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
The Supreme Court decides to stay out of the California-Florida tax tussle. The state of Florida recently filed a bill of complaint objecting to one of California’s tax laws. The law in question requires businesses to exclude income from “substantial and occasional” sales from their state tax returns. In its lawsuit, Florida said that the rule deprives the state of tax revenue because it distorts the taxable income California can claim from multi-state businesses. The lawsuit argued that the tax exclusion is unconstitutional and allows California to tax profits earned elsewhere. However, Florida’s request to have the highest court in the land review the case was rejected. The Supreme Court rarely takes on original jurisdiction cases and already denied a similar request in 2021 when New Hampshire sued Massachusetts over tax policy.
A.I. meets IPO: Anthropic beats OpenAI to the public market. The maker of Claude AI kicked off June with an announcement that the company had filed for its initial public offering. Rumors had already been circulating that Anthropic and rival company OpenAI were both planning IPOs this year. These stock market launches are expected to make waves with their massive valuations. Anthropic recently raised $65 billion in funding for new product development, and the company now has an estimated value of $965 billion. Analysts are predicting that Anthropic may hit the market as the second or third-largest IPO ever, falling just behind SpaceX and Saudi Aramco. The price and number of shares have not been set. The filing will remain confidential while under review by the Securities and Exchange Commission.
A union strike may delay production for GM pickup trucks. About a thousand workers affiliated with the United Auto Workers (UAW) union went on strike after a new contract with General Motors failed to go through. The workers are employed by an axle and components plant in Michigan—a key supplier for the company’s pickup trucks. The union stated in a press release that their workers are still trying to regain wages lost during the Great Recession. According to UAW, workers experienced dramatic wage reductions in 2008—dropping from $29 an hour down to $14.50. Now top hourly wages stand at $22, still below the rates of almost two decades ago. Workers are also negotiating better healthcare and retirement benefits. A quick resolution to the strike will be needed to keep GM’s production from falling behind. Estimates suggest that the company only has enough axles in stock to keep regular manufacturing going for the next two weeks.
What's New In The Tax World?
Retail sales spiked in 2026, but the reason might be tax refunds
Amid skyrocketing gas prices and inflation concerns, consumers are still spending. The first quarter of 2026 saw strong profits and sales for the retail industry. Could this become a trend for the year? Economists are not so sure. Many are linking the high spending to higher-than-usual tax refunds and an increase in “buy now, pay later” options. As tax refund money disappears, experts are expecting that other economic pressures will reduce spending. Retailers seem to feel the same way. Major brands like Ross, TJX Companies, and Walmart released cautious outlooks—reports that predict the businesses’ financial performance for the rest of the year. This points to the expectation that consumers may shift into savings mode going forward.
Just how much of an impact have tax refunds made? First, it’s noteworthy that the average refund this year was about 11.3% higher than 2025. This comes out to $3,275 for individual filers versus $2,942 in 2025. This number only factors in tax returns filed by the April 15th deadline, not those that received extensions due to natural disasters or other challenges. Part of this uptick can be attributed to Trump’s “One Big Beautiful Bill,” which included deductions for tips, overtime pay, and car loan interest. Among those who qualified for the tips deduction, the average amount saved was over $7,000. For those who qualified for the overtime pay deduction, the average amount was over $3,100.
Another factor was that, despite the tax breaks, the IRS failed to update withholding tables for employers—so many workers simply overpaid on taxes for 2025. In this case, taxpayers were given back tax money they never owed in the first place. However, the unexpected influx of cash may be what triggered higher spending. Taxpayers were expecting to make do with less, but the tax adjustments presented an opportunity to make purchases that might have otherwise been delayed.
Big retailers appear to have benefited the most from this spending spike. Ross saw one of the biggest upticks with sales jumping 17% in the first quarter. Walmart also saw a notable 7% increase in sales, while TJX Companies’ sales rose 6% and Target’s jumped 5.6%. The “buy now, pay later” option offered by main major retailers also gained popularity early this year. Estimates suggest that 15% to 17% of consumers who earn $150,000 or less used this service so far in 2026.
State-By-State Updates
Florida debates a total overhaul of their property tax system. Governor Ron DeSantis is calling for dramatic changes to how local governments in the state are funded. Property taxes currently provide the biggest share of revenue for local governments to use on everything from police and fire departments to road maintenance and public parks. Like many regions in the U.S., Florida homeowners have seen significant property tax increases in recent years. The governor’s proposal includes an expanded homestead exemption, which would allow taxpayers to exempt a larger portion of the value of their home from property taxes. State lawmakers are already requesting amendments to the proposal. One in particular would protect funds collected for school districts. Alternate versions of the bill have been put forward by the House and the Senate. A notable difference between them is that the House allows for local governments to use property tax revenue for local constitutional offices like clerks of court, election supervisors, property appraisers, and tax collectors. Both the House and Senate included permission to use these funds toward emergency medical services, fire service, law enforcement, and public schools.
Illinois may make changes to the rules for selling property tax debt. The Prairie State is considering reform for regulations on delinquent property tax sales. This is the major question: Should homeowners receive the surplus funds if their property is sold to pay off their debt? If a homeowner fails to pay their debt, the county clerk can put a lien on the property. The lien can then be sold as a tax certificate to a third party who may charge high interest rates and other fees. If the homeowner still cannot pay off the debt within their “redemption period,” the property is then seized and sold at auction. If the property is sold at a price that is higher than the debt owed, what happens to the additional money? Right now, that money simply goes to the tax buyer. The new proposal would instead give that money back to the original homeowner. This would put Illinois law in compliance with a 2023 Supreme Court decision that ruled that surplus funds should go toward reimbursing the equity the homeowner had in the property.
Rhode Island introduces their own “millionaires tax.” Lawmakers moved forward with a new proposal to phase in a 3% surtax on annual income over $1 million. The Ocean State would join Hawaii, Maine, Massachusetts, Washington, and other states that have passed or proposed special taxes on high-income residents. Previous versions of the proposal were more aggressive. The proposal by Governor Dan McKee would have imposed the full tax starting next year. Another proposal would have taxed residents earning over $640,000 annually. Rhode Island’s current version would start with a 1% tax for 2027 and gradually rise to 3% by 2029. In all, this would bring the top tax bracket to 8.99%. The change is expected to generate an additional $142 million in tax revenue each year. The tax is part of a $15.2 billion budget bill for the next fiscal year. The bill would also allow the state to override a federal tax provision that allows businesses to immediately deduct research and experimental expenses.
Minnesota extends its pass-through entity tax election through 2027. The PTET election allows the owners of LLCs, partnerships, and S corporations to pay state taxes through their businesses. This tactic allows business owners to sidestep the state and local tax (SALT) deduction limit, which is currently set at $40,400 (for 2026). Each state legislature decides whether the PTET election is available to their residents. Minnesota’s PTET election was set to expire at the end of 2025, but the state has now reupped it, retroactive to the beginning of the 2026 tax year. Most of Minnesota’s small businesses are structured as pass-through entities, according to the National Federation of Independent Business. Back in 2024, about 66,300 local businesses claimed an estimated $2.05 billion in pass-through entity tax credits. A similar number of elections are expected for 2026. The same bill also includes relief for taxpayers who missed Q1 estimated tax payments. No penalties will apply if the amount is paid alongside the Q2 estimated payment.
Tax Planning Tips
How can Trump Accounts help with tax savings?
One of the new provisions from the “One Big Beautiful Bill” Act was the creation of “Trump Accounts.” About 6 million children have been signed up for these accounts, giving them the ability to start saving money in what is essentially a new type of individual retirement account (IRA). Standard IRAs are only available to people who earn their own wages. With Trump accounts, family members, friends, and employers can all contribute funds on behalf of a child. A big draw of this program is the promised $1,000 that the federal government will deposit in accounts of children born from 2025 through 2028. A number of companies, including BNY, BlackRock, Robinhood, and Charles Schwab, have also offered matching contributions for their employees.
From a tax perspective, like IRAs, Trump accounts have the advantage of tax-free investment growth. Another possible avenue for tax savings is converting a Trump account to a Roth IRA. By transferring the saved funds to a Roth IRA, the child would owe income tax now but would enjoy tax-free withdrawals in the future. Experts suggest making this conversion when the child is somewhere between ages 18 to 25 when they are in a lower tax bracket.
The new HSA contribution limits have been set—here’s how you can plan ahead
Health savings accounts provide three key tax breaks: a tax deduction for contributions, tax-free growth, and tax-free withdrawals when used for qualified medical expenses. These accounts are available to taxpayers with an eligible high-deductible health insurance plan. Recent estimates suggest that about 31% of companies that offer employee health coverage also offer HSA-eligible plans. As of the end of 2024, 59 million Americans had an HSA.
For 2027, the IRS has set the HSA contribution limit to $4,500 for individuals (up from $4,400) and $9,000 for family plans (up from $8,750). Under the “One Big Beautiful Bill” Act, more marketplace health plans are also eligible for HSAs. Since the enhanced premium tax credit was not renewed, HSAs may now be a key way to offset the cost of medical expenses. Taxpayers may not realize that HSAs can also be a way to plan ahead for retirement. Unused HSA funds can be invested in mutual funds, stocks, or ETFs. After age 65, you can start withdrawing funds for non-medical expenses without penalty. However, HSA funds spent on non-medical needs will be subject to ordinary income taxes. The main benefits are that invested funds still receive that upfront tax deduction and the ability to grow tax-free.
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CURRENT EDITION
A Court Just Bought Your Clients More Time on Clean Energy Tax Credits Here’s How to Use It
A federal district court just struck down an IRS rule that had been closing the door on a pretty compelling tax savings opportunity available to your clients today, the Section 48E Clean Electricity Investment Tax Credit. The ruling, handed down on June 6, 2026, reinstated a key pathway that allows investors to lock in credit eligibility for large-scale wind and solar projects a pathway the IRS had tried to eliminate just last year. The window is not wide open. July 4, 2026 is still the critical deadline, and the government will almost certainly appeal. But for advisors who act quickly, this ruling creates a genuine, time-sensitive planning opportunity. Here is what you need to understand, and what you should be doing right now.
Your Summer Tax Practice Playbook: Three Moves to Make Before Labor Day
Tax Day is finally in the rearview mirror, and if you’re like many practitioners—with the phones quieter, the inbox manageable, and the September extension wave feeling comfortably far away—the temptation right now is to coast. Resist that temptation. Summer is the only stretch of the calendar when both you and your best clients have the bandwidth to think strategically; furthermore, this summer, there is a deadline-driven opportunity. In this article, I’ll walk through three moves every practitioner should be making between now and Labor Day. The first move has a hard statutory deadline of July 10, 2026. The second move is about turning your highest-value client conversations into billable advisory engagements. And third is about tending to the practice itself because a tax practice, like a garden, doesn’t survive without care.
What Every Client Should Know About Partnership Distributions
Perhaps the most misunderstood aspect of partnership taxation relates to distributions. When a partnership distributes cash or property to its partners, the tax consequences can range from completely tax-free to significantly taxable, depending on how the distribution is structured and the partners’ tax basis in their partnership interests. In this article, we’ll explore the rules governing partnership distributions and how they impact partners’ tax situations. More importantly, we’ll look at strategies to structure distributions in the most tax-efficient manner possible – because the goal is not just to understand the rules but to use them advantageously.
