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
- Elon Musk is stepping back from DOGE and from hefty political spending. Musk announced recently that his time would shift more toward his role as Tesla CEO and less time would be spent on the Department of Government Efficiency starting in May. As part of the Trump administration, Musk is considered a “special government employee,” which limits him to only 130 days of work in his role within a single year. At the same time, Musk has indicated that he will be spending less on political campaigns after his steep investment in a Wisconsin Supreme Court race was unsuccessful. Musk’s $3 million contribution made the election the most expensive court race in U.S. history. However, Republican candidate Brad Schimel lost by 10 percentage points, which some have attributed to Musk’s declining popularity among those who feel the entrepreneur has exercised too much influence over the federal government.
- Bitcoin hits an all-time high—and may climb even higher. The cryptocurrency peaked at $109,500 before dropping by several thousand dollars. Analysts say that Bitcoin’s recent success is likely a result of lower inflation in the U.S., more favorable trade terms between the U.S. and China, and Moody’s Ratings downgrading the U.S. government’s credit rating. The latter may have caused investors to look for other stores of value. This spike in Bitcoin’s price comes after a major slump in early April, likely influenced by uncertainty around tariffs and trade agreements. Bitcoin has also benefited from liquidity in the stock market and in the crypto market. What’s more, prices are predicted to rise even higher in the coming months if certain regulatory updates and corporate treasury investments move forward as expected. For instance, the Senate recently approved a bill that would create a brand new regulatory framework for stablecoins, which does not include Bitcoin.
- Put together tariffs and DEI-related boycotts and you get… Target’s struggling sales numbers. The department store saw a 2.8% decline in net sales in the first quarter of 2025. In combination with lower revenue, Target also saw fewer customers who spent less per visit than their previous averages. The retail giant has since adjusted its forecast from 1% growth for the year to a “low single-digit” decline. Analysts have pegged both tariff uncertainty and the shift in Target’s diversity, equity, and inclusion (DEI) policy as reasons for falling sales. After Trump took office, Target announced that it was ending a number of programs focused on hiring minority employees and investing in racial justice. The change sparked significant public pushback, including a 40-day consumer boycott in Atlanta and protests at Target headquarters in Minneapolis. Tariffs are also expected to undercut Target’s bottom line, since about 50% of the store’s products are imported and about 25% come from China.
What's New In The Tax World?
Trump’s tax bill centers on extending the 2017 tax cuts—but the cost may be too high for some Republicans
The Republican party finds itself in a standoff over President Trump’s immigration and tax bill, largely due to its projected cost of $3.8 trillion over the next 10 years. Though the GOP has a majority in the House, a number of conservative representatives are holding out and advocating for changes to the 1,000-page plus bill before it would receive their vote.
For Speaker of the House Mike Johnson, the difficulty in negotiating is that every change to the bill that pacifies one group seems to alienate another. For instance, lawmakers in high-tax states have long been advocating to repeal or revise the current $10,000 cap on state and local tax (SALT) deductions. A recent deal that would raise the cap to $40,000 appeases some Republicans but caused pushback from others who expressed concern about the sum that would add to the national debt.
What else is in the hefty tax bill and what is causing such intense debate in the House? A primary goal of the bill is to extend the expiring tax provisions introduced by Trump in 2017 under the Tax Cuts and Jobs Act (TCJA). Additionally, the tax package introduces some new measures, such as an increase to the standard deduction from $15,000 to $16,000 for single filers and from $30,000 to $32,000 for married couples filing jointly. The bill would also increase the child tax credit from $2,000 per child to $2,500. Older adults would also receive an extra $4,000 deduction to offset Social Security income taxes if they meet certain income requirements. In the current version, the SALT cap would also rise from $10,000 to $30,000 for joint filers who earn no more than $400,000 a year, though this is actively being renegotiated.
How does the bill intend to offset the cost of these tax cuts? This is where even more disagreement is brewing. Though the bill reduces federal spending by about $1 trillion, this includes cuts to Medicaid, food stamps, clean energy tax breaks, and social safety net programs. One major change is that starting in 2027 both Medicaid and the Supplemental Nutritional Assistance Program (SNAP) that provides food stamps would be subject to new work requirements for those who are able-bodied and without dependents. If the proposed changes are enacted, the Congressional Budget Office estimates that 8.6 million people would lose health insurance and 3 million people each month would no longer have SNAP benefits.
State-By-State Updates
- Maryland’s latest bill brings significant tax increases. Governor Wes Moore recently signed off on a $67 billion spending plan after 3 months of legislative debate. The budget package features over $1.6 billion in taxes and fees intended to offset a projected $3.3 billion deficit for the state. Maryland has been especially affected by the cuts to federal spending and employment under the Trump administration. A report by Moody’s Ratings identified Maryland as the state most at risk for fiscal problems, partly due to the number of residents who work for the government or rely on federal contractors and grants. New taxes introduced by this bill include two new higher-income tax brackets and a 3% tech tax that is expected to raise $500 million.
- North Carolina lawmakers press pause on income tax cuts but move ahead with raises for state workers. The state House and Senate have proposed competing budget bills for the new fiscal year. The budget plan put forward by the House would delay scheduled personal and corporate income tax cuts. Under the new plan, the state would have to hit higher revenue targets before the tax rates could be reduced. Governor Josh Stein has recommended a similar plan based on declining state revenue. However, the Senate’s bill takes the opposite approach and sustains the scheduled tax cuts. The two bills also differ when it comes to wage increases for teachers and state employees: the House budget calls for a 2.5% raise, while the Senate suggests a 1.25% raise along with $3,000 bonuses split over two years. The House bill also advocates for other tax cuts including a higher standard deduction and tax exemption for tipped wages.
- Texas homeowners and business owners may both see a bigger tax break. The state House recently approved bills that would reduce the property taxes paid toward funding school districts. One bill would adjust the state’s homestead exemption so that less of a home’s value is considered taxable. Another bill would increase the special homestead exemption for senior or disabled homeowners from $10,000 to $60,000. Other property tax changes would be directed at business owners. Texas levies a tax on business inventory, but a new bill would exempt up to $125,000 of that inventory. Currently, inventory is exempt from school district, city, county, or similar taxes if it is worth $2,500 or less. Though the House and Senate seem to be moving ahead with these tax relief bills, voters will have the final say in November since these changes involve amending the Texas Constitution.
- Washington state’s new $78 billion budget means upcoming tax hikes. Governor Bob Ferguson recently signed a state operating budget that raises state spending by 8% over two years. The increased revenue will fund pay raises for most state employees and sustain the state’s social services including a $1 billion boost for public schools and $15 billion for state transportation projects. To cover the cost, the state is raising business and occupation tax rates across a number of industries and introducing a surcharge for corporations earning over $250 million in taxable state income. Other new taxes will impact Discover Passes, hunting and fishing licenses, liquor permits, marriage licenses, vehicle registration, and “lucrative” electric vehicle credits—a levy seemingly aimed at Tesla. Lastly, a 6 cent per gallon gas-tax will take effect starting in July and provide funding for highway projects, ferries, and transit.
Tax Planning Tips
What can the entire U.S. Senate agree on? Apparently, no tax on tips. In a surprising unanimous decision, the Senate approved the No Tax on Tips Act, an idea that captured the political imagination during Trump’s presidential campaign last year. The new legislation centers on a tax deduction covering up to $25,000 in cash tips that workers report to employers. This deduction would be available to workers who earn less than $160,000 per year, adjusted yearly for inflation.
The bill was a bipartisan effort and was passed without objection to the House, which will decide its fate. In spite of its popularity in the Senate, some tax experts have criticized the proposal, noting that many hourly workers do not earn enough to pay federal income taxes so this is not the tax break it appears to be on the surface. Others express concerns that employers will start reclassifying wages as tips so that they don’t have to pay payroll taxes on them. Some have argued for focusing instead on changing the policies around “subminimum” wage where employers are allowed to pay less than the state’s minimum wage if tips make up the difference.
The SALT cap has become a Congressional battleground: Who is on what side? Before the Tax Cuts and Jobs Act (TCJA) of 2017, taxpayers were allowed to claim unlimited deductions for state and local taxes (SALT) as long as they itemized their deductions. With the introduction of TCJA, a new SALT cap was put in place, limiting these deductions to $10,000. Now that the cap is expiring at the end of 2025, lawmakers are split on what their next move should be. However, this debate has split not so much along party lines but based on whether or not legislators represent a high-tax state.
The current version of President Trump’s tax package would make the SALT cap permanent. This disadvantages taxpayers who live in states with high property taxes, which can be deducted. Taxpayers are also allowed to deduct either their state and local income taxes or their state and local general sales taxes. The most recent data suggests that residents of Maryland and Washington, D.C. claimed the SALT deduction most often—on more than 20% of tax returns. More than 10% of taxpayers claimed the deduction in California, Colorado, Connecticut, Georgia, Hawaii, Massachusetts, New Jersey, New York, Oregon, Utah, Virginia and Washington State. Lawmakers from these states are largely vying for a revised SALT provision, while those from other states are more in favor of keeping the cap in place.
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