At Around the Tax World, you can find out all about what’s going on in the wonderful, worldwide world of tax. Every month, we’ll feature a few mini-articles on what’s been going on in the world when it comes to tax, and fully available for viewing even if you don’t have a subscription.
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In The Headlines
- How could ongoing tariffs impact the Federal Reserve interest rate? The Federal Reserve recently decided to keep its interest rate unchanged, holding at about 4.4%. This decision comes as inflation has begun slowly declining and unemployment continues to stay low at 4.2%. The wild card factor is the effect of President Trump’s sweeping tariffs, which could cause inflation to rise again in the second half of the year. Unemployment is also expected to rise due to the impact of tariffs on business margins. This puts the Federal Reserve in a tricky position because rising inflation would typically cause the Fed to increase interest rates, but higher unemployment would typically mean reducing interest rates. President Trump has been urging the Fed to reduce rates, in part because without a cut, the government will have to pay more interest on its budget deficits.
- Kraft Heinz says “bye-bye” to artificial food dye. The multinational food company recently announced its plans to eliminate all chemical dyes from its offerings over the next two years. Some of Kraft Heinz’s most popular—and brightly colored—products like Crystal Light, Jell-O, and Kool-Aid currently contain Red No. 40 and Blue No. 1. Overall, the company estimates that this shift would only affect about 10% of its portfolio, in terms of sales. The food giant has previously taken steps toward removing artificial coloring from some of its goods including boxed Mac & Cheese, which has contained only natural spices since 2015. This move makes Kraft Heinz the first major food company to announce such a plan since the new Secretary of the Department of Health and Human Services, Robert F. Kennedy Jr., made official his plan to phase out synthetic dyes in the U.S. Kennedy has been a long-time critic of artificial food dyes, which he says contribute to chronic disease and poor health.
- Could chemotherapy become a thing of the past? Pharma companies share their progress on targeted cancer drugs. Companies including AstraZeneca, Daiichi Sankyo, Merck, and Pfizer have invested billions in antibody-drug conjugates (ADCs). This class of medicines is intended to deliver chemotherapy directly to cancer cells in the body, unlike traditional chemotherapy which can also affect nearby healthy cells. This could greatly diminish the harsh side effects cancer patients typically experience while undergoing chemotherapy. Several newer ADCs, such as Enhertu from AstraZeneca and Daiichi Sankyo, use a different design than previous medicines. Enhertu has been approved in the U.S. to treat certain breast, lung, and gastric cancers. Other ADCs have been approved when used in combination with chemotherapy, such as Pfizer’s Adcetris, which can be used on certain lymphomas. Though researchers estimate it may still be years before ADCs could replace chemotherapy, several drug companies shared significant progress at the 2025 American Society of Clinical Oncology annual meeting. Recent market research suggests that ADCs could make up $31 billion of the global cancer market by 2028.
What's New In The Tax World?
The Senate is proposing changes to the House’s tax and spending bill: What stayed and what’s going?
Senate Republicans have reworked the tax and Medicaid provisions in President Trump’s “Big, Beautiful Bill” (BBB). The current version of the bill was narrowly passed by the House and still contained many elements that were expected to be contentious in the Senate. The new version unveiled by the Senate Finance Committee increases cuts to Medicaid by lowering provider taxes from 6% to 3.5% from now to 2031. These taxes help cover states’ share of Medicaid costs. This differs from the House’s proposal, which is to freeze provider taxes at their current rates and ban states from establishing new provider taxes. Both approaches have received pushback within Congress, including from some Republicans who fear that rural hospitals in their states will be deeply impacted.
The Senate’s proposal also swings in the opposite direction when it comes to the state and local tax (SALT) deduction. At present, SALT deductions are limited to $10,000—a cap put in place through the 2017 Tax Cuts and Jobs Acts, which will expire at the end of this year. The House chose to renew but also raise the cap to $40,000 per household for those earning up to $500,000 a year. The Senate was expected to push back on this, since no Republican Senators represent the high-tax states most impacted by the SALT cap. In the new version, the $10,000 SALT cap would become permanent. This change may make it less likely that House Republicans will approve the revised bill.
After amending two major elements of the House bill, the Senate continued to add tweaks to other proposals. The Senate introduced a cap to the new “no tax on tips” provision that would limit the total deduction to $25,000 per year. This benefit would phase out for individuals earning over $150,000 or married couples earning over $300,000. A similar $25,000 cap was set for overtime pay for joint filers. Senate Republicans also adjusted the Child Tax Credit to $2,200 compared to the $2,500 suggested by the House. The revised bill also phases out clean energy-related subsidies much more quickly and makes certain business tax breaks permanent that the House had introduced as temporary.
Finally, the Senate version of the BBB would raise the debt ceiling by $5 trillion to prevent the government from defaulting on its debt. The next step is for the full Senate to debate and then vote on the bill before a new version is sent to the House.
State-By-State Updates
- Alaska hits a roadblock in solving problems with state oil tax collections. Governor Mike Dunleavy recently vetoed a bipartisan bill meant to address the decline in certain types of oil tax revenue. The bill sought to increase oversight of the collection process by clarifying the authority of the Legislature’s auditor. Between 2020 and 2024, the tax revenue deposited in Alaska’s rainy-day fund dropped from $281 million to only $3.1 million. Under the Dunleavy administration, auditors have received less organized information on tax payments from oil and gas companies. Before 2018, auditors could expect summary tables, but recently auditors report receiving raw data that they find difficult to interpret. State law currently doesn’t provide clear instructions on formatting data. The governor stated that the vetoed bill provided auditors with too much authority and contradicted the state Constitution. The state legislature still has the option to override the veto with a two-thirds vote in January.
- Florida approves $1.3 billion in tax cuts in its new budget bill. After a long battle in the state legislature, the final version of the bill did not include any of the three most hotly-debated tax cuts: the property tax cut proposed by Governor Ron DeSantis, the overall sales tax cut backed by House Speaker Daniel Perez, or a sales tax reduction for clothes and shoes. Instead, the bill features a study of property tax cuts, a series of sales tax cuts on select items, and one-month tax exemption on clothes, shoes, and other back-to-school gear. Other major cuts include the elimination of the business rent tax, the elimination of the aviation fuel tax, and a permanent tax cut for items typically covered by the state’s disaster preparedness sales tax holiday. Instead of reducing property taxes, the bill relies on increased property tax revenue to fund K-12 schools.
- Louisiana looks to fund college sports by increasing its sports betting tax. If a new bill is signed by Governor Jeff Landry, Louisiana will become the first state to raise taxes in order to increase pay for student athletes. This comes after a judge approved a $2.8 billion settlement with the NCAA and ruled in favor of allowing schools to pay top-tier athletes for use of their name, image, and likeness (NIL). Louisiana initially considered doubling its 15% tax on online sports betting but ultimately landed on a 21.5% tax rate. Of this revenue, about $24 million would be divided between 11 public universities in conferences with Division I football programs to go toward “student benefits” like scholarships, insurance, medical coverage, and sports facility upgrades.
- Texas says “yes” to three property tax relief bills. Governor Greg Abbott recently signed the bills for both commercial and personal property tax relief, but voters will still need to approve the related constitutional amendment in November for the tax cuts to take effect. House Bill 9 dramatically raises the business personal property tax exemption from $2,500 to $125,000. Senate Bill 4 makes a smaller but significant increase to the homestead exemption, upping it from $100,000 to $140,000. Lastly, Senate Bill 23 provides additional relief to seniors and those living with the disabilities by raising the homestead exemption to $200,000 for these residents. Together, these bills would save the average homeowner $500 on their yearly property tax bill. For seniors and those with disabilities, the average savings goes up to $900. Business owners could see a $2,500 reduction on their tax bill. To fund these cuts, the state will use less property tax money to fund public schools.
Tax Planning Tips
Solar stocks plunged in response to the Senate’s revised tax bill. After the Senate Finance Committee released its expedited plans to phase out solar and wind tax credits, stocks for many in the green energy industry dropped significantly. The biggest decline on the S&P 500 was solar inverter manufacturer Enphase Energy, which fell by 20.9%. Solar panel retailers Sunrun and SolarEdge Technologies each plummeted by more than 30%. Clean energy companies have already been facing declining revenue due to higher interest rates and legislative changes in states like California.
The proposed tax bill would reduce solar and wind incentives to 60% in 2026 and phase them out completely by 2028. The current tax credits are not permanent and are already scheduled to phase out by 2032. Conversely, the Senate proposal extends other tax credits for hydro, nuclear, and geothermal energy through 2036. Whether the changes proposed by the Senate will make it into the final version of the bill remains to be seen. The House had also proposed significant changes but with a slower timeline. The previous bill eliminated tax credits for rooftop solar installments and electric vehicle tax credits after 2025 and tightened tax credit restrictions for projects involving foreign corporations.
What is the “revenge tax” featured in the federal tax bill? The Senate made significant changes to the “Big, Beautiful Bill,” but one provision they kept is a tax that is causing alarm on Wall Street. The so-called “revenge” tax would allow the U.S. to increase taxes by 5% per year (capped at 20%) on foreign entities if their home country imposes “unfair foreign taxes” against U.S. companies. This would include foreigners with U.S. investments and multinational companies operating in the U.S. Two of the “unfair” taxes likely referred to are those in the 2021 global minimum tax agreement and the digital services taxes imposed on American tech giants.
If the new tax is approved, the asset management industry would be especially impacted, including hedge funds and private equity funds. Withholding tax on passive investment income could rise as high as 50%, according to some analysts. Some analysts worry this could curtail future investment, including the foreign investment that President Trump hopes to attract. The Senate has already introduced some revisions to the tax in their new proposal, lowering the cap to 15% and delaying the implementation of the tax until 2027.
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