State SGO list (as will be specified in
future guidance). Form 15714, including
instructions for its submission, are available at www.irs.gov/pub/irs-pdf/f15714.
pdf. No alternative method of making an
Advance Election, and no alteration of
Form 15714, will be accepted for calendar year 2027. The IRS will acknowledge
or otherwise confirm receipt of a State’s
Advance Election submitted in accordance with this section 4.
315
.02 No Inclusion of Other Attachments
or SGO List. Any State SGO list (or other
information or attachments) submitted
with Form 15714 will not be processed
by the IRS and will need to be resubmitted in accordance with the procedures for
submitting State SGO lists as specified in
future guidance.
.03 No Subsequent Advance Election
Submissions. Once a State’s Advance
Election for calendar year 2027 has been
made, the only subsequent submission that
will be processed by the Treasury Department and the IRS is the submission of the
State SGO list (including all required certifications).
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective as
of January 1, 2026. No Advance Election
for calendar year 2027 may be submitted
to the IRS before January 1, 2026, or after
the day before the final date on which the
State is permitted to submit the State SGO
list (as will be specified in future guidance).
SECTION 6. PAPERWORK
REDUCTION ACT
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (PRA) generally
requires that a Federal agency obtain the
approval of the Office of Management and
Budget (OMB) before collecting information from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control number
assigned by the OMB.
Section 4 of this revenue procedure
sets forth collections of information to
be provided with Form 15714, including information related to an Advance
Election. The collections will be used
by the IRS for tax administration purposes. The respondents are States that
voluntarily elect, on or after January
1, 2026, to participate under § 25F for
the following calendar year in advance
of perfecting the election by providing
the State SGO list, as required under
§ 25F(g)(1).
January 5, 2026
Estimated number of respondents: 51
respondents.
Estimated number of responses: 51
responses.
Estimated frequency of responses:
Annually.
Estimated average time per response:
0.72 hours.
Estimated total annual burden: 37
hours.
Books or records relating to a collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law.
The collection of information contained in this revenue procedure has been
submitted to the OMB under control number 1545-2335.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Edward Waters of the Office
of the Associate Chief Counsel (Income
Tax & Accounting). However, other personnel from the Treasury Department and
the IRS participated in its development.
For further information regarding this revenue procedure, please contact Mr. Waters
at (202) 317-7009 (not a toll-free call).
26 CFR § 601.201: Rulings and determination
letters
Rev. Proc. 2026-7
SECTION 1. PURPOSE
.01 Purpose
This revenue procedure updates Rev.
Proc. 2025-7, 2025-1 I.R.B. 301, by providing a current list of those areas of the
Internal Revenue Code under the jurisdiction of the Associate Chief Counsel
(International) (hereinafter “the Office”)
relating to matters on which the Internal
Revenue Service (hereinafter “the Service”) will not issue letter rulings or determination letters.
.02 Changes
Old section 4.01(22), regarding rulings
under § 1059A, has been removed.
January 5, 2026
SECTION 2. BACKGROUND AND
SCOPE OF APPLICATION
.01 Background
In the interest of sound tax administration, the Service answers inquiries from
individuals and organizations regarding
their status for tax purposes and the tax
effects of their acts or transactions before
the filing of returns or reports that are
required by the Internal Revenue Code.
There are, however, areas where the Service will not issue letter rulings or determination letters, either because the issues
are inherently factual or for other reasons.
These areas are set forth in sections 3 and
4 of this revenue procedure.
Section 3 lists areas in which letter rulings and determination letters will not be
issued under any circumstances.
Section 4 lists areas in which letter rulings and determination letters ordinarily
will not be issued; in these areas, unique
and compelling reasons may justify issuing a letter ruling or determination letter.
A taxpayer who plans to request a letter
ruling or determination letter in an area
described in Section 4 should first contact the Office by telephone ((202) 3173800) or in writing to discuss the unique
and compelling reasons that the taxpayer believes justify issuing the letter
ruling or determination letter. Although
not required, a written submission is
encouraged because it will enable Office
personnel to arrive more quickly at an
understanding of the unique facts of each
case. A taxpayer who contacts the Office
by telephone may be requested to provide
a written submission.
The Service may provide a general
information letter in response to inquiries
in areas on either the Section 3 or Section
4 list. These lists are not all-inclusive.
Future revenue procedures may add or
delete items. The Service may also decline
to rule on an individual case for reasons
peculiar to that case, and the decision will
not be announced in the Internal Revenue Bulletin. See Section 6.02, Rev. Proc.
2026-1, 2026-1 I.R.B. 1.
.02 Scope of Application
This revenue procedure does not preclude the submission of requests for
technical advice to the Office from other
offices of the Service.
316
SECTION 3. AREAS IN WHICH
LETTER RULINGS OR
DETERMINATION LETTERS WILL
NOT BE ISSUED
.01 Specific Questions and Problems
(1) Section 861.—Income from Sources
Within the United States.—A method for
determining the source of a pension payment to a nonresident alien individual
from a trust under a defined benefit plan
that is qualified under § 401(a) if the proposed method is inconsistent with §§ 4.01,
4.02, and 4.03 of Rev. Proc. 2004-37,
2004-1 C.B. 1099.
(2) Section 862.—Income from
Sources Without the United States.—A
method for determining the source of a
pension payment to a nonresident alien
individual from a trust under a defined
benefit plan that is qualified under
§ 401(a) if the proposed method is inconsistent with §§ 4.01, 4.02, and 4.03 of Rev.
Proc. 2004-37, 2004-1 C.B. 1099.
(3) Section 871(g).—Special Rules for
Original Issue Discount.—Whether a debt
instrument having original issue discount
within the meaning of § 1273 is not an
original issue discount obligation within
the meaning of § 871(g)(1)(B)(i) when
the instrument is payable 183 days or less
from the date of original issue (without
regard to the period held by the taxpayer).
(4) Section 894.—Income Affected by
Treaty.—Whether a person that is a resident of a foreign country is entitled to
benefits under the United States income
tax treaty with that foreign country pursuant to the limitation on benefits article.
However, the Service may rule regarding
the legal interpretation of a provision of
an applicable objective test within the relevant limitation on benefits article, including, in appropriate cases, whether the person satisfies an element of such objective
test.
(5) Section 954.—Foreign Base Company Income.—The effective rate of tax
that a foreign country will impose on
income.
(6) Section 954.—Foreign Base Company Income.—Whether the facts and circumstances show that a controlled foreign
corporation makes a substantial contribution through the activities of its employees to the manufacture, production, or
Bulletin No. 2026–2
construction of the personal property sold
within the meaning of § 1.954-3(a)(4)(iv).
(7) Sections 7701(b) and 894.—Definition of Resident Alien and Nonresident
Alien.—Whether an alien individual,
whether or not a dual resident alien, is a
nonresident of the United States, including whether the individual has met the
requirements of the substantial presence
test or exceptions thereto, or whether
the alien is solely a nonresident under a
United States income tax treaty. However,
the Service may rule regarding the legal
interpretation of a particular provision of
§ 7701(b) or the regulations thereunder.
.02 General Areas.
(1) The prospective application of the
estate tax to the property or the estate of a
living person, except that rulings may be
issued on any international issues in a ruling request accepted pursuant to § 5.06 of
Rev. Proc. 2026-1.
(2) Whether reasonable cause exists
under Subtitle F (Procedure and Administration) of the Code.
(3) Whether a proposed transaction
would subject a taxpayer to criminal penalties.
(4) Any area where the ruling request
does not comply with the requirements of
Rev. Proc. 2026-1.
(5) Any area where the same issue is
the subject of the taxpayer’s pending
request for competent authority assistance
under a United States income tax treaty.
(6) A “comfort” ruling will not be issued
with respect to an issue that is clearly and
adequately addressed by statute, regulations, decisions of a court, tax treaties,
revenue rulings, or revenue procedures
absent extraordinary circumstances (e.g.,
a request for a ruling required by a governmental regulatory authority in order to
effectuate the transaction).
(7) Any frivolous issue, as that term is
defined in § 6.10 of Rev. Proc. 2026-1.
SECTION 4. AREAS IN WHICH
LETTER RULINGS OR
DETERMINATION LETTERS WILL
NOT ORDINARILY BE ISSUED
.01 Specific Questions and Problems
(1) Section 367(a).—Transfers of Property from the United States.—Whether
the transferee foreign corporation, or any
qualified subsidiary or any qualified part-
Bulletin No. 2026–2
nership, is engaged in an active trade or
business outside the United States for purposes of § 1.367(a)-3(c)(3)(i)(A).
(2) Section 367(a).—Transfers of Property from the United States.—Whether a
transferred corporation subject to a gain
recognition agreement under § 1.367(a)-8
has disposed of substantially all of its
assets.
(3) Section 864.—Definitions and
Special Rules.—Whether a taxpayer is
engaged in a trade or business within
the United States, and whether income
is effectively connected with the conduct of a trade or business within the
United States; whether an instrument is
a security as defined in § 1.864-2(c)(2);
whether a taxpayer effects transactions in
the United States in stocks or securities
under § 1.864-2(c)(2); whether an instrument or item is a commodity for purposes
of § 1.864-2(d)(3); and for purposes of
§ 1.864-2(d)(1) and (2), whether a commodity is of a kind customarily dealt in on
an organized commodity exchange, and
whether a transaction is of a kind customarily consummated at such place.
(4) Section 871(h).—Repeal of Tax on
Interest of Nonresident Alien Individuals
Received from Certain Portfolio Debt
Investments.—Whether a payment constitutes portfolio interest under § 871(h);
whether an obligation qualifies for any of
the components of portfolio interest such
as being in registered form; and whether
the income earned on contracts that do not
qualify as annuities or life insurance contracts because of the limitations imposed
by §§ 72(s) and 7702(a) is portfolio interest as defined in § 871(h).
(5) Section 881(c).—Repeal of Tax
on Interest of Foreign Corporations
Received from Certain Portfolio Debt
Investments.—Whether a payment constitutes portfolio interest under § 881(c);
whether an obligation qualifies for any of
the components of portfolio interest such
as being in registered form; and whether
the income earned on contracts that do not
qualify as annuities or life insurance contracts because of the limitations imposed
by §§ 72(s) and 7702(a) is portfolio interest as defined in § 881(c).
(6) Section 892.—Conduct of Foreign
Governments.—Whether a foreign government or an entity in which a foreign
government holds any interest is treated
317
as conducting commercial activities for
purposes of section 892(a)(2).
(7) Section 893.—Compensation of
Employees of Foreign Governments and
International Organizations.—Whether
wages, fees, or salary of an employee of a
foreign government or of an international
organization received as compensation
for official services to such government
or international organization is excluded
from gross income and exempt from taxation and any underlying issue related to
that determination.
(8) Section 894.—Income Affected by
Treaty.—Whether the income received
by an individual in respect of services
rendered to a foreign government or a
political subdivision or a local authority
thereof is exempt from federal income tax
or withholding under any of the United
States income tax treaties that contain
provisions applicable to such individuals.
(9) Section 894.—Income Affected by
Treaty.—Whether a taxpayer has a permanent establishment in the United States
for purposes of any United States income
tax treaty and whether income is attributable to a permanent establishment in the
United States.
(10) Section 894.—Income Affected by
Treaty.—Whether certain persons will be
considered liable to tax under the laws of a
foreign country for purposes of determining if such persons are residents within
the meaning of any United States income
tax treaty, including pursuant to Rev. Rul.
2000-59, 2000-2 C.B. 593.
(11) Section 894.—Income Affected
by Treaty.—Whether the income received
by a nonresident alien student or trainee
for services performed for a university
or other educational institution is exempt
from federal income tax or withholding
under any of the United States income tax
treaties that contain provisions applicable
to such nonresident alien students or trainees.
(12) Section 894.—Income Affected by
Treaty.—Whether the income received by
a nonresident alien performing research
or teaching as personal services for a university, hospital or other research institution is exempt from federal income tax
or withholding under any of the United
States income tax treaties that contain
provisions applicable to such nonresident
alien teachers or researchers.
January 5, 2026
(13) Section 894.—Income Affected
by Treaty.—Whether a recipient of a payment is the beneficial owner for purposes
of any United States income tax treaty.
(14) Section 894.—Income Affected
by Treaty.—Whether an entity is treated
as fiscally transparent by a foreign jurisdiction for purposes of § 894(c) and the
regulations thereunder or pursuant to any
United States income tax treaty.
(15) Section 895.—Conduct of a Foreign Central Bank of Issue.—Whether a
foreign central bank of issue is treated as
conducting a commercial banking function or other commercial activity.
(16) Section 901.—Taxes of Foreign
Countries and of Possessions of United
States.—Whether a foreign levy meets
the requirements of a creditable tax under
§ 901.
(17) Section 901.—Taxes of Foreign
Countries and of Possessions of United
States.—Whether a person claiming a
credit has established, based on all of
the relevant facts and circumstances,
the amount (if any) paid by a dual
capacity taxpayer under a qualifying
levy that is not paid in exchange for a
specific economic benefit. See § 1.9012A(c)(2).
(18) Section 903.—Credit for Taxes in
Lieu of Income, Etc., Taxes.—Whether a
foreign levy meets the requirements of a
creditable tax under § 903.
(19) Section 937.—Definition of Bona
Fide Resident.—Whether an individual is
a bona fide resident of American Samoa,
Guam, the Northern Mariana Islands,
Puerto Rico, or the U.S. Virgin Islands.
However, the Service may rule regarding
the legal interpretation of a particular provision of § 937(a) or the regulations thereunder.
(20) Sections 954(d), 993(c).—Manufactured Product.—Whether a product is
manufactured or produced for purposes of
§§ 954(d) and 993(c).
(21) Section 989(a).—Qualified Business Unit.—Whether a unit of the taxpayer’s trade or business is a qualified business unit.
(22) Sections 1471, 1472, 1473, and
1474.—Taxes to Enforce Reporting on
Certain Foreign Accounts.—Whether a
taxpayer, withholding agent, or intermediary has properly applied the requirements of chapter 4 of the Internal Revenue
January 5, 2026
Code (§§ 1471 through 1474, also known
as “FATCA”) or of an applicable intergovernmental agreement to implement
FATCA.
(23) Section 1503(d).—Dual Consolidated Loss.—Whether the income tax
laws of a foreign country would deny any
opportunity for the foreign use of a dual
consolidated loss in the year in which
the dual consolidated loss is incurred
under § 1.1503(d)-3(e)(1); whether no
possibility of foreign use exists under
§ 1.1503(d)-6(c)(1); whether an event presumptively constitutes a triggering event
under § 1.1503(d)-6(e)(1)(i); whether
the presumption of a triggering event is
rebutted under § 1.1503(d)-6(e)(2); and
whether a domestic use agreement terminates under § 1.1503(d)-6(j)(1).
(24) Section 2501.—Imposition of
Tax.—Whether a partnership interest
is intangible property for purposes of
§ 2501(a)(2) (dealing with transfers of
intangible property by a nonresident not a
citizen of the United States).
(25) Section 7701.—Definitions.—
Whether an estate or trust is a foreign
estate or trust for federal income tax purposes.
(26) Section 7701.—Definitions.—
Whether an intermediate entity is a conduit entity under § 1.881-3(a)(4); whether
a transaction is a financing arrangement
under § 1.881-3(a)(4)(ii); whether the
participation of an intermediate entity in
a financing arrangement is pursuant to a
tax avoidance plan under § 1.881-3(b);
whether an intermediate entity performs
significant financing activities under
§ 1.881-3(b)(3)(ii); whether an unrelated
intermediate entity would not have participated in a financing arrangement on substantially the same terms under § 1.8813(c).
(27) Section 7874.—Expatriated Entities and Their Foreign Parents.—Whether,
after the acquisition, the expanded affiliated group has substantial business activities in the foreign country in which, or
under the law of which, the foreign entity
is created or organized, when compared
to the total business activities of the
expanded affiliated group.
(28) Section 7874.—Expatriated Entities and Their Foreign Parents.—Whether
a foreign corporation completes the direct
or indirect acquisition of substantially all
318
of the properties held directly or indirectly
by a domestic corporation or substantially
all of the properties constituting a trade or
business of a domestic partnership.
.02 General Areas
(1) Whether a taxpayer has a business
purpose for a transaction or arrangement.
(2) Whether a taxpayer uses a correct
North American Industry Classification
System (NAICS) code or Standard Industrial Classification (SIC) code.
(3) Any transaction, or series of transactions, that is designed to achieve a different tax consequence or classification
under U.S. tax law (including tax treaties)
and the tax law of a foreign jurisdiction,
where the results of that different tax consequence or classification are inconsistent
with the purposes of U.S. tax law (including tax treaties).
(4)(a) Situations where a taxpayer or
a related party is domiciled or organized
in a foreign jurisdiction with which the
United States does not have an effective
mechanism for obtaining tax information
with respect to civil tax examinations and
criminal tax investigations, which would
preclude the Service from obtaining information located in such jurisdiction that
is relevant to the analysis or examination
of the tax issues involved in the ruling
request.
(b) The provisions of subsection
4.02(4)(a) above shall not apply if the
taxpayer or affected related party (i)
consents to the disclosure of all relevant
information requested by the Service in
processing the ruling request or in the
course of an examination to verify the
accuracy of the representations made
and to otherwise analyze or examine the
tax issues involved in the ruling request,
and (ii) waives all claims to protection
of bank or commercial secrecy laws in
the foreign jurisdiction with respect to
the information requested by the Service. If the taxpayer’s or related party’s
consent to disclose relevant information
or to waive protection of bank or commercial secrecy is determined by the Service to be ineffective or of no force and
effect, then the Service may retroactively
rescind any ruling rendered in reliance on
such consent.
(5) The federal tax consequences of
proposed federal, state, local, municipal,
or foreign legislation.
Bulletin No. 2026–2
(6)(a) Situations involving the interpretation of foreign law or foreign documents. The interpretation of a foreign
law or foreign document means making a
judgment about the import or effect of the
foreign law or document that goes beyond
its plain meaning.
(b) The Service, at its discretion, may
consider ruling requests that involve
the interpretation of foreign laws or
foreign documents. In these cases,
the Service may request information
in addition to that listed in § 7.01(2)
and (6) of Rev. Proc. 2026-1, includ-
Bulletin No. 2026–2
ing a discussion of the implications of
any authority believed to interpret the
foreign law or foreign document, such
as pending legislation, treaties, court
decisions, notices, or administrative
decisions.
(7) The treatment or effects of hook
equity, as described in section 4.02(11) of
Rev. Proc. 2026-3, 2026-1 I.R.B. 143.
SECTION 5. EFFECT ON OTHER
REVENUE PROCEDURES
Rev. Proc. 2025-7 is superseded.
319
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective
January 5, 2026.
SECTION 7. DRAFTING
INFORMATION
This revenue procedure was compiled
by James Kostura of the Office of Associate Chief Counsel (International). For
further information regarding this revenue
procedure contact Mr. Kostura at (202)
317-3800 (not a toll-free number).
January 5, 2026
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior published position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confusion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously published ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the substance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rulings in the series.
Suspended is used in rare situations
to show that the previous published rulings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
Bulletin No. 2026–2
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
i
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
January 5, 2026
Numerical Finding List1
Bulletin 2026–2
Notices:
2026-2, 2026-02 I.R.B. 304
2026-3, 2026-02 I.R.B. 307
2026-5, 2026-02 I.R.B. 309
2026-6, 2026-02 I.R.B. 313
Revenue Procedures:
2026-1, 2026-01 I.R.B. 1
2026-2, 2026-01 I.R.B. 119
2026-3, 2026-01 I.R.B. 143
2026-4, 2026-01 I.R.B. 160
2026-5, 2026-01 I.R.B. 258
2026-6, 2026-02 I.R.B. 314
2026-7, 2026-02 I.R.B. 316
Revenue Rulings:
2026-1, 2026-02 I.R.B. 299
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2025–27 through 2025–52 is in Internal Revenue Bulletin
2024–52, dated December 22, 2024.
1
January 5, 2026
ii
Bulletin No. 2026–2
Finding List of Current Actions on
Previously Published Items1
Bulletin 2026–2
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2025–27 through 2025–52 is in Internal Revenue Bulletin
2024–52, dated December 22, 2024.
1
Bulletin No. 2026–2
iii
January 5, 2026
Internal Revenue Service
Washington, DC 20224
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