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
Tariff refunds hit a whopping $100 billion—but consumers may not see the benefits. As of July, the Trump administration has paid out well over half of the $166 billion owed to U.S. businesses. These specific tariffs were overturned by the Supreme Court earlier this year. The court determined that the president could not use the International Emergency Economic Powers Act to impose tariffs without the approval of Congress. Now companies ranging from small businesses to global giants can apply for tariff refunds. The biggest checks have gone to the biggest brand names: Amazon reported a $600 million refund, Apple received a $2.2 billion refund, and Walmart is expecting $2.4 billion. Many of these companies are promising to use this money to lower prices in the future, but others are reinvesting it into the business itself. Unfortunately for small businesses, these refunds are sometimes coming too late to offset the negative impact of the tariffs. Many entrepreneurs had to lay off employees or go into debt over the past year to keep their businesses running.
Inflation drops to 3.4% in the U.S. as gas prices ease up. Between June and July, gas prices fell by 2.9%, providing relief to consumers and businesses alike. If peace talks continue to progress between the U.S. and Iran, analysts predict that global oil prices will drop even further. As fuel costs went down, so did prices across other areas. In July, grocery prices decreased by 0.1%, and housing prices started to slow, though the shelter index still rose by 0.1% last month. This decline in inflation could be good news for businesses looking to borrow and expand their operations. Earlier in August, investors predicted that the Federal Reserve would raise interest rates by the end of the year, but that likelihood decreases as inflation goes down. Unfortunately, pay rates in the U.S. have not been keeping pace with inflation. The latest jobs report showed only a 3.2% pay gain since this time last year.
Monster Beverage lives up to its name with monstrous profits this year. The maker of popular energy drinks surpassed $2.5 billion in net sales for the second quarter of 2026. This is an all-time sales record for Monster Beverage Corporation. On top of that, Monster saw a gargantuan first quarter, reaching $2 billion in net sales. The company’s success can largely be chalked up to its popularity overseas. Though the drink manufacturer is based in California, the U.S. and Canada saw just a 12% uptick in sales since last year. Comparatively, Monster saw a 27% increase in the region of Europe, the Middle East, and Africa. Numbers rose even higher in Asia Pacific and Latin America, which saw increases of 36% and 56% respectively. This global success is significant given the rising fuel costs this year and the impact of tariffs on the cost of aluminum to make their canned beverages. Monster has also benefited from the heft of its global distribution partner, the Coca-Cola Company.
What's New In The Tax World?
President Trump eyes a capital gains tax cut as a possible midterm election strategy
As Republican candidates angle for votes going into November, President Trump is considering calling on Congress to introduce new tax cuts. Given the rising cost of living and ongoing war in Iran, the president is looking for ways to appease voters who are expressing frustration with the Trump administration’s economic decisions. At the top of the list is a change to the federal capital gains tax. The proposal would index capital gains—in other words, it would adjust the tax rates for inflation. Exemptions for certain home sales have also been discussed.
How would indexing capital gains amount to a tax cut? If inflation goes up after an investor purchases stock, indexing would automatically adjust the original purchase price to reflect that—which also means they would owe less in taxes if they sold the stock at that point. This idea has been floated by Republican lawmakers in the past, and others have even pushed for Treasury Secretary Scott Bessent to implement it through executive action.
However, a number of lawmakers are hesitant to approve more tax cuts as the federal deficit is already projected to surpass $1.8 trillion by the end of the year. A major contributor to the growing deficit is the $100 billion in tariff refunds the federal government must pay out. If inflation indexing was implemented, it would decrease federal tax revenue by an estimated $200 billion. That number would likely rise even higher if the change was implemented via executive action instead—adding up to $950 billion to the national deficit by 2035.
A different proposal would instead focus solely on taxpayers selling their primary residence. Instead of affecting all capital gains, this change would index a home’s basis with inflation. A tax break already exists that exempts up to $250,000 from the sale of a primary residence from capital gains tax. The benefit doubles to $500,000 for married couples filing jointly.
Some have argued that neither of these proposed tax cuts will make a difference for the average taxpayer. According to a 2022 study, only 10% of homeowners had capital gains that exceeded the tax exemption, and many taxpayers in that 10% were worth over $1 million. Similarly, the average taxpayer is less likely to benefit from indexing capital gains, since the top 1% of income earners receive between 50% to 70% of all capital gains.
State-By-State Updates
Can California’s wealth tax overcome a billionaire opponent? Residents of the Golden State will vote on Proposition 40 this November, which imposes a one-time 5% tax on billionaires’ assets. If the tax passes, 90% of the revenue would go toward healthcare, and 10% would go to education and food assistance programs. However, the tax has a number of formidable opponents, including billionaire and Google co-founder Sergey Brin. Brin has donated $102 million to a group called Building a Better California that is putting two counter-proposals on the ballot. Proposition 41 would require audits for new state taxes and ban taxes that exempt their revenue from a state spending limit. Proposition 42 would prohibit retroactive taxes on past earnings, as well as taxes on individually-owned assets and other personal savings such as retirement accounts. If either of these propositions are approved, they would essentially invalidate the wealth tax.
A Colorado county gives a new data center a $19 million tax break. Douglas County, home to the Denver metropolitan area, is taking measures to bring in business from IT infrastructure provider Flexential. The county has approved a 100% rebate on business personal property tax for the next 35 years for Flexential’s new data center. This move is expected to save the company $19 million in taxes. Flexential will continue to pay regular property tax and state-level business personal property tax. In Colorado, business personal property tax applies to business assets exceeding $56,000. However, a number of local taxpayers have spoken out against the tax break—and the building of a data center in their area. Residents are concerned about water usage, noise, and potential pollution. Some also oppose the size of the tax break, since the data center is only expected to create 16 local jobs.
Trump may pursue a federal ban on New York City’s “pied-à-terre tax.” The president recently spoke out against the new tax on non-primary residences in the city. This tax applies to secondary homes worth over $5 million and to condos and co-ops worth over $1 million. Mayor Zohran Mamdani and New York Governor Kathy Hochul advocated for the tax, and it was passed by the New York State legislature this spring. However, a Staten Island judge recently blocked the new tax—a decision that was quickly appealed by city officials. Trump, among others, has predicted that raising taxes on the wealthy will cause high-income earners to flee the city and relocate their businesses. Mamdani and advocates of the tax point to the $500 million the tax is expected to raise that will go toward education, public safety, and similar initiatives.
A Texas county approves a tax rate increase and places a new tax to address homelessness on the November ballot. Dallas County commissioners just approved the first property tax increase since 2010, upping the rate to $0.2246 for every $100 in property value. The new rate takes effect for fiscal year 2027. The county also introduced a new tax proposal that asks voters to approve a five-year contract with the non-profit Housing Forward. Housing Forward works with a network of over 150 public, private, and nonprofit organizations to address the problem of homelessness. If approved, the tax would go toward homelessness outreach services, housing support, and mental health treatment. Due to budget concerns, a number of other initiatives were removed from the proposal, including crisis intervention training for law enforcement and shelter and support services for incarcerated individuals. By limiting the proposal, the county lowered the new budget to $1.59 billion.
Tax Planning Tips
What does the “no tax on Social Security” provision actually do?
A year after the passing of President Trump’s “One Big Beautiful Bill” Act, the tax provision once promoted as a Social Security tax cut functions differently than described. Better named as a “deduction for seniors,” the provision offers a $6,000 deduction (or $12,000 for married couples filing jointly) on top of the current $1,600 additional standard deduction for seniors. To qualify, the taxpayer must be age 65 or older by the end of the tax year. The enhanced benefit is available whether the taxpayer itemizes their deductions or takes the standard deduction. However, two notable limitations apply: the deduction phases out for taxpayers earning above $75,000 in modified adjusted gross income (MAGI) and is only effective from 2025 through 2028. Because of these parameters, the Tax Policy Center estimates that fewer than half of seniors will benefit.
For seniors who are still facing tax on Social Security benefits, what options are available to lower those taxes? One route is to diversify your retirement plan. Rental property or gold IRAs are two examples of alternative investments that can lessen your reliance on Social Security.
New guidance is available for how employers can contribute to Trump accounts
The Treasury recently released information on how employer-sponsored programs can engage with Trump Accounts—the tax-advantaged investment accounts now available to children under 18. One benefit of the program is the option for employees to make pre-tax contributions on behalf of their dependents. Additionally, employers can contribute up to $2,500 per year per employee. Because these contributions are excluded from an employee’s gross income, they are tax-free for the employee. Because they count as a fringe benefit, they are tax-deductible for the employer. Businesses that are interested in setting up a contribution program must take the following steps:
- Maintain their own written plan document
- Follow certification procedures the confirm the beneficiary’s age and dependent status and validate that the account is a Trump Account
- Provide notices and annual statements to employees
- Provide reporting to the Trump Account trustee
The Trump administration reports that over 50 companies have committed to employer contribution programs thus far.
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CURRENT EDITION
When Your Client’s World Is Bigger Than the U.S.
A lot of client meetings still start with the same assumptions: W-2 in a U.S. state, mortgage nearby, a 401(k), maybe some RSUs, and a college-savings plan. Yet many of those “simple” clients now own an apartment in another country, freelance for a foreign company, or have parents wiring money from overseas. The tax code does not see those details as background color; it treats them as organizing facts. This is where citizenship, residency, and domicile quietly step onto center stage. For planners, the challenge is not memorizing every cross-border rule. It is knowing when a client is no longer “just domestic” and shifting your planning framework before you stumble into penalties, double taxation, or blown opportunities.
Are You Committing Filing Status Malpractice?
Consider this article your periodic reminder that, for married taxpayers, filing jointly is an election and not the default (and certainly not the only) filing status option. It is important in a busy practice to remember to offer this option to clients who may benefit from filing separately, even if they don’t ask.
Syndicated Easements: Fresh IRS Offer and the Perils of Post-BBA Gamesmanship
The IRS has issued a statement about a new settlement offer that is going out for conservation and historic preservation easement disputes. It is similar to previous offers, but there is one big difference. The partnership will not have to make a payment at the time that it accepts the offer. Other than that, it is similar to the deal offered in 2020. Taxpayers get to deduct what they are out-of-pocket as an ordinary deduction and are subject to a 10% penalty. In general, the out-of-pocket donation might be around 20% to 25% of the claimed charitable deduction. The Tax Court, on average, has been allowing 6%, although results vary. There is usually a 40% penalty in the decided cases.
