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
- Could Tesla be seeking a replacement for Elon Musk? Rumors spark questions around the automaker’s future. The Wall Street Journal recently reported that Tesla had reached out to several executive placement firms in March. The report also suggested that board members met with Musk to ask that he spend more time on the company, and Musk promised to do so in May. In the aftermath of the report’s release, Tesla responded with a public statement that the rumors of Musk’s replacement were false. The automaker has struggled with a 45% decline in stock prices this year and a 71% plummet in Q1 profits. These losses come as Musk’s role as head of President Trump’s Department of Government Efficiency has stirred up controversy and protests at Tesla dealerships across the U.S. Since joining Trump’s team, Tesla’s market value dropped from $1.5 trillion in December 2024 to $900 billion this spring.
- Trump closes a shipping loophole for Chinese goods leaves e-commerce shops in a flurry. Previously, products valued at under $800 could escape import taxes, an exemption known as the de minimis loophole. The Trump administration has asserted that the loophole opens up opportunities for the fentanyl trade. The new order also affects low-value goods that originate from China but are shipped from elsewhere. Now small-ticket items like shoes, clothing, and holiday decorations may no longer be cheaper to buy from China. This shift is expected to impact independent online retailers, though large retailers like Walmart and Amazon that buy products in bulk are also anticipating pain. Online businesses that have relied on inexpensive supplies from China are also facing uncertainty about future costs.
- The popularity of Eli Lilly’s new weight loss drug may be undercut by CVS Health. New drug Zepbound originally sent Lilly stock soaring. The drug has been popular among consumers, jumping from $517 million one year ago up to $2.3 billion this year. However, CVS Health’s recent announcement is causing the stock to take a dip. The popular pharmacy chain recently announced that drugs Wegovy and Saxenda from Lilly’s rival Novo Nordisk will be the preferred options on its list of covered drugs. Employers and insurers look to these lists to determine which drugs they will cover. This move would make Zepbound less affordable for many patients, and many might switch to the competitors instead. Investors have responded to this possibility and Lilly stock fell nearly 11% in a day last month.
What's New In The Tax World?
What could make it into the next budget bill? SALT and staffing are the next big conversations
State and local tax (SALT) deductions have been a hot topic in Congress since Trump’s 2017 Tax Cuts and Jobs Act (TCJA) introduced a $10,000 cap on this tax break. Taxpayers in high-tax states like California, Connecticut, New Jersey, and New York especially benefit from SALT deductions, and their representatives have long been advocating for a lower cap or no cap at all. House Republicans are now discussing how to accommodate this without dramatically increasing the cost of this new spending package.
Legislators in favor of changing the SALT limitation have focused on finding a way to expand the tax break to those earning under $400,000 a year. One option would be to introduce income limits to qualify for the tax break. Another would be to set the cap at a number that would likely exclude those with high incomes or who own expensive properties. In most cases, the changes considered would cost $25 billion a year or more. Opponents of adjusting the SALT cap are still finding that they need to negotiate because the supporters are just large enough in number that they could block the bill as a whole if not enough SALT-friendly changes are present.
In addition to extending or changing a number of TCJA tax cuts, Republican lawmakers are also advocating for more funding to recruit, hire, and retain staff—but only in certain departments. After several months of dramatic reductions in staff across many federal agencies, the new budget bill may allocate billions of dollars to Customs and Border Protection, Immigration and Customs Service, and the Federal Aviation Administration (FAA). Customs and Border Protection is seeking $4.1 billion to hire 3,000 new Border Patrol agents, 5,000 new Office of Field Operations customs officers, and other support staff. In addition to salaries, the funds would go toward training and retention and signing bonuses. Similarly, Immigration and Customs Service is requesting $8 billion to hire 10,000 new agents. As part of the plan to fund these hires, Republicans have proposed introducing a $1,000 application fee for asylum seekers and a $550 work visa fee for certain immigrants. The FAA may receive $15 billion for hiring air traffic controllers and resolving other ongoing staffing shortages for years. All three agencies have struggled to recruit and retain staff over the past several decades.
State-By-State Updates
- Over 400,000 Florida taxpayers will get a check through the Hillsborough County Sales Tax settlement. The state is paying $250 million back to taxpayers for tax revenue collected for road projects that were never completed. Before transportation upgrades could take place, the transit tax surcharge was overturned by the Florida Supreme Court, which was deemed unconstitutional because the referendum overstepped the role of the county commission. Hillsborough County residents who lived in the county from January 1, 2019, to March 15, 2021 and who filed a claim can expect a check of up to $100 in the mail. Not everyone is celebrating the refunds, however. Some supporters of the proposed transportation plan have stated that they’d prefer to return the check and improve the state’s infrastructure instead.
- Minnesota looks to reform its tutoring tax credit. Governor Tim Walz is advocating to dismantle a program that offers parents loans to cover tutoring services for their children. The program was originally designed to allow more low-income families to take advantage of the K-12 Education Tax Credit. Families earning less than $80,000 a year can receive a credit covering eligible educational expenses of up to $1,500 per child, but these families would have to pay the expenses upfront and wait to be reimbursed through their tax refund. In an attempt to resolve this problem, the state introduced an option for parents to take out a loan from a nonprofit organization and use their tax refunds as collateral. Unfortunately, many families reported that they were not informed their tax refunds would be transferred to a nonprofit and that in some cases their children did not even use or benefit from the tutoring instruction.
- Montana approves a new residential property tax relief bill. The relief package includes a homestead exemption that increases taxes for second homes and certain large businesses and utility companies in order to lower taxes for owner-occupied homes. As part of its $16.6 billion budget bill, the state also made decisions on income tax cuts and Medicaid expansion. Governor Greg Gianforte recently signed an income tax reduction amounting to $278 million per year. Democrats also pushed forward a bill that renewed the state’s Medicaid expansion, which was previously scheduled to expire this year. The legislature blocked a bill that would introduce a tax on out-of-state luxury vehicles registered in Montana. The funds from this tax were earmarked for bridge repairs and support for victims of crime.
- North Dakota axes a bill that would have expanded income tax cuts. The Senate and House have gone back and forth on income-tax-related bills since the beginning of the year—but at the end, no mutually agreeable decision was reached. In January, the Senate passed a bill that provided an income tax exemption on law enforcement retirement benefits for surviving spouses. Once in the House, the bill was revised to include a broader income tax reduction. House representatives sought to increase the number of taxpayers who pay no state income tax, a move which would cost the state about $20 million in revenue over the next two years. However, the Senate then rejected the updated bill, concerned about whether North Dakota could afford the cut. The state’s last income tax cut was approved in 2023 and introduced a zero tax bracket for low-income residents and a lower tax rate for higher-income residents.
Tax Planning Tips
The federal government may flip the script on electric vehicles by introducing an annual EV registration fee. In the U.S. gas-powered vehicles currently pay an average of 18.4 cents in tax for every gallon of gasoline they purchase. Altogether, this tax makes up 81% of the $43.5 billion budget for the Highway Trust Fund. This fund supports federal highway and mass transit programs including projects like fixing potholes, patching bridges, and some public transportation needs. Since electric vehicles began rising in popularity, tax revenue for transportation has declined since fully electric vehicles do not need gasoline and hybrid vehicles use much less. Some lawmakers have responded by looking for ways to introduce a new tax on EVs that would bring revenue back to its previous levels.
Recently, a bill was introduced to the Transportation and Infrastructure Committee that would charge a $250 annual registration fee for EVs and $100 per year for hybrids starting in 2031. However, clean energy advocates have pushed back, stating that the $250 cost is equivalent to paying tax on about 1,400 gallons of gasoline—about triple the amount the average commuter uses in a year. Under this bill, commercial and government vehicles would be exempt from registration fees.
Looking to maximize your retirement savings? Use this lesser-known tactic if you have a 401(k). If you have this employer-sponsored retirement savings plan, you may be able to benefit from after-tax contributions. In 2025, all 401(k) account holders can defer up to $23,500 into their retirement savings, and employees ages 50 and older can contribute extra “catch-up contributions” starting at $7,500 and jumping up to $11,250 for those ages 60 to 63. On top of this, about 22% of 401(k) plans offer even more after-tax contributions. What’s more, only 9% of account holders with access to this feature take advantage of it.
Retirement planning experts advise utilizing this after-tax contribution option if you can afford it. For 2025, employee deferrals, after-tax contributions, company matches, profit-sharing, and other deposits are capped at $70,000 in total. To further maximize your savings, you can also periodically convert these 401(k) funds to a Roth IRA, which does not tax withdrawals.
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