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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Check out what’s happening all around the world of tax!
In The Headlines
- Steph Curry’s collection of brands hit $173.5 million in revenue last year. The basketball-great is CEO of Thirty Ink, a conglomerate that owns Gentleman’s Cut bourbon, Underrated Golf and Basketball, and Unanimous Media. The mission underlying all of Thirty Ink’s branches is to “elevate the under.” This is expressed through hiring diverse writers through his media company and seeking to partner with minority-owned businesses. Much of Thirty Ink’s 2024 revenue came from Curry Brand, a partnership with Under Armour. However, Curry is looking to level up his other enterprises, such as Unanimous Media, which is set to release its first feature film next year about a billy goat that plays basketball. The media company launched in 2018 when it formed a first-look deal with Comcast’s NBCUniversal.
- The U.S. services industries go from a driving force to a shrinking sector. The “service side” of the economy spans everything from education and healthcare to hospitality and food services—companies and organizations that provide services rather than creating products. Together, these industries typically make up a large percentage of national GDP. Over the past several years, the services sector has fueled economic expansion, but this spring, the sector began to contract. The services index of the Institute for Supply Management indicates that these industries dipped in May: agriculture, forestry, fishing, and hunting; construction; finance and insurance; management of companies and support services; retail trade; transportation and warehousing; and wholesale trade. Analysts say that the global trade wars is likely the main catalyst for this change, resulting in higher supply costs and hiring freezes.
- As tariffs hike prices, consumers are seeking relief at stores like Dollar General. The dollar store chain saw a 2.4% increase in same-store sales during the last quarter. This increase in revenue was spread across all product categories from consumables to home goods and apparel to seasonal specialty items. Notably, Dollar General also drew in the highest percentage of higher-income customers in four years—since the COVID-19 pandemic. New customers are visiting dollar stores more often, spending more money, and purchasing more discretionary items. How is Dollar General continuing to provide lower costs with the tariffs currently in place? The retailer is focusing on sourcing products from a wider range of countries and reducing its reliance on China as well as negotiating prices and finding different products to keep its bottom line stable.
What's New In The Tax World?
Will Congress deliver on tax reform by President Trump’s July 4th “deadline”?
The colloquially-named “Big, Beautiful Bill” (BBB) was passed by the U.S. House of Representatives by a single vote and is now under debate in the Senate. The 1,000-page-plus package would extend the expiring tax cuts introduced during Trump’s first presidential terms and add new ones, including the popularized “no tax on tips and overtime pay” idea. Cuts would be made to Medicaid, food stamps, and clean energy initiatives while funds for border security, deportations, and national security would be increased.
The Republican-led bill is expected to face aggressive pushback from Democrats who have objected to the cuts to social services. Some GOP senators have also already voiced their objections to the bill and what they would need to see changed for the BBB to secure their vote. President Trump has publicly begun applying pressure to the Republican holdouts, such as Kentucky Senator Rand Paul. Paul has long campaigned on the value of reducing government spending and is advocating to remove one key element from the BBB: $4 trillion increase to the national debt ceiling. In fact, the July 4th deadline named by President Trump is not arbitrary—the Treasury Secretary has issued a warning that the U.S. will run out of money to pay its bills on that date if Congress does not raise the debt ceiling. Senators Ron Johnson of Wisconsin, Rick Scott of Florida, and others have voiced similar concerns, saying that the proposal to reduce spending by $1.5 trillion barely scratches the surface of what is needed.
Other Republican senators pushing for edits include Senator Susan Collins of Maine, Lisa Murkowski of Alaska, and Josh Hawley of Missouri who are concerned about the bill’s changes to Medicaid. Under the BBB, the government healthcare program would have a new work requirement for recipients without children, without disabilities, and who are below age 65. The bill also introduces a potential copay of up to $35 for Medicaid services and freezes states’ provider tax rates, which help fund many rural hospitals.
The clean energy tax credits introduced under former President Biden would get the axe from the BBB, but GOP Senators Lisa Murkowski, John Curtis of Utah, Jerry Moran of Kansas, and Thom Tillis of North Carolina wrote a letter to the Senate majority leader advocating against repealing all the current credits, fearing that this would cause economic damage and weaken America’s position as a global energy leader.
Lastly, some Republican Senators are opposing the changes suggested to the cap on state and local tax (SALT) deductions. The higher SALT cap proposed by the BBB caters to high-tax states, none of which have Republican senators. However, if the more generous SALT cap is removed, the revised bill may not receive approval from the House on the second go-round.
State-By-State Updates
- Illinois’ grocery tax is set to expire in 2026—but the mayor of Chicago is pushing back. Just last year, state lawmakers approved a movement to eliminate the 1% grocery tax, though municipalities can still opt to impose the tax locally. So far, over 200 cities and towns in Illinois have introduced their own grocery sales tax, and Chicago Mayor Brandon Johnson is advocating to do the same. Since the statewide tax disappears as of January 1st, 2026, the city of Chicago would need to pass its own ordinance and submit it to the state by October 1st of this year for tax collection to continue without interruptions. If the tax does lapse on both a state and local level, Chicago will lose over $70 million in revenue in 2026 alone. Overall, the city is already facing a $1.1 billion budget deficit for 2026.
- Ohio considers a flat income tax rate and a new financing plan for the Cleveland Browns’ stadium. The state Senate is weighing a new proposal that would make dozens of changes to Ohio’s latest two-year spending plan. The process of creating a new budget starts with a draft from the governor, which is sent to the House for edits, and finally passed along to the Senate who can approve it as-is or edit it and send it back through the approval cycle. The bill currently being considered by the Senate would create a flat 2.75% income tax rate for all taxpayers who earn more than $26,050 per year. This shift away from income-based tax brackets would cost the state about $1 billion in revenue over the next two years. Ohio’s homestead exemption property tax relief program would also be updated so that homeowners can exempt $42,000 of the value of their home from taxes. Additionally, the bill would allow the state to sell $600 million in public bonds to fund a new football stadium.
- Oregon’s current state health plan could be in jeopardy if the “Big, Beautiful Bill” becomes law. The federal tax bill would reduce Medicaid funding, partly through a mandate that says all recipients must work or participate in community service for at least 80 hours each month. The state estimates that between 100,000 to 200,000 Oregonians could lose their health insurance, even due to lapses and errors in the new paperwork required for proof of work. Oregon currently relies on the federal government for $11 billion each year, which covers 75% of the Oregon Health Plan. About a third of the state’s residents rely on this Medicaid program, including children, seniors, and others with caregiving needs. Oregon is also one of a majority of states that tax medical providers to raise revenue for state Medicaid programs—money that is typically matched by federal dollars. The BBB would freeze these tax rates, further reducing funding options.
- Tennessee’s business tax refund is called into question for lack of transparency. This year, local companies received a combined $1.5 billion in tax refunds. The Department of Revenue website currently lists the 60,000 companies that received a refund, but the Tennessee Coalition for Open Government has expressed dissatisfaction with the lack of financial information, such as the exact amounts the businesses received. Currently, the law requires that the companies be sorted into three categories based on their refunds: less than $750, between $750 and $10,000 and more than $10,000. The advocacy organization also requested that the list be available for more than 30 days. Tennessee lawmakers approved the business tax refund just last year along with cuts to the state franchise tax and excise tax.
Tax Planning Tips
The Child Tax Credit would face a new restriction under the federal tax bill: What could this mean for families? The “Big, Beautiful Bill” includes a requirement that the taxpayer and their spouse have Social Security numbers in order to claim the credit for their children. This would mean that children with “mixed-status” parents—say, one who is a U.S. citizen and one who is not—or undocumented parents could not qualify for the tax credit. This would be true even if the child is a U.S. citizen and has a Social Security number. Parents who are authorized to work or study in the U.S. may also lack Social Security numbers and could not claim the tax credit.
Under current law, the Child Tax Credit offers $2,000 per eligible child and requires that each child has a valid Social Security number. The new bill would boost the credit to $2,500 for the next three years, adjusting the amount for inflation. The new restrictions would impact an estimated 4.5 million children, primarily those living in California, Florida, and Texas. The Senate will be next to decide whether to keep this tax provision as-is or suggest changes, though any proposed edits would send the bill back to the House for approval.
SALT vs PTE: How can pass-through businesses still get state and local tax breaks? The future of state and local tax (SALT) deductions continues to spark debate as the Senate considers making changes to the current $10,000 cap. This limit on SALT deductions was introduced in 2017 under Trump’s Tax Cuts and Jobs Act (TCJA). In the aftermath of TCJA becoming law, many states introduced a new workaround to allow certain businesses to bypass the SALT cap: the pass-through entity tax. The “PTE” tax allows taxpayers to opt to pay individual state and local taxes via a pass-through business, such as an LLC, partnership, sole proprietorship, or S corporation. Through a pass-through business, these taxes can now be deducted as business expenses.
However, the new federal tax bill would introduce a restriction that prevents any “specified service trade or business” (SSTB) from using the PTE tax for federal deductions. SSTBs include sectors like accounting, consulting, financial services, health, law, and businesses involved in investment, trading, and dealing in securities. While SSTBs would lose a potential tax break, non-SSTB businesses would still be able to use the PTE tax as a workaround.
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CURRENT EDITION
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