KPMG flags Capitol Hill budget fights, possible tax moves this spring

Capitol Hill reopened to a budget fight that could quickly spill into tax planning, and KPMG said the stakes now extend well beyond Washington. The firm’s April 13 Capitol Hill Weekly said lawmakers returned from recess to a crowded agenda that includes Department of Homeland Security funding, possible budget reconciliation, Iran-related war powers resolutions and the first hearings on the administration’s fiscal 2027 budget request.

The immediate pressure point is DHS. KPMG’s April 7 update said the Senate passed a bipartisan bill funding all of DHS except Immigration and Customs Enforcement and most of Customs and Border Protection, leaving those agencies for a later partisan reconciliation bill. House Republicans initially rejected that approach, then reversed course after Donald Trump backed the Senate plan. Speaker Mike Johnson later told Republicans he expected the Senate could pass a narrow reconciliation package for ICE and CBP within about two weeks, a sign that the dealmaking was still in flux even inside the GOP conference.

That fluidity matters to firms like KPMG because reconciliation is one of the few legislative vehicles that can move tax and spending changes quickly. The April 13 note said the administration’s budget request contemplates a second reconciliation bill later in the year, which raises the question of whether any revenue costs would have to be offset by spending cuts or tax increases. The update did not promise tax legislation, but it said plainly that whether the process opens the door to tax changes remains uncertain.

The White House is also putting a number on what it wants out of the process. Its fiscal 2027 topline materials call for $350 billion in additional mandatory resources through reconciliation for defense and national-security priorities. That makes the legislative lane more than a procedural fight. It is a potential vehicle for major policy decisions that could affect tax modeling, compliance timelines and how quickly companies decide whether to hold, accelerate or rework plans.

At the same time, the clock is ticking on FISA. KPMG flagged an April 19 sunset date for a provision of the Foreign Intelligence Surveillance Act unless Congress acts, while congressional research says Section 702 was last reauthorized on April 20, 2024 and is set to sunset on April 20, 2026. The White House is publicly pressing for a clean extension, turning what might have been a routine renewal into another live test of whether Congress can still move must-pass legislation without loading it up with side deals.

For KPMG’s public-policy, tax and regulatory teams, the message is straightforward: clients will want clarity before they lock in budgets, compliance work and scenario plans. The question in Washington is no longer whether Congress has enough on its plate. It is which of these fights becomes the vehicle for the next round of tax policy.