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
Federal interest rates are rising for the first time since 2023. If your business has been waiting to borrow, the ideal window for 2026 may have closed. The Federal Reserve raised its benchmark lending rate last week in an attempt to offset inflation. Inflation has been creeping up for almost five years now, worsening with the war in Iran. The annual inflation rate reached 3.4% for the 12 months ending this August. By comparison, the Fed’s inflation target is just 2%. The central bank announced a 0.25% increase, bringing the flagship rate to between 3.75% and 4.00%. A major reason for the increase is to slow spending and prevent disruption in the stock and bond markets. This marks the first rate hike under Federal Reserve Chairman Kevin Warsh, the most recent Trump nominee. Though President Trump has repeatedly advocated for dramatically lowering interest rates, Warsh reasoned that lowering inflation is a priority and reminded the public that the Federal Reserve does not have the power to affect direct costs that consumers pay.
Intel tries to cut a deal to bring more memory chip manufacturing to the U.S. The well-known technology manufacturer is in talks with SK Hynix, one of the world’s largest high-bandwidth memory (HBM) manufacturers. HBM and other memory chips are essential for A.I. applications, which require massive amounts of memory. The South Korea-based company is considering leasing part of Intel’s Ohio facility to make its chips in the U.S. for the first time ever. Another possibility is for the two companies to form a joint venture. If a deal goes through, this would be a major win for Intel as they look for marquee customers to help boost their manufacturing business. Both Intel’s and SK Hynix’s stock rose after news of these discussions broke. Even if a deal is not approved, SK Hynix has plans to shift stateside. The company broke ground on its first U.S. facility in August and expects to be operational by 2028. SK Hynix’s stock has skyrocketed by 400% over the past year, and the company announced plans to double its capacity over the next five years.
A new cryptocurrency bill fails to pass the Senate, causing a dip in Bitcoin and similar stocks. A 600-page bill called the Clarity Act would have established the first legislative framework for crypto in U.S. history. The crypto industry has long been lobbying for clearer regulations, but opponents of this particular bill felt that the proposed rules were too lenient and lacked the necessary safeguards. A major obstacle in getting the needed votes was President Trump’s own cryptocurrency profits. The president has amassed over $1 billion from crypto businesses launched shortly before his inauguration. A number of Democrats argued that the Clarity Act did not restrict public officials—those who determine cryptocurrency policy—from trading crypto themselves. Since Trump returned to the White House, he has installed more officials with a crypto-friendly outlook in financial regulatory agencies, but Congress appeared to be much more divided. With midterm elections on the horizon, a new cryptocurrency bill is not likely to make an appearance this year.
What's New In The Tax World?
Will the current tax laws help or hurt Republicans going into the midterm elections?
If you thought by the end of 2026 we’d be done talking about the “One Big, Beautiful Bill” Act (OBBBA), you’d be wrong. As the November elections draw near, Democrats are highlighting the parts of Trump’s signature bill that have negatively impacted the cost of living. For instance, New York Senator Kirsten Gillibrand has spoken out against the changes made to the Supplemental Nutrition Assistance Program (SNAP). Starting on October 1st, the federal government will only cover 25% of administrative costs, instead of 50% as it stood before. State and local governments are facing a sharp uptick in expenses if they plan to keep SNAP benefits in place. According to Senator Gillibrand, New York counties will face $168 million in additional annual costs to make up for the gap.
Meanwhile, Republican candidates have largely defended OBBBA as making necessary tax cuts and tightening eligibility requirements for government aid. One state senator from New York argued that the rising cost of living has more to do with local and state policies, especially New York’s energy policy. The Empire State recently issued energy rebate checks of up to $200 to lessen the impact of skyrocketing utility bills.
Similarly, the war in Iran and its impact on prices continues to be a major focus in this year’s elections. Gas prices across the U.S. have gone up by 50% since the Iran war began back in February. As of September, gas prices reached their highest level of the year, with a nationwide average of $4.46 per gallon. At least six states currently have an average gas price above $5, including Alaska, California, Hawaii, Nevada, Oregon, and Washington. Looking to provide consumer relief, numerous states have either suspended or reduced their gas taxes. President Trump recently floated the idea of doing the same for the federal gas tax, but this would require Congressional approval.
While reduced government benefits and the war in Iran could hurt Republican hopefuls in November, other tax changes could provide a boost in the eyes of voters. GOP candidates are reminding voters of the tax perks extended by the OBBBA like lower tax brackets and increases to the standard deduction, the bigger child tax credit, and the estate and gift tax exemption. The OBBBA also introduced a new deduction for tips that averaged over $7,000 last year and a deduction for seniors that averaged over $7,500.
State-By-State Updates
Californians are split over the proposed “billionaires tax.” A slim 52% majority of voters said they plan to vote “yes” Proposition 40 as November inches nearer. The proposal would introduce a one-time 5% state-level tax on billionaires living in California as of January 1st, 2026. This could include any individuals, married couples, or a trust worth over $1 billion. According to this definition, there are about 250 billionaires in the state of California who would be subject to this tax. If this tax is passed, the revenue would go toward the Medi-Cal health program for low-income residents. The state’s healthcare program is facing a major funding gap since Congress made deep federal healthcare cuts last year. However, the billionaires tax could be nullified this November if voters approve Propositions 41 and 42 instead. Prop 41 would make any new taxes subject to the state’s existing spending limit. Prop 42 would ban taxes on financial assets such as stocks and other personal property, with the exception of real estate.
Delaware is “going Hollywood” with its own film tax credit program. The First State just introduced the Delaware Entertainment and Production Tax Credit. This $10 million program offers a 30% transferable tax credit available to eligible businesses. This could include film, television, commercials, music videos, esports, and video game productions—with the caveat that they must spend more than $100,000 in Delaware within a 12-month period. The $100,000 threshold is meant to be accommodating to smaller productions and independent filmmakers. Productions must also be able to demonstrate that they are at least 70% funded and are prepared to begin filming within 120 days of their application date. Delaware officials have touted the variety of filming locations available throughout the state from cities to small towns to farms to beaches all within 1.5 hours of one another. New York City and Washington, D.C. are also both relatively close by. Applications can be found at de.gov/film
New Hampshire legislators go to battle over income taxes, sales taxes, and property taxes. Democratic Representative Ellen Read stirred up fierce debate with a new proposal: an income tax on the wealthy and a sales tax on certain luxury goods. New Hampshire does not currently have a state income tax, so the introduction of any income tax—even if limited to high-income earners—would be the first of its kind. Similarly, the Granite State does not have a statewide sales tax on everyday goods. Read argued that the income tax would only apply to those earning a high six-figure income and the sales tax would still be below neighboring states. Part of Read’s objective is to lessen the burden of property taxes. New Hampshire’s property tax currently stands at 1.5%—the fifth highest in the nation, just below New Jersey, Illinois, Connecticut, and Vermont. Because the state relies so heavily on property tax, lowering these taxes can prove challenging, and funding for public health and other social programs often bears the brunt.
Will Washington state’s new wealth tax survive the November ballot? Washington is currently planning to implement its new tax in 2028, which would place a 10% levy on income above $1 million. Estimates suggest that less than 1% of the state’s total population would have to pay the tax, and the vast majority live in Seattle or its surrounding suburbs. However, a new initiative on this year’s ballot would repeal the law before it even begins. What’s more, the initiative would permanently ban all state and local taxes. Opponents of the tax have argued that a wealth tax will only cause high-income earners and major job creators to move to a lower-tax state. A new poll found that less than 2% of wealthy Washingtonians would move. The Washington State Budget and Policy Center found that even with the new tax the tax rate for millionaires in Washington would still be below the national average. If the millionaires tax survives, the revenue will go toward public schools, child care, health care access, and small business tax relief.
Tax Planning Tips
Clean energy tax credits have become a buyer’s market
Clean energy tax credits do not just benefit the company that earned them—a major perk built into these programs is the option to sell tax credits for a profit. Since the Inflation Reduction Act of 2022, clean energy developers have been able to sell their tax credits to companies that want to lower their tax bills but that do not qualify for clean energy credits themselves. However, developers are now generating credits faster than companies are buying them. One report found that about one in four Fortune 1000 companies buy clean energy credits. These companies are now in a better position to negotiate pricing than ever before. Solar and wind production credits are selling at the highest prices, while investment-based tax credits for solar, battery storage, and biogas are selling for less—partly because of uncertainty over new federal rules. Without clarity on these rules, credits cannot be insured, so buyers are taking on more risk if they choose to purchase them.
The IRS rolls out a new official Tax Compliance Report
Need to prove that you’re up-to-date on your federal taxes? Taxpayers can now request a digitally authenticated report through their IRS Individual Online Account. This report includes key tax compliance information without revealing any sensitive data like annual income, filing status, or dependents. The report features:
- Compliance status: compliant, noncompliant, or compliance issue
- Tax filing history
- Any federal taxes owed
- Any recent late filings, late payments, or other compliance issues
Why might you need to request a Tax Compliance Report? If you are applying for a job, a loan, a government benefit, or similar services, you may need to prove your compliance status. Because the report includes an IRS-issued digital certificate, organizations can more easily confirm that the report is authentic. If you need to share your report, simply send along the original PDF, which will include the embedded digital certificate. Keep in mind that if you recently filed a tax return or made a payment, those updates may not appear on your report immediately. Payments take about two weeks to post, and tax returns can take between four to six weeks.
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CURRENT EDITION
D&A Planning After the One Big Beautiful Bill Act
After 2021, whether an expenditure was deducted currently or recovered through depreciation often affected timing, but it typically did not create a meaningful advantage from a Section 163(j) perspective. The restoration of depreciation, amortization, and depletion addbacks in the computation of adjusted taxable income (“ATI”) has changed that analysis and created a new opportunity for taxpayers with actual or anticipated interest limitation exposure. As a result, taxpayers should reconsider whether certain expenditures that historically may have been deducted immediately can instead be capitalized into depreciable or amortizable property in order to improve their Section 163(j) profile.
What To Watch Out For With Family Limited Partnerships
The story of Anne Milner Fields is one of the reasons family limited partnership (FLP) opinions appeal to me so much. Born in 1925, she grew up in a small town in Texas and then moved to Dallas where she got a job as a secretary and met prominent oil man Bert Fields Sr. They married, and she lived the life of a socialite until he died in 1963. She consciously turned herself into a businesswoman, going so far as to take accounting courses. Having no children or grandchildren, she took her grandnephew, Bryan Milner, under her wing, paying for his education and mentoring him. In 2010, the year she turned 85, she made him executor of her estate and gave him a general power of attorney. He was also set to inherit the residue of her estate after some specific bequests. I really think we have the elements of a novel or a TV miniseries here, but we are tax people, so we are going to focus on how Anne’s estate tax was handled after she passed. It didn’t go well.
Tax Research in an AI World
It has never been harder to do quality tax research than at any time in my 43-year career in tax accounting. In the 1980s, when I was part-time in the industry, there was no internet. Since I was part-time, I ordered Publications 1132, 17, and 334. The rest I found at the library. A few hearty souls might even remember when the post office had stacks of tax forms for the public. Once I went full-time for the 1989 tax season I needed more resources. CCH was my tool of choice. I still used IRS publications and the library. My handy reference guide of choice was, and still is, the QuickFinder. I never used TaxBook much, but it is another good resource for general answers. Then came the internet. The promise was that we would have the world at our fingertips. And for the large part we did, only we forgot some things we would rather keep at an arm’s length. The internet slowly allowed us to replace rooms in our office filled with tax guides and forms with online resources. Law offices and accounting firms often wrote tax articles on narrow tax subjects. Research was easier than ever.
Then came AI.
