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KPMG report: Final and proposed section 892 regulations

KPMG analysis and observations

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december 23, 2025

The U.S. Department of the Treasury and IRS on December 15, 2025, published in the Federal Register a significant package of guidance under section 892 with respect to the tax exemption for income of foreign* governments. This package includes final regulations (T.D. 10042) (the “Final Regulations”) and a new notice of proposed rulemaking (REG-101952-24) (the “Proposed Regulations”).

The Final Regulations amend and finalize, to an extent, previous proposed and temporary regulations promulgated in 1988, 2011, and 2022.

Read a December 2025 report prepared by KPMG LLP that includes initial analysis and observations regarding the provisions in the Final and Proposed Regulations.

* For purposes of this report, “foreign” refers to entities or governments that are not of the United States; that is, “foreign” means “non-U.S.”

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