The Irony of Overturning Chevron: New Challenges for Federal Regulations and Tax Professionals

Sharon Kreider, CPA

In a striking turn, the Supreme Court’s June 28, 2024 decision in Loper Bright Enterprises v. Raimondo dismantled Chevron deference, the 40-year precedent that gave federal agencies wide latitude to interpret ambiguous laws. Originally established by a conservative court to support deregulation under President Reagan, overturning Chevron now imposes new limits on agency authority, ironically complicating conservative regulatory goals under the incoming Trump administration.

Key Impacts on Federal Regulation

State Challenges Amplified:

Blue states, such as California and New York, gain a potent tool to challenge federal rules on immigration, healthcare, and environmental deregulation under a Republican-led administration.
Conversely, red states have already used Loper Bright to block Biden-era initiatives, such as LGBTQ+ protections and stricter environmental standards.

Regulatory Hurdles:

Agencies must now clear higher legal barriers to implement or change policies, particularly in contentious areas like Medicaid work requirements, immigration enforcement, and climate regulation.
Courts are no longer bound to defer to agency expertise, increasing the likelihood of protracted litigation and policy gridlock.

Legislative Pressure:

Congress will need to draft clearer laws to avoid court challenges, slowing policy adoption and creating uncertainty for regulated industries, including tax compliance and credits.

Implications for Tax Professionals

The shift away from Chevron deference could disrupt tax-related regulations, especially those relying on agency discretion, such as renewable energy credits, healthcare tax provisions, and environmental incentives. Legal challenges may delay implementation, complicating compliance for businesses and taxpayers.

For tax professionals, this decision marks a new era of regulatory uncertainty. Agencies’ reduced authority and heightened judicial scrutiny will require careful monitoring of legal developments and potential legislative responses to navigate the evolving regulatory landscape effectively.