Tax News & Views Big Beautiful Blueberry Roundup

Trump Signs Bill to Make Most of TCJA Permanent - Katie Lobosco, Tax Notes ($):

President Trump signed into law Republicans’ massive reconciliation package, making most of the 2017 Tax Cuts and Jobs Act provisions permanent nearly six months before they were scheduled to expire.

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The legislation will permanently lower individual tax rates, expand the standard deduction, create a bigger child tax credit, and increase the estate tax exclusion.

It will also make certain business tax breaks permanent, including full and immediate expensing, 100 percent bonus depreciation, and the 20 percent passthrough deduction.

When will key aspects of Trump’s ‘big, beautiful bill’ take effect? - Alejandra O'Connell-Domenech, The Hill:

Starting this year, tip amounts of less than $25,000 will be tax-deductible through 2028. There is a cap for the deduction of a $150,000 income or $300,000 for people filing jointly, according to the law.

The law also changes when overtime pay will be tax-deductible. Starting this year, up to $12,500 of extra overtime pay is tax-deductible until 2028. Again, there is an income limit of $150,000 a year for a single person or $300,000 for those filing jointly.

Tax provisions in the One Big Beautiful Bill Act - Alistair Nevius, The Tax Adviser:

The bill extends many of the expiring provisions from the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. It also addresses other tax priorities of the Trump administration, including providing deductions to eliminate income taxes on certain tips and overtime pay.

The bill also revamps some of the TCJA’s provisions on the taxation of corporations’ foreign income and terminates a large number of clean energy tax incentives.

Things in The Bill

Tax News & Views Extra: Tax and Budget Bill Heads to President - Eide Bailly. Outlines key provisions of the bill.

How Trump’s Megabill Will and Won’t Change Your Taxes - Laura Saunders, Wall Street Journal:

Notably, the tax brackets individuals have gotten used to won’t change. The rates set in 2017 will stand at 10%, 12%, 22%, 24%, 32%, 35% and 37%. Many filers especially value the 22% and 24% brackets, which stretch from about $100,000 to $400,000 for married joint filers and half that for single filers. This swath of income at nearby rates can ease planning, such as for Roth IRA conversions or stock-option exercises.

Also retained: the 2017 overhaul’s near-doubling of the standard deduction, which is the amount taxpayers get to subtract from income if they don’t itemize deductions on Schedule A. This fundamental change has simplified taxes for many and reduced the number of itemizers from about 30% of individual filers to less than 10%.

Because of a sweetener, the standard deduction for 2025 will be $15,750 for single filers and $31,500 for married joint filers and rise with inflation after that, according to the Tax Foundation.

Here’s how Trump’s big bill will change taxes - Tobias Burns, The Hill:

The inheritance and gift tax exemptions are increased to $15 million for individuals and $30 million for couples and are pinned to inflation.

The state and local tax (SALT) deduction cap — one of the most controversial provisions that endured a lengthy battle in the House — is increased to $40,000 and upped annually through 2029 for people making less than $500,000 annually. Starting in 2030, the cap goes back down to $10,000.

The Good, the Bad, and the Ugly in the One Big Beautiful Bill Act - Daniel Bunn, Alex Muresianu, and William McBride, Tax Policy Blog. "Most of the good tax policy aligns with Tax Foundation’s principle of stability. The Senate bill makes permanent the House bill’s provisions allowing expensing for investment in short-lived assets and domestic research and development."

Tax Bill Nixes Some ERC Claims - Benjamin Valdez, Tax Notes ($). "Under the reconciliation bill (H.R. 1) signed July 4, pending ERC claims for the third and fourth quarters of 2021 filed after January 31, 2024, will be disallowed. Also, the statute of limitations on assessments for those claims has been extended to six years from several possible starting dates, including the date the claim for refund was made."

Don't Tip Your Hand: Gamblers suffer, Tip Recipients Benefit

OB3 Act: Gamblers, Beware - Thomas Gorczynski, Tom Talks Taxes:

The OB3 Act reworks the wagering loss limitation rule starting in tax year 2026. The wagering loss deduction allowed during the tax year is:

- 90% of the wagering losses during the tax year, and

- Allowed only to the extent of wagering gains during the tax year.

Trump Promised ‘No Tax on Tips.’ Then Came the Fine Print. - Josie Reich and Richard Rubin, Wall Street Journal:

Under Republicans’ policy, workers who do pay federal income taxes will be able to deduct up to $25,000 for tips. For someone in the 12% tax bracket making that much in tips, the change would deliver up to $3,000 in savings. The deduction would start phasing out once an individual’s income reaches $150,000, or $300,000 on a joint return for people who are married.

The relief will take effect this tax year, including for tips already received.

The law orders the Treasury secretary to publish a list of typical tip-earning jobs that qualify for the deduction, so it is unclear now exactly who will benefit. Tax experts said barbers, restaurant servers and other longtime service workers are almost certain to qualify, but it is unclear whether it will extend to other types of jobs such as online creators, who are sometimes tipped for their work.

Tips And Overtime Deductions In Big Beautiful Bill Create Odd Marriage Incentives - Peter Reilly, Forbes. "There appears to be a marriage penalty for well tipped servers tying the knot with one another and a marriage bonus for well tipped servers marrying industrious blue collar workers."

Energy Credit Power Outage

Trump Further Targets IRA Tax Credits - Alexander Rifaat, Tax Notes ($):

President Trump has formally instructed Treasury to move quickly on the cancellation of energy credits tied to the Inflation Reduction Act, just days after signing into law a reconciliation bill that repeals most of the subsidies.

In an executive order signed July 7, Trump ordered Treasury Secretary Scott Bessent to “strictly enforce” the termination of section 45Y production credits and section 48E investment credits pertaining to clean energy within 45 days and take “prompt action” in enforcing new rules on foreign-entity-of-concern restrictions.

Conservatives say Trump won their megabill votes by promising crackdown on renewable energy credits - Kelsey Tamborrino and Josh Siegel, Politico:

Hard-line House conservatives said President Donald Trump assured them his administration would take action to constrict wind or solar projects that qualify for Inflation Reduction Act tax credits — a pledge that ultimately persuaded them to back the party’s megabill.

“We believe the administration is aligned with us on terminating those Green New Scam subsidies. We believe we’re going to get 90-plus percent of all future projects terminated,” said Rep. Chip Roy (R-Texas), a member of the House Freedom Caucus, after the megabill passed Thursday. “And we talked to lawyers in the administration. We believe that’s true.”

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The Senate’s language gave projects one year to begin construction to claim current tax credits, while projects that start later would need to be placed into service by 2027.

Oops

Social Security no taxes message on Trump bill raises eyebrows - Rachel Scully, The Hill, referring to a press release by the Social Security Administration:

“The new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples,” the Thursday press release said. “Additionally, it provides an enhanced deduction for taxpayers aged 65 and older, ensuring that retirees can keep more of what they have earned.”

However, policy experts are concerned that the bill does not include a provision to eliminate federal income taxes on Social Security benefits.

“There is no provision in the budget bill that directly ‘eliminates’ or even reduces taxes on Social Security benefits,” Howard Gleckman, senior fellow at the nonpartisan Tax Policy Center, told the Washington Post.

The bill has an additional standard deduction for seniors, but does not affect taxation of Social Security benefits.

Litterbugs

GOP megabill littered with special tax breaks - Brian Faler, Politico:

There’s a new supersized deduction for business meals — though only for employees at certain Alaskan fishing boats and processing plants, with the measure stipulating the facilities must be “located in the United States north of 50 degrees north latitude” though not in a “metropolitan statistical area.”

What now?

Capitol Hill Recap: Next Steps - Alex Parker, Eide Bailly. "It may not be too long before agencies begin issuing notices and proposed rules to carry out the One Big Beautiful Bill's provisions—especially since many of them took effect retroactively to the beginning of the year. "

Bill passed? Let’s peer into the future - Bernie Becker, Politico:

That’s because the four Trump campaign items — also including an enhanced tax deduction for seniors and a write-off for interest on car loans — are scheduled to lapse at the end of 2028, as does a provision offering full expensing for manufacturing buildings.

Meanwhile, the new cap on state and local deductions — which maxes out at $40,000-plus in the coming years — is scheduled to expire at the end of 2029.

That could make for interesting dynamics if, say, Democrats win back the House in next year’s midterms, particularly given how much new debt is projected to be generated by the new GOP measure.

Tariff Tuesday

Trump sets 25% tariffs on Japan and South Korea, and new import taxes on 12 other nations - Josh Boak, Associated Press:

President Donald Trump on Monday set a 25% tax on goods imported from Japan and South Korea, as well as new tariff rates on a dozen other nations that would go into effect on Aug. 1.

Trump provided notice by posting letters on Truth Social that were addressed to the leaders of the various countries. The letters warned them to not retaliate by increasing their own import taxes, or else the Trump administration would further increase tariffs.

Trump Threatens Extra 10% Tariff On BRICS-Aligned Nations - Natalie Olivo, Law360 Tax Authority ($):

President Donald Trump threatened an additional 10% tariff on any country aligning with what's known as the BRICS coalition, which includes Brazil, Russia, India and China.

In a brief Truth Social post, Trump said Sunday there will be no exceptions to a 10% tariff on any country aligning "with the Anti-American policies" of BRICS. While his post did not elaborate on what this alignment may entail, the announcement fell against the backdrop of negotiations between 100 countries and the Trump administration over the White House's threat of higher import tariffs.

Blogs and Bits

What the one big tax bill could mean for you - Kay Bell, Don't Mess With Taxes. "We have six months to examine the tax changes (or extensions) and make moves, new and old, that can benefit us."

H.R. 1 OBBBA's New Limited Deduction for Interest on Car Loan - Annette Nellen, 21st Century Taxaton. "My take: Given that the people who qualify for this won't have $10,000 of interest expense, the phaseout level starts at fairly low amounts for people likely to be able to afford a new car, the reporting requirement for lenders, this provision should have been omitted and the $30 billion it costs the fisc over 4 years (per JCX-35-24 (7/1/25)) should have been used for deficit reduction."

I write on the BBB for The Free Press - Tyler Cowen, Marginal Revolution, quoting himself. "My view of the fiscal authority—Congress—is that its primary fiduciary duty is to act responsibly. The Big Beautiful Bill is not that. Nonetheless, I am reminded of the classic scene in the 1971 movie Dirty Harry when Clint Eastwood (Harry) asks, 'Do I feel lucky?' Here’s to hoping."

Dissecting Partnership Audit Limitations: Insights from JM Assets, LP v. Commissioner - Ed Zollars, Current Federal Tax Developments. "In a significant decision for tax professionals navigating Bipartisan Budget Act (BBA) partnership audit procedures, the United States Tax Court in JM Assets, LP v. Commissioner, 165 T.C. No. 1 (2025), delivered a ruling that clarifies the statute of limitations for final partnership adjustments, particularly when a partnership requests modification of an imputed underpayment."

Refunds and Regrets

Four tax preparers sentenced to combined 105 months in federal prison - IRS (Defendant names omitted, emphasis added):

Four tax preparers convicted of defrauding the IRS of nearly $8 million have been sentenced to a combined 105 months in federal prison, announced Acting United States Attorney for the Northern District of Texas Nancy E. Larson.

According to court documents, Defendant, of Mansfield, Texas, was the owner of FA Tax, a tax preparation business located in Grand Prairie, where he and other tax preparers prepared fraudulent tax returns for their clients, often causing the IRS to issue refunds to those clients. The estimated loss to the IRS from these false tax returns totaled more than $7.5 million.

Defendant pled guilty in September 2024 to falsely preparing tax returns. As part of his plea agreement, Defendant also admitted to fraudulently obtaining two Paycheck Protection Program (PPP) loans totaling $760,415 under the Small Business Administration’s COVID -19 relief program.

The biggest refund doesn't mean the best preparer. And remember, preparer fraud allows the IRS to assess taxes on fraudulent returns they prepared indefinitely, even if the clients didn't know about the fraud.

What day is it?

It's National Blueberry Day! I like them best in pies.

Tax News & Views Big Beautiful Blueberry Roundup

Joe B. Kristan, CPA