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In The Headlines
- TikTok and trade talks: What’s the latest in the U.S. relationship with China? U.S. Treasury Secretary Scott Bessent, who has been leading the official discussions with China, has indicated that the countries are close to striking a deal. These talks have been covered by a tariff truce, which expires on November 10th. While negotiations continue, tariffs stay frozen at their current rates: 30% on Chinese imports to the U.S. and 10% on U.S. imports to China. Without the tariff freeze, levies on Chinese goods could spike to 145%, and retaliatory tariffs on U.S. goods could rise as high as 125%. Leaders from both nations agreed that a pause would help their economies as the holiday season draws near and trade is expected to be at its highest. Alongside these trade talks, President Trump and President Xi Jinping are discussing the future of TikTok. The question in the air is whether the Chinese owners of TikTok are willing to sell the U.S.-based portion of the company. Rumor has it that tech company Oracle is a leading contender for purchasing these shares, which recently caused Oracle stocks to rise.
- ChatGPT rolls out new safety measures targeted specifically at teens. As parent company OpenAI navigates a lawsuit connected to a teen suicide, AI chatbots are under pressure to increase their safeguards. In light of this, CEO Sam Altman recently announced a new age-prediction and ID verification system that will be introduced in some countries, including the U.S. The new system would use its predictive powers to automatically sort users into either an adolescent-appropriate version of ChatGPT (for ages 13 to 17) or an adult ChatGPT (for ages 18 and older). If there is uncertainty, users will be sorted into the adolescent version. In some cases, users may have to provide an ID to access the adult version. Future features will include parental controls that will allow parents to instruct ChatGPT on how to respond to their children. This announcement came mere hours before a Senate Judiciary Committee hearing convened to discuss the possible harm of AI Chatbots.
- Stocks slip slightly as investors wait on the possibility of lower federal interest rates. After reaching record highs this year, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all experienced a dip this month. The reason? Investors may be exercising caution as they wait on a decision from the Federal Reserve. The Federal Reserve Board of Governors recently held its policy meeting with a new member in place—President Trump’s nominee Stephen Miran was confirmed by the Senate the day before the meeting kicked off. Miran was previously Trump’s top economic advisor. Given the slowdown in the labor market, many expected interest rates to be cut and that Miran’s appointment would sway the votes in that direction. This would mark the first interest rate cut since December 2024. So far, the Fed has hesitated to cut rates without knowing what the impact of President Trump’s tariffs would be. A cut would indicate that the Federal Reserve is anticipating any inflation upticks to be temporary.
What's New In The Tax World?
Could a wealth tax be the next step for New York City—or the U.S.?
Billionaires pay a lower percentage of tax than the average American, according to a recent study conducted by the University of California, Berkeley. In this analysis, researchers combined all income taxes and corporate taxes paid by companies owned by America’s Forbes 400 list. In total, billionaires paid an average effective tax rate of 24% from 2018 to 2020. By comparison, the average U.S. taxpayer paid a tax rate of 30%. This mirrors the impact of the 2017 Tax Cuts and Jobs Act, which lowered the average effective tax rate for the wealthiest Americans from 30% to 24%. Recent estimates suggest that the “One Big Beautiful Bill” Act will also offer a more significant tax break to higher-income households. The Tax Policy Center found that about $6 of every $10 in tax cuts will go to the top 20% of income earners who mostly earn over $217,000 a year.
In response to statistics like these, some are strongly advocating for the U.S. to impose a wealth tax. Some lawmakers, including Senator Elizabeth Warren from Massachusetts and Senator Bernie Sanders from Vermont, have been outspoken supporters of this idea. Critics say that wealth tax could have the adverse effect of dampening entrepreneurship and investment.
This has become a hot topic in New York City as Democratic mayoral candidate Zohran Mamdani has suggested introducing a local wealth tax. Mamdani recently received an endorsement from Governor Kathy Hochul, and if Mamdani were to be elected, he would need her approval to take action on anything similar to a wealth tax. Mamdani has suggested increasing the city income tax by 2 percentage points for those who earn $1 million or more annually. The Democratic candidate estimates that this tax would raise $4 billion, which could go toward social services like free bus service and universal child care. In her endorsement of Mamdani, Governor Hochul emphasized that she had spoken to him about the importance of ensuring New York remains “the center of the global economy.”
Though no U.S. states currently have an actual wealth tax, some do have taxes that target higher-income residents. In 2023, Massachusetts introduced a 4% surtax on all income over $1 million. In 2024, Minnesota passed a 1% additional on investment income over $1 million. Currently, New York has higher tax brackets for those who earn over $1.1 million—a measure that lasts through 2027.
State-By-State Updates
- Indiana considers a pause on utility bill taxes. Lieutenant Governor Micah Beckwith has called for a moratorium on the sales tax normally levied on utilities. Rates have been steadily rising, and all of Indiana’s five investor-owned utilities charge more than they did last year—most by double-digit percentages. However, Beckwith’s plan is facing opposition from legislative leaders, seeing it as a temporary bandaid and not a long-term solution. The impact on state funding is likely another reason for the pushback. Indiana levies a 7% tax on electricity, gas, water, and steam from public utilities. The vast majority of this money goes to the state’s General Fund. However, there is some precedent for repealing the sales tax on utilities. In 2022, lawmakers eliminated the utility receipts tax and the complementary utility services use tax. Though attempts have been made to exempt utilities from sales tax, these proposals have not made it through the state legislature.
- Nebraska homeowners will soon enjoy $20 million in property tax relief. Governor Jim Pillen gave the stamp of approval on a major tax rebate. The state saw an increase in casino gambling revenue and had a significant amount of unused money in its Property Tax Credit Cash Fund and School District Property Tax Credit Fund. Nebraska lawmakers have attempted to use school district tax credits to offer property tax relief in the past, but these efforts have fallen short. Budget constraints and resistance to sales tax increases both proved to be obstacles. Last year, property taxes did dip by $6 million, which was the first time the state had seen a decrease in 26 years. In 2022 and 2023, property taxes collected jumped up by about $300 million each year. Governor Pillen’s office previously worked to address this by removing community colleges from property tax rolls, placing revenue caps on school districts, and directing $1.26 billion in property tax relief to taxpayers.
- Ohio lawmakers are in pursuit of property tax reform. A state representative recently introduced the Senior Protection from Foreclosure Act, which would prevent foreclosures due to delinquent property taxes on property owners aged 65 or older. This would only apply to properties valued below $750,000. The lawmakers behind this bill say it is a priority to make sure seniors can keep their homes as long as they are making some level of payment. This would be the first bill of its kind in the U.S. if it passes. In Ohio, county governments have the power to foreclose on a property, and many county leaders already work with seniors to prevent foreclosure. However, counties are currently legally allowed to sell tax delinquent certificates to third party companies that can then foreclose on the property owners. Part of the goal of this new bill would be to ban that practice.
- Washington is facing a lawsuit from Comcast contesting its new advertising tax. Telecommunications company Comcast is attempting to block a new state sales tax on advertising services, arguing that it violates federal law. The plaintiff states that the tax is problematic because it does not apply to all advertising services in the same way. If the tax does not move forward, the state would lose about $475 Million in tax revenue over the next four years. The tax is currently scheduled to take effect on October 1st of this year. This particular tax was part of an expansion of business taxes approved earlier this spring in an attempt to balance the state budget. Altogether, the bill was set to raise $2.7 billion over four years by increasing the services that are subject to a retail sales and use tax. Under the expansion, ads sold by streaming services would face sales tax, but ads in newspapers, radio, television broadcasting, billboards, buses, and stadiums would not. The lawsuit states that this makes the tax discriminatory and that it goes against the Internet Tax Freedom Act.
Tax Planning Tips
How have the new Trump tax policies affected companies?
Two major shifts in U.S. tax policy have the potential to dramatically impact companies. The first is tariffs. According to the Bipartisan Policy Center, the U.S. has collected $162 billion in revenue from tariffs in this calendar year (as of September 10th). Treasury Secretary Scott Bessent predicts that the total could rise to $500 billion a year. How is this affecting companies? Based on second-quarter earnings this year, most of the impact of tariffs has been passed on to consumers through higher prices. While this could affect sales as consumers scale back on spending, the impact so far is unclear.
The second change is a largely unprecedented one: the Trump administration is pursuing equity ownership in companies. So far, this includes stakes in Intel, U.S. Steel, Nvidia and AMD, and MP Materials. Some analysts have labeled this as an unconventional form of a corporate tax. Estimates show that the government’s investment in MP Materials has about doubled, and the Nvidia and AMD investment could generate $320 million a year. Supporters say that these moves help increase corporations’ contribution to federal revenue and therefore enable more cuts to individual taxes. Opponents have expressed concern about how these investments could compromise the independence of these companies and the overall economic system.
Estimated tax payments may have become more complicated under the “One Big Beautiful Bill” Act (OBBBA).
The third-quarter estimated tax deadline just passed on September 15th. However, this year taxpayers could find themselves embroiled in more tax reporting confusion than usual. Estimated payments are typically made by taxpayers who are self-employed, freelancers, or gig workers. Investment profits, like capital gains dividends, interest, or rental income, may also require these quarterly payments. Anytime you earn income but automatic tax withholding does not occur, estimated payments help you avoid underpayment and possible penalties.
How might the OBBBA impact estimated tax payments? First, the bill introduced new tax brackets that kick in this year. Workers that do not have automatic tax withholding may end up overpaying through the end of the year. Calculating the correct payments for the third and fourth quarter of 2025 may prove more difficult. The third quarter payment was due on September 15th, and the fourth quarter payment is due on January 15, 2026. Conversely, underpayment is also a potential problem—with more problematic consequences for most taxpayers since they could owe penalties in addition to the remaining taxes due. Experts advise that taxpayers follow the safe harbor guidelines to avoid underpayment. To do so, make sure to pay at least 90% of your 2025 taxes or 100% of your 2024 taxes—whichever is the smaller amount. The threshold is higher for those who earn $150,000 or more. In this case, the safe harbor rule says you should 110% of your 2024 taxes to avoid underpayment.
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