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 stock market leaves investors reeling after a rollercoaster week. New political updates set off a tidal wave of stockholders selling their shares in anticipation of a possible trade war and impending federal government shutdown. Amid the mayhem, the S&P 500 fell 1.4%, coming down more than 10% since hitting a record high in February. The Nasdaq Composite also dropped 2%, and the Dow Jones Industrial Average dipped by 1.3%. This comes after President Donald Trump threatened a 200% tariff on European wines and other alcoholic products in response to the EU’s announcement of a tariff on U.S. whiskey. Stocks saw an uptick after the latest inflation data revealed that price increases had slowed significantly. The shift in inflation may also mean that the Federal Reserve will consider new interest rate cuts in the coming weeks.
- Will Dr. Oz’s lack of SECA taxes prevent him from taking the helm at the Center for Medicare and Medicaid Services? Dr. Mehmet Oz became well-known for his regular guest appearances on The Oprah Winfrey Show, speaking on medical and health issues. The former surgeon also ran for the Senate in Pennsylvania in 2022 but lost the race. Oz is now President Donald Trump’s nominee to oversee the CMS and was recently scrutinized for possible underpayment of Medicare and Social Security taxes. A memo from within the Senate Finance Committee stated that Oz paid no SECA (Self-Employed Contributions Act) taxes in 2023 and very low amounts in 2022. Oz has argued that he is not liable for these self-employment-related taxes because he is set up as a limited partner of the media company Oz Property Holdings LLC.
- The IRS replaces its chief counsel as workforce cuts loom on the horizon. William Paul was recently removed from this role, purportedly due to disagreements over the Department of Government Efficiency’s push to gain access to personally identifiable information (PII) housed at the IRS. Paul has been replaced by Andrew De Mello, a lawyer in the Chief Counsel’s Office. Meanwhile, IRS employees are anticipating major layoffs in addition to the 7,000 probationary employees who were let go this February. Between layoffs, buyouts, and attrition, some have projected that the IRS staff will shrink down as low as half its previous size. Government officials at the Treasury Department, the Social Security Administration, and other agencies have also spoken against potential DOGE access to sensitive systems and data.
What's New In The Tax World?
In the push to renew the Tax Cuts and Jobs Act, SALT could cause the stalemate
Enacted in 2017 during Trump’s first administration, a number of the TCJA tax provisions are set to expire this year without congressional action. One provision is the cap set on state and local taxes (SALT). Under TCJA, taxpayers who itemize their deductions cannot deduct more than $10,000 of taxes paid to state and local governments. This includes income and property taxes and is especially relevant for residents of high-tax states like California, New Jersey, and New York. Since the SALT deduction was unlimited before TCJA, if Congress does not renew the cap, taxpayers will be able to write off all state and local taxes starting next year.
Trump’s current stance on the SALT cap remains somewhat undefined. Though he originally enacted TCJA, in recent interviews, the president has spoken about reforming or restoring SALT deductions. However, even if lawmakers were to agree on the issue, this is easier said than done. The SALT cap provided a significant amount of tax revenue to offset the losses created by other TCJA tax cuts. Given the government’s limited budget, lifting the SALT cap entirely would make it more difficult to fund the renewal of lower personal income taxes, the expanded child tax credit, and the 20% qualified business income deduction, which amount to trillions of dollars in tax breaks.
One possibility is a revised version of the SALT cap. A current proposal would set the limit at $20,000 for married couples filing jointly—a change that would cost about $170 billion. Others have proposed a raised SALT cap for lower-income taxpayers or limiting SALT deductions for second homes. Democratic leaders have also suggested letting the cap expire but increasing a different tax, such as the corporate tax rate.
Unlike some other tax provisions, opinions on whether to raise or eliminate the SALT cap are not expected to fall along party lines, since both Republicans and Democrats represent the states most impacted by this law. However, SALT is structured in the final tax bill could determine how likely it is to be quickly approved.
State-By-State Updates
- Connecticut lawmakers are weighing a new retail delivery tax. The proposed tax would impose a 28-cent levy on deliveries made by motor vehicles. This would apply to any goods that are normally subject to state sales and use taxes. If the tax is approved, retailers would have to file quarterly returns. The state Transportation Committee also considered a tax on peer-to-peer car sharing lasting up to 30 days. Supporters of the bill argue that funds are needed for the state’s infrastructure and the Special Transportation Fund. Opponents of the tax argue that the additional costs will stretch small businesses and consumers too much at a time when expenses are already high. Similar bills were considered in other states, including Hawaii, Indiana, Louisiana, Maryland, Mississippi, and Nebraska, all of which ultimately rejected the tax.
- Delaware seeks to expand property tax benefits for senior citizens. For taxpayers to qualify for the state’s senior property tax credit, they currently have to meet an age requirement and a residency requirement. Residents aged 65 or older who have lived in Delaware for at least 10 consecutive years can claim a tax credit to cover up to 50% of their school property taxes (with a cap set at $500). If the new bill passes, the required period of residency would drop down to three consecutive years starting in tax year 2026. County governments have also been seeking ways to alleviate tax burdens on seniors. In Sussex County, lawmakers upped the Real Property Tax Exemption for Senior Citizens from $12,500 of the assessed value to $229,000. Seniors with an annual income below $6,000 for single filers (or $7,500 for married couples) can qualify if they have lived in their home for at least five years.
- Could Indiana be in for a property tax system overhaul? A proposal put forward by Representative Jeff Thompson would change how property taxes are calculated. Under this plan, certain deductions for homesteads would be revised, and the threshold for business personal property taxes would drop. The new system focuses on preventing future tax increases while also protecting local governments from losing revenue. Thompson’s plan would result in $4 million in decreased funding for schools—the lowest of any recent tax proposal. A comparable plan put forward by Governor Mike Braun would cut over $500 million in school funding, but the average homeowner would see much more of a tax decrease. A major critique of Thompson’s plan is that the changes would offer very little relief to homeowners.
- Texas homeowners struggle with heavy fees imposed on late property tax payments. In Texas, private collection companies are allowed to charge late fees of up to 20% on property tax bills that are not paid by the deadline. This is on top of the taxes owed, state-imposed penalties, and interest. Under state law, delinquent property taxes face a 6% penalty that increases by 1% for every month the sum is unpaid (capped at 12%). Interest also increases by 1% each month until the bill is paid. This has made tax collection an especially profitable business in the Lone Star State. In 2023, law firms that collect delinquent taxes earned approximately $184 million in revenue. Many local governments outsource tax collections to these firms because it is free for them to do so. The state currently has the seventh-highest property taxes in the U.S., much of which funds local counties, cities, and school districts.
Tax Planning Tips
Senior citizens could still reduce this year’s tax bill with these best practices. Retirees in particular may find it challenging to navigate the new factors that play into their taxes, whether that is Social Security income, retirement account withdrawals, or available tax deductions. By reviewing this simple checklist, seniors can catch possible mistakes that could end up unnecessarily costing them.
First, for some retirees, Social Security benefits may be taxable. This depends on whether their combined income—50% of Social Security income, any other income, and investments—exceeds certain thresholds. Do the math in advance to figure out if you need to make adjustments to your financial setup. Second, taxpayers aged 73 or older are required to take minimum distributions (RMDs) if they have a traditional IRA or 401(k). Seniors who fail to do so by the April 15th tax deadline could face penalties of up to 25% of the RMD amount.
Taxpayers aged 65 or older may also be eligible for unique tax credits and deductions. The standard deduction is higher for senior citizens, for instance. Seniors may also be able to claim a deduction for medical expenses or receive a tax credit through a state or local property tax relief program. Some may also qualify for the Credit for the Elderly or the Disabled.
Finally, those who work part-time or more may still be able to make contributions to their retirement accounts. Taxpayers aged 50 or older can contribute up to $7,000 to a traditional IRA this year. Employer plans, such as 401(k)s, may also allow for catch-up contributions. This reduces your taxable income and overall tax bill.
Which could benefit your business most: the standard mileage tax deduction or the actual expenses mileage deduction? Small business owners and self-employed entrepreneurs can especially benefit from familiarizing themselves with any and all tax deductions available to businesses. One often-forgotten deduction is for the business use of a vehicle. Daily commutes do not qualify, but if you use a vehicle (even one that you own privately) for deliveries or traveling for client meetings, this can be deductible. The key is to keep records of all expenses related to travel including miles traveled, travel dates, parking fees, and road tolls.
Once you have this data on hand, the next step is to choose a calculation method—either per-mile or based on the actual cost of using your car. The standard mileage deduction is simpler to calculate and is based on the number of business miles driven and the current IRS mileage rate. For tax year 2024, taxpayers can deduct 67 cents per mile, and for tax year 2025, the deduction rate increased to 70 cents per mile. The actual expense mileage tax deduction requires you to determine the cost to operate the car by totaling expenses for gas, oil, repairs, insurance, registration, depreciation or lease payments, and any other fees associated with owning and maintaining the vehicle.
Be sure to review the IRS’ official pages on the standard mileage deduction and actual expenses deduction before filling out your tax return.
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Breaking Down Tax Benefits for Higher Education
With the rising cost of higher education and greater reliance on student loans, taxpayers are looking for every opportunity to ease the financial burden of earning a degree. Fortunately, several higher education tax benefits are available to help offset the high cost of tuition, student loans and other education-related expenses. However, certain eligibility requirements — such as income limits and tax filing status — often trip up taxpayers along the way. Understanding the nuances of these tax benefits for higher education can ensure your clients take full advantage of available tax savings.
Don’t Forget About the Refund Statute Expiration Date
Have you ever found an amazing strategy for a new tax prospect that they missed in previous years? Even worse, have you realized that you overlooked a client’s eligibility for a credit when you prepared their tax return? Not only that, but you had them make an unnecessary estimated tax payment. Well, it may not be too late for your client and prospect to take advantage of those credits for the year in question. The fate of your client isn’t sealed after filing their tax return. The IRS gives taxpayers a set amount of time to make a claim for a credit on their return. The IRS calls the date that this time sunsets the Refund Statute Expiration Date.
Syndicated Conservation Easement Promoters Continue to Lose In Tax Court
The Tax Court docket has been inundated with syndicated easement cases. In 2024, the IRS was mostly winning. That trend has continued in 2025. So far there have been three IRS wins. Here they are.