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In The Headlines
- Starbucks on strike: The “Red Cup Rebellion” impacts 65 coffee shops across the U.S. Over 1,000 unionized workers walked out on the coffee chain’s major promotion day. Baristas have been in contract negotiations seeking better hours, higher wages, and resolutions to claims of unfair labor practices. Though all 65 of the impacted stores closed down for the day, Starbucks currently has over 17,000 locations in the U.S. This is not the first time Starbucks workers have organized a strike on Red Cup Day—where customers receive a red reusable cup when they order a holiday beverage. Union walkouts happened in both 2022 and 2023 on this same day. Over 5,000 baristas also went on strike for five days in December 2024 to push for a wage increase. In response to the recent protests, over 100 U.S. lawmakers wrote a letter to Starbucks CEO Brian Niccol urging the company to resolve its labor disputes and put forth a fair contract.
- Delayed jobs reports will finally be released as the government shutdown lifts. The Bureau of Labor Statistics normally publishes important economic data each month, including a jobs and unemployment report, consumer price index report, and consumer expenditures report. The October report was originally scheduled for November 7th, but in light of the shutdown, White House press secretary Karoline Leavitt stated that the report might never be published. Though the Bureau now intends to report on jobs added in October, this will not include the unemployment rate because the usual household survey was not completed. The September report is expected to be more complete since the data was collected before the government shutdown. However, the U.S. Labor Department is being urged to prioritize the November employment and inflation reports instead. This would provide the Federal Reserve with necessary information for their December policy meeting—when many hope that officials will lower national interest rates.
- Boeing defense workers return to work with a 24% wage increase. After a more than three-month strike, 3,200 union workers have returned to assembling and maintaining F-15 fighter jets and missile systems. The new agreement with Boeing includes a 24% pay hike over the next five years and a $6,000 upfront bonus. Workers involved in negotiations primarily came from Missouri and Illinois, with the majority based in St. Louis. This contract was approved after several had been rejected for their failure to address workers’ requests for higher retirement plan contributions and a higher bonus to match that given to the Pacific Northwest division last year. Strikers were also protesting unfair labor practices—charges that the union officially filed this October. This year’s strike marks the longest pause in production that Boeing has seen since 1996. The defense unit comprises about 30% of Boeing’s $65.5 billion in sales so far this year.
What's New In The Tax World?
The government shutdown has ended, but the future of health care tax credits remains uncertain
After a record-breaking 43 days, a deal was reached to end the longest government shutdown in U.S. history. As of November 12th, President Trump signed a new bill into law that extended funding for most government agencies until January 30, 2026. Certain federal workers are now receiving back pay, and stalled operations that affected everything from food benefits to air travel have resumed. The new legislation also includes three bills that fund other parts of the government through September 2026. One issue that has yet to be addressed? The enhanced premium tax credits that will expire at the end of this year.
A major factor in the recent shutdown was the failure of lawmakers to reach an agreement on the Affordable Care Act (ACA) tax credits, which subsidize the cost of health insurance for about 22 million Americans. Democrats have been pushing for an extension of the credits, but the current deal for temporary funding continues to kick the ACA “can” down the road. Tensions around this decision are expected to rise as open enrollment for marketplace plans has begun, and millions of Americans are seeing premiums more than double without the enhanced premium tax credits. The Congressional Budget Office estimates that 4 million people will likely drop their ACA coverage due to the higher premiums.
Republican leaders have alluded that they would vote on the ACA credit by mid-December. Without an extension, premiums for ACA plans will rise to an average of $1,904 in 2026, up from $888 in 2025. Americans who would be impacted are those who earn over 400% of the federal poverty level. Previously, these individuals and families would not qualify for a health care subsidy, but the enhanced version of the tax credit includes those whose insurance rates exceed 8.5% of their income.
Though recent polls suggest that as many as 75% of Americans support extending the enhanced tax credits, it is unclear how Congress will vote. Some Republican leaders have suggested redirecting funds away from health care tax credits and toward federal flexible spending accounts or even direct taxpayer refunds.
State-By-State Updates
- Delaware’s Supreme Court rules in favor of property tax relief for New Castle County. After a months-long legal battle, a new tax law that allows local school districts to set a higher tax rate for commercial properties remains in place. The law was passed in a special session after the property reassessments in New Castle County dramatically increased residential property taxes while decreasing commercial property taxes. The reassessments, which occur only once every 40 years, resulted in extreme backlash from homeowners. However, when legislators approved higher taxes for commercial properties, an outcry rose up from apartment trade organizations and mobile home operators instead. These local trade groups filed a lawsuit claiming the new law was unconstitutional because state law says projected revenue from new tax rates cannot exceed the projected revenue from the original tax rates. The court ruled that lawmakers were within their rights to rebalance residential and nonresidential property taxes as long as the resulting rates were reasonable.
- Minnesota homeowners may face a collective tax hike of almost $1 billion in 2026. According to recent data, residents may see a 6.9% increase next year—or about $948 million more than this year’s property taxes. Some of the higher levies were approved directly by Minnesota voters to increase school district funding. Overall, the extra $1 billion in revenue would go toward city, county, and local government operations across the state. Local governments have reported struggling under higher expenses for benefits, goods, and labor, partly due to new requirements from state and federal governments. The 2026 tax hike would impact cities and counties differently than townships and special jurisdictions. Cities and counties are expected to see an 8% to 9% tax adjustment, while townships would see 5.6% jump and special jurisdictions like housing or development authorities and watershed districts would see a 4.6% change. However, analysts note that an 8% levy increase does not mean an 8% property tax increase for every homeowner. This is because different jurisdictions use different classification rates—residents will want to research the changes in their specific area.
- Nebraska lawmakers vow not to increase taxes in 2026. A coalition of four conservative state senators have pledged to keep the overall tax burden the same as lawmakers prepare for the 2026 session. State senators Bob Andersen, Tanya Storer, Jared Storm, and Paul Strommen have promised taxpayers that if any tax rate is increased, they will ensure equivalent decreases are enacted in other areas. The group stated that Nebraska is struggling with a spending problem, and they intend to work on decreasing the size of government. Recent revenue projections show that revenue is expected to drop by $120 million for this fiscal year and by $247 million for FY2026-27. This dip in revenue would increase the shortage in state budget from $95 million to over $450 million. State legislators have discussed introducing a new sales tax specifically focused on “luxury” services from nail care to chartered airplane flights. The conservative coalition aims to focus instead on scaling back state programs, though they have not yet named which ones would face cuts.
- Wisconsin’s wheel tax has expanded by 1500% in the last two decades. A study conducted by the Wisconsin Policy Forum shows that more local governments than ever are implementing vehicle registration fees to cover the cost of road maintenance. In 2010, only three cities and one county in Wisconsin used a “wheel tax.” However, strict state limits on raising property taxes have led more jurisdictions to rely on this revenue-raiser. This year’s data shows that 64 cities, counties, towns, and villages have implemented vehicle registration fees—meaning over half of Wisconsinites will pay a wheel tax in 2025. The majority of state funding for road projects comes from a combination of gas tax and vehicle registration fees, but in 2005, the gas tax was amended so that the rate no longer changed with inflation. This means that Wisconsin’s gas tax has remained at 31 cents per gallon for the past 20 years. Meanwhile, the total revenue raised from wheel taxes jumped up to $75 million in 2021.
Tax Planning Tips
Roth IRAs get a boost with higher income limits for 2026
The IRS is expanding the opportunity to benefit from Roth IRAs, a type of individual retirement account that receives after-tax contributions and offers tax-free distributions. For 2026, Roth IRA holders can contribute up to $7,500 to their accounts, up from $7,000 this year. Taxpayers aged 50 and older are also eligible for catch-up contributions to increase their retirement savings. In 2025, the catch-up contribution amount was set to $1,000—now the cap will be $1,100.
Roth IRA contributions are also subject to income limitations based on taxpayers’ modified adjusted gross income (MAGI). For 2025, the threshold was set to $150,000 for taxpayers filing as single or head of household. For income earners falling between $150,000 and $165,000, the total Roth contributions begin to phase out. Now in 2026, the threshold is set to $153,000 and phases out to zero when taxpayers reach $168,000 in MAGI. For taxpayers with a married filing jointly status, the income thresholds have been increased to $242,000 (where the phaseout begins) and $252,000 (where the phaseout reaches zero).
How does the One Big Beautiful Bill Act affect your state tax returns? It depends on where you live
The OBBBA includes a number of new tax provisions that will affect this upcoming tax season, especially when it comes to state tax returns. Most states base their individual and corporate income tax on the Internal Revenue Code (IRC), which means when the federal tax code changes so does their state tax code. However, some states “decouple” from certain IRC provisions and therefore may not implement the OBBBA provisions in the same way.
What changes should taxpayers keep an eye out for in this upcoming tax season?
- The increased standard deduction for seniors and new deductions for tips, overtime pay, and car loan interest will flow through to most or all of the seven states that “conform” to the OBBBA and use federal taxable income as their starting point. This includes Colorado, Idaho, Iowa, Montana, North Dakota, Oregon, and South Carolina.
- The increased state and local tax (SALT) deduction will result in higher property tax deductions in 18 states.
- The provision that allows full expensing of machinery and equipment will impact 17 states, and the provision for research and development expensing will affect almost all states’ tax structures.
States that deny the new deductions must add a new line to their state tax returns so taxpayers can report the amount of the federal deduction and add it back for state purposes. Sound confusing? Stay ahead of the curve by researching your state’s tax policies before filing season hits.
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CURRENT EDITION
Lessons Learned from the Tax Court: The Root of the Issue
When is a business really a business? As Supreme Court Justice Potter Stewart said in 1964, “I know it when I see it.” The US Tax Court, however, maintains a slightly less subjective standard. The Roots were pretty sure they were running a bona fide business; the IRS, however, didn’t share the sentiment. And since we’re reading about them in a segment called “Lessons Learned,” one should assume it did not go the way the Roots would have liked.
The Lessons From The Supreme Court Zuch Opinion
There is a great scene in the movie On The Basis Of Sex. The actors portraying Ruth Bader Ginsburg and her husband, Martin Ginsberg, a very high-level tax attorney, early in their careers are reading in separate rooms. He comes in with something he wants her to read and she snaps that she doesn’t read Tax Court cases. In that moment she showed her future as a Supreme Court Justice. Not many Tax Court cases reach the Supreme Court. So when one does it’s exciting. And, as it happens, Commissioner of Internal Revenue v Zuch contains some practical lessons worth considering.
Fractional Art Investing Is Real — How To Advise Your Clients On The Tax Consequences
In mid-November a portrait of a young Vietnamese woman by the artist Gustav Klimt, which was part of the estate of the late Leonard Lauder (the cosmetics billionaire), was sold at a Sotheby’s auction for $236.4 million. It set the record for the most expensive work of modern art ever sold at auction according to Bloomberg. That’s probably out of reach for most of our clients. But what if they could join together to buy an interest in the painting with an entity holding the asset? That’s the idea behind the burgeoning fractional art market. While, in general, the art market has been struggling for a few years, the fractional art market has been expanding. According to the website Digital Original, “Fractional art ownership is no longer a niche concept – it’s a growing investment trend that’s accessible, flexible, and supported by cutting-edge technology.” What, you may be asking, does this have to do with taxes? It may be more than you think for your high-net-worth clients. As a trusted advisor it’s important that you are aware of both the types of investment opportunities your clients may be buying into and the tax consequences.
