Income Tax News

Montana Gov. Greg Gianforte ©Image courtesy of Montana governor

The 2025 Legislative Session is officially over in Montana. Lawmakers in the Treasure State focused on several priorities during their time in Helena, including record income tax relief, reducing business costs with unemployment insurance reform, and clarifying environmental laws in response to court rulings. There were a couple of missed opportunities as well, and although property tax relief bills were approved, more work needs to be done to avoid further cost shifting and to bring greater transparency to why property taxes are increasing.

Although not as large as originally proposed by Gov. Greg Gianforte, record income tax relief was adopted with the approval of House Bill 337. The various income tax changes are expected to save taxpayers more than $750 million over the next four years. Even with this record tax cut, there is more work to be done in Montana.

As noted by the governor: “The reality is, even after our historic tax cuts in 2021 and 2023, we still have the highest income tax rate in the region and one of the highest in the nation.”

Continuing the tax cut theme, lawmakers also adopted House Bill 210 to reduce the state’s unemployment insurance burden for businesses. These changes are expected to save employers approximately $250 million over the next decade.

Secretary of State Christi Jacobsen said: “We’ve had record business growth in the state of Montana under Republican leadership in the last four years. In 2024, we had over 64,000 new businesses in the state. This is just a continued move to have historic tax cuts for Montana businesses and getting government out of the way so Montana businesses can thrive.”

Property tax reform was a big focus of the 2025 legislative session, but structural changes may need to wait for the next time lawmakers meet in 2027. Senate Bill 542 essentially freezes property tax values for the next two years, while House Bill 231 did reduce property taxes, but did it by shifting the burden to other taxpayers. Not acted on was the proposal for Truth in Taxation to bring greater transparency to what drives the property tax burden – spending.

As noted by Senate Taxation Committee Chair Greg Hertz: “Unfortunately, all we did was just rearrange who is paying property taxes in Montana.”

Along with reforming taxes, lawmakers spent time addressing the state Supreme Court’s controversial environmental rulings. Discussing these bills, Gianforte said: “Last year, the Montana Supreme Court issued a series of rulings that if left unchecked would have impacted Montana’s energy sector at time when Americans have seen electricity costs soar nearly 30 percent in the last four years. This package of legislation reduces red tape and provides certainty to small and large businesses across our state.”

According to the Governor’s press release, the five reform bills are:

House Bill 285 – Reaffirms that the purpose of environmental reviews is procedural in nature and is to share information with policymakers and the public.House Bill 270 – Clarifies that courts may not vacate permits without properly considering a number of factors in law, including impacts to Montana’s economy and the public interest.

House Bill 291 – Makes it clear that the State of Montana cannot adopt air quality standards that are stricter than the federal government’s, except in specific circumstances.House Bill 466 – Outlines that projects that are exempt from National Environmental Policy Act are also exempt from MEPA, reducing burdensome red tape and potentially duplicative processes.Senate Bill 221 – Clearly states what impacts are required to be included in MEPA assessments and directs DEQ to develop guidance for use by state agencies.

While Montana’s 2025 Legislative Session saw mostly positive outcomes for supporters of the free market and limited government policies, there were a couple of curious decisions. One was the approval of House Bill 477 to ban Styrofoam products. Another was the failure to advance Senate Bill 94 to end taxpayer subsidies of government union activities.

When all was said and done during the 85 days of session, Montana lawmakers debated a record 1,759 bills, sending 803 of those to the governor’s desk. Realizing these are part-time lawmakers who have sacrificed time away from their families and regular jobs, Mountain States Policy Center sends our thanks for their service and commitment to the people of the Treasure State.

Jason Mercier is Vice President and Director of Research of Mountain States Policy Center, an independent research organization based in Idaho, Montana, Eastern Washington and Wyoming. Online at mountainstatespolicy.org.

Originally Appeared Here

By Rachel Cohrs Zhang
Bloomberg News
(TNS)

President Donald Trump has set his sights on the pharmaceutical industry to shoulder part of the cost of his tax cuts, pressing congressional Republicans to force drugmakers to accept lower prices on prescriptions covered by Medicaid.

Trump asked House Republicans to mandate the government health program for low-income and disabled Americans get the lowest price for drugs that certain foreign countries are charged, the White House confirmed in an email to Bloomberg. The president made the request during ongoing talks over how to cut hundreds of billions of dollars in government spending to fund tax cuts.

The strategy could potentially ease one of the most contentious issues dividing Republicans as they seek to offset some of the cost of the tax cuts: whether to force millions of low-income Americans off Medicaid health coverage.

But it risks antagonizing a powerful Washington lobby. The pharmaceutical industry has fiercely fought efforts to lower the prices federal programs pay for drugs.

It’s also unclear how much savings the approach would generate. Medicaid already gets a set discount off the lowest price a drug maker offers in the domestic private market.

“There’s every reason to believe Medicaid is getting an incredible price for most drugs,” said former Biden administration Centers for Medicare and Medicaid Services official Kristi Martin.

The request is the first public indication that Trump is returning to a theme from his first term—that the U.S. overpays for drugs compared with other countries. However, his earlier plans were focused on the Medicare program, which includes older adults and is the nation’s largest payer for medicines.

“This is utterly unsurprising on one hand, but the details are a little surprising,” said Benedic Ippolito, a senior fellow in economic policy studies at the conservative think tank the American Enterprise Institute.

The pharmaceutical industry, battered by legislative losses under former President Joe Biden’s term, has aggressively lobbied for favorable policies this term. Executives have traveled to Trump’s Mar-a-Lago resort club, trumpeted investments in domestic manufacturing and argued their case in White House meetings. Trump even gave Eli Lilly & Co. CEO Dave Ricks a call-out at a public White House event Wednesday, saying Ricks “sweet talks” him about pushing reform to pharmacy middlemen.

While the pharmaceutical industry has notched some wins with temporary relief on tariffs and an industry-friendly provision in a recent executive order, Trump’s revival of his policy idea executives most dislike is bad news.

“Government price setting in any form is bad for American patients… At a time when we are facing growing competition from China, policymakers should focus on fixing the flaws in the U.S. system, not importing failed policies from abroad,” PhRMA spokesperson Alex Schriver said in a written statement.

The proposal to apply an international drug pricing element to Medicaid is a new one, and is a curveball in talks that have largely centered on complex details of how state Medicaid programs are funded and who should be eligible for health coverage. Those proposals would financially hurt state governments, health insurers and hospitals and drive millions of Americans off the insurance program.

Obstacles remain. Drafting legislation from scratch and getting it cleared by budget analysts in time to assemble a package this summer is a formidable task. Conservative Republicans in both chambers of Congress have in the past opposed the policy on the grounds that it constitutes “socialist price controls,” as Senator Mitch McConnell said when Democrats floated the idea.

Without details, it’s impossible to tell whether the savings could be enough to fund the hundreds of billions of dollars lawmakers are seeking. Medicare makes up a roughly three times larger share of retail drug spending than Medicaid, according to a 2017 analysis by the nonpartisan health policy research firm KFF.

“It would be very difficult to get big budget savings from Medicaid drug spending on the scale of what we’re talking about,” Ippolito said.

Politico first reported Trump’s request on international reference pricing.

Photo caption: President Donald Trump walks on the South Lawn of the White House on May 1, 2025. (Yuri Gripas/UPI/Alamy Live News)

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©2025 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency LLC.

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Originally Appeared Here

IRS to reduce workforce

Last season, taxpayers spent 13 hours doing their taxes, according to a report on ABC. How much we get taxed, how we submit our tax returns, and everything that happens after that could potentially be impacted soon, as early as late May of this year.

As with many federal programs and agencies, change is coming to the IRS as well. The Trump administration plans to reduce its workforce by 18 percent as a cost-cutting measure proposed by the Department of Government Efficiency (DOGE.) This would lead to the slashing of the jobs of some 7,000 of its probationary employees.

This year, the IRS is expected to collect about 97 percent of the revenues that fund the federal government, estimated to be around $5 trillion. Due to this upcoming restructuring, though, it is projected to lose out on about $700 billion in owed taxes, said Professor Natasha Sarin, speaking at an American Community Media briefing on April 11. She is a professor of Law and Finance at Yale and president of the Budget Lab, also at Yale.

Top 1% will pay less tax

The reason they won’t be collected is not because the vast numbers of those who earn a wage or a salary will not be paying their taxes. They will because their taxes are taken out of their paychecks, she explained. It is those who make money through means other than employment that are a lot less visible to the IRS, and it is they who have a lot of scope to pay less tax than what they owe.

“The vast plurality of underpayment is coming from those at the very top of the income ladder— the top one percent of the earners,” Sarin said. 

Fewer staff means fewer audits

According to Sarin, reports suggest that the IRS could be trimmed by as much as 50 percent. That would be like having an IRS at levels not seen since 1960, when the U.S. population was around 60 million and the economy was much less complicated.

At the Budget Lab, Sarin and her team tried to gauge the consequences of such a measure. “What we found is that a shrunk IRS could lead to a loss of revenue of $400 billion over the next decade. But that number could go up to as high as $2.4 trillion if we take into account the indirect effect of the staffing reduction,” she said.

The IRS of the future will do fewer audits of the rich because it will have fewer resources to do so. And that will shape the behavior of taxpayers in a big way. Just as people are less likely to drive recklessly in the presence of speed cameras, so businesses are less likely to underpay their taxes or evade them if they see other businesses getting audited. “Take away the enforcement and you lose not just direct tax dollars, but also these indirect tax dollars,” she explained.

Impact of changes

Speaking about how these changes would be felt at the level of individual taxpayers, Michael Kaercher, Deputy Director of the Tax Law Center at NYU School of Law and former IRS attorney, said, “I see a couple of things playing out. An IRS that is going to see cuts at the level that is being talked about is going to have a hard time answering phone calls. There has been some strong messaging that the IRS may pull the software with which many Americans could do their taxes at no cost.”

Aravind Boddupalli, a researcher at the Urban-Brookings Tax Policy Center, focused on the recent agreement between the IRS and ICE to share data. This, he believes, will lead to three outcomes.

A) This arrangement will effectively reduce how much federal tax the agency collects because illegal immigrants, who do pay taxes, will stop doing so, for fear of being deported. They chip in over $60 billion to the U.S. economy.

B) It will erode public trust in the agency. Up until now, the IRS has kept taxpayer data highly confidential, bound as it is by §6103 of the federal tax code. “It has no stated exception for immigration enforcement.” As a result, folks who are not documented have paid their taxes in good faith, hoping that paying their taxes will, one day, enable them to acquire a legal status,” Boddupalli said. 

C) It will have a chilling effect in other areas, too. Immigrants will be reluctant to engage not only with the IRS, but with other government agencies as well, and other spaces where they sense risk, such as going to see a doctor or sending kids to school.

Loss of Revenue

The purported goal of reducing the IRS is to reduce government spending and its operating costs. But paradoxically, this may lead to a loss of revenue, which could potentially exceed what could be gained through the reduction in the workforce, these experts warned. To offset some of that loss, there is a plan being contemplated to cut Medicaid and SNAP, which would harm low-income households.

Tariffs are being considered as a stream of revenue. But they are essentially “consumption taxes,” said Kaercher, which, again, would have a “far greater impact on the low-income households than the very rich.”

AI could replace some IRS agents, but who would train those AIs? Surely, that job would need humans.

Related

Originally Appeared Here

Ever wonder why your friend in Florida brags about tax season? It might be because their state doesn’t collect any income tax. Let’s break down which states take the biggest (and smallest) bites out of your paycheck. State income taxes are separate from federal income taxes and help fund services including education (including K–12 teacher salaries), healthcare, infrastructure, public assistance, and state prisons. Some states have a flat income tax rate, while others have a progressive rate, which means that higher earners pay a larger percentage of their income.

In 2022, the highest average state income taxes per person were in New York ($4,461), California ($3,735), and Massachusetts ($3,475). The lowest averages among states that tax wages were in North Dakota ($605), Mississippi ($863), and Louisiana ($975). But you could say the lowest averages were truly in the nine states that didn’t collect any state income tax. As of 2025, they were Alaska, Florida, Nevada, South Dakota, New Hampshire, Tennessee, Texas, Washington, and Wyoming.  (New Hampshire and Tennessee collected small amounts in 2022 as they phase out income tax laws).

Help Wanted: Air traffic controllers. These professionals help manage air traffic and keep the skies safe. The Federal Aviation Administration (FAA) controls 290 air control facilities, but as of September 2023, nearly half of those facilities were understaffed. What’s behind the nationwide gaps?

In 2023, the FAA set a staffing goal of reaching 85% of target staffing levels at terminal air control facilities. Of the 290 facilities, 128 fell short. Of the facilities that fell short of the goal, 84 had staffing ranges between 75.0% and 84.9%. The remaining 44 were staffed to less than 75%. Staffing levels included trainees. The FAA cites several causes for shortages, including training delays related to COVID-19, an already-lengthy training timeline, and limited on-the-job training opportunities. Workforce losses from retirements, promotions, and resignations also play a role. In 2023, Minnesota’s Rochester Tower was the nation’s most understaffed facility (at 47.8% of target air traffic controllers on staff). Iowa’s Waterloo Tower (56.5%) and New Jersey’s Morristown Tower (57.9%) followed. The FAA exceeded its hiring goals in 2023 and in 2024. As of 2025, the FAA has announced a plan to accelerate air traffic controller hiring to address the shortages.

Tariffs are back in the news, but did they really ever leave? Here are the facts on tariffs in light of the tariffs President Trump announced on dozens of nations last Wednesday. USAFacts also took tariffs questions from our online followers last week. Replay the live stream here. Tornadoes tore through the central US last week, killing several people. Here’s the data on where tornados happen most often. The US dollar hit a six-month low against other major currencies on Thursday. Traditionally the dollar is strong. A federal judge ruled last Monday that Alabama’s attorney general cannot prosecute people or organizations who help the state’s residents seek an out-of-state abortion.   Did you keep up with last week’s newsletter? Prove it with the weekly fact quiz.

According to the Census Bureau, every state became more diverse between 2020 and 2023. By 2023, the most diverse counties were along the coast and near the Mexican border, while the Midwest, Appalachia, and parts of New England remained less diverse. The bureau’s diversity index measures the probability that two people selected at random will be from different racial and ethnic groups.

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Previous articleRichardson K’s 11, Auburndale Handles Newman Catholic in Shutout WinNext article2025 Medford Raiders Spring Sports Schedules David Keech is a retired teacher and works as a sportswriter, sports official and as an educational consultant. He has reported on amateur sports since 2011, known as ‘KeechDaVoice.’ David can be reached at [email protected]

Originally Appeared Here

Montgomery County Executive Marc Elrich (D) announced Wednesday he plans to withdraw his proposed 3.4% property tax rate increase for fiscal year 2026 and replace it with a proposal to increase the county’s income tax rate from 3.2% to 3.3%.

Elrich’s initial property tax proposal was intended to fully fund Montgomery County Public Schools’ (MCPS) $3.65 billion budget request for fiscal year 2026, which begins July 1. He said that changing to an income tax increase instead would be a more equitable solution for county taxpayers.

“This change will allow us to continue to fund both MCPS and vital County services, while mitigating the impact on individuals who might find themselves without employment because of recent action by the Federal government,” Elrich wrote in a Tuesday letter to County Council President Kate Stewart (D-Dist. 4).

In the letter, Elrich explained the proposed change was due to legislation passed by the 2025 Maryland General Assembly that allows counties to increase the formerly mandated income tax rate of 3.2% to a maximum of 3.3%. Elrich said this move is “more progressive” than his property tax hike proposal.

According to Elrich, the proposed income tax increase, coupled with the other revisions to the state’s tax code, is preliminarily estimated to generate between $70 million and $80 million for the county government in fiscal year 2026 and $60 million to $70 million annually thereafter. In his letter, Elrich said he would be sending the council his new proposal and other changes to his proposed $7.65 billion county operating budget in the coming days.

Stewart told Bethesda Today in an interview Wednesday that Elrich had not sent information about his proposed changes beyond the letter, and that the council also was not provided with details about how the estimated tax revenue was determined.

Elrich released his recommended county operating budget plan for the upcoming fiscal year on March 14. The spending plan represents an increase of 7.4% from the county’s current $7.1 billion operating budget. The council is reviewing Elrich’s proposal and is expected to approve a final budget in mid-May.

In addition to his recommended income tax hike, Elrich also is proposing some tax relief for eligible residents. He’s suggesting the county’s Income Tax Offset Credit for eligible homeowners be increased $60: from $692 to $752 “to provide meaningful relief to homeowners who may be experiencing higher overall bills due to various budget adjustments this fiscal year.”

Elrich is also proposing the county increase its match of the state’s Refundable Earned Income Tax Credit from 56% to 65% percent.

Elrich presses council to move forward with proposal

During a virtual press briefing on Wednesday, Elrich said funding his proposed operating budget will not be possible unless the council votes to pass his proposed income tax increase.

“I’m hoping that the majority of council members are amenable to this. I mean, there is no way to fund the things we need to do in the budget if we don’t do this,” Elrich said. “The worst cuts you could make are certainly to the school system, but everything else would wind up coming out of social services, environmental programs. And I’m really concerned.”

When asked by a reporter if he’d shared the idea of switching to an income tax increase with councilmembers, Elrich said he’d floated the idea to Stewart.

“We thought it would be fair, and she didn’t say ‘great,’ and she didn’t say ‘horrible.’ She basically was happy,” Elrich said.

But Stewart shared a different perspective when asked by Bethesda Today about the exchange.

“The county executive should know better than to ever speak on behalf of someone, particularly a woman elected official,” Stewart said. “We have the potential to increase our income tax. But we need to think about that very carefully. Our residents are really feeling the stress of what is happening right now in the country. We have seen taxes go up at the state level.”

Stewart told Bethesda Today that she had told Elrich that there was not enough council support to pass a property tax rate increase. Councilmembers Andrew Friedson (D-Dist.1), Evan Glass (D-At-large) and Laurie-Anne Sayles (D-At-large) had all publicly released statements saying they didn’t support the initial proposal to increase the property tax rate.

“So many of our residents are impacted directly and indirectly by the cruel and haphazard decisions that are being made by the federal government in terms of layoffs and firings and other things,” Stewart said. “We know that our [property] assessments in the county have gone up quite dramatically. Even the thought of increasing property taxes was something that many of us had very strong doubts about.”

Stewart said Elrich’s new proposal will be considered by the council. A date has not been officially set for its introduction or for a public hearing. Stewart said the council will have to balance the pressures facing residents with adequately funding the county’s programming and services.

“We need to make sure that we’re providing the services they need across the board, whether that’s for our school system or our health and human services, and we need to continue to plan for the future,” Stewart said.

County Chief Administrative Officer Rich Madaleno defended Elrich’s new proposal during Wednesday’s media briefing.

“People have to recognize that … if their federal taxes are going to come way down, increasing 0.01% for their income tax [is] in order to keep up all these services — public education, public safety, public health, all the other amazing things that we do each and every day to keep this one of the most desirable locations to live on the planet,” Madaleno said.

Originally Appeared Here

CNN
 — 

Gary Shapley, whom President Donald Trump named acting commissioner of the Internal Revenue Service earlier this week with the support of Elon Musk, will no longer serve in the role, sources told CNN — a win for Treasury Secretary Scott Bessent’s office, which had opposed his appointment.

Michael Faulkender, the deputy secretary of the Treasury, will be taking on the position, the sources said.

Shapley had the backing of Musk and congressional Republicans, while Bessent’s office had reservations, three sources familiar with the matter told CNN. Bessent was out of the country when Trump appointed Shapley.

Shapley’s ouster from the top leadership role, which was first reported by The New York Times, ends a whiplash week at the IRS, which is a bureau of the Treasury Department. Trump signed the paperwork appointing Shapley on Tuesday, triggering panic among some career civil servants.

Shapley, who helped lead the Hunter Biden investigation, had provided whistleblower testimony to Congress as Republicans claimed partisan bias by Justice officials had hindered the investigation of the son of President Joe Biden. Republicans had celebrated his ascension at the IRS after Trump had previously named him deputy chief of IRS criminal investigations.

The outgoing acting commissioner, Melanie Krause, announced Shapley’s elevation in an agency-wide email on Wednesday, according to three sources.

“I’ve made the decision to step down as acting commissioner and today is my last day in the office before I transition into a leave status,” Krause wrote. “I also have the privilege of sharing that President Trump has appointed Gary Shapley as the next acting commissioner.”

But days after his appointment, Shapley was on his way out of the top leadership role.

Bessent wrote on X on Friday that “trust must be brought back to the IRS,” and expressing confidence that Faulkender “is the right man for the moment.”

He also praised Shapley, noting that “he remains among my most important senior advisors” at Treasury and vowing that he will have a “senior government role” after completing his ongoing internal review of what the administration has described as political interference in the Hunter Biden tax fraud investigation.

A Treasury spokesperson added that Faulkender “is the United States Treasury’s choice to temporarily lead the IRS during its current transition toward a more efficient, more effective agency to best serve the American people.”

“We urge Congress to act quickly to confirm permanent leadership at the IRS to ensure its ability to best serve taxpayers going forward,” the spokesperson added.

Including Shapley’s short-lived tenure, Faulkender will be the fifth person to lead the beleaguered tax-collection agency this year. Trump’s pick for full-time commissioner – former Missouri Rep. Billy Long – awaits confirmation in the GOP-led Senate.

CNN has reached out to the IRS.

During Trump’s first term, Faulkender worked at the Treasury Department as assistant secretary for economic policy. He was confirmed in March by the Senate, in a 53-43 party line vote, to be the deputy secretary under Bessent during Trump’s second term.

Faulkender’s responses to written questions from senators shed light on his philosophy surrounding the IRS’ top priorities. On March 6, he wrote that the agency should “enforce the tax code in an even-handed manner” and raised concerns about “overly aggressive and poorly targeted audits that burden ordinary taxpayers and small businesses.”

He also offered reassurances to Democratic concerns that Trump might pressure the IRS to do his political bidding, including that he might order audits of perceived enemies.

“If confirmed, I will support the fair and impartial implementation of our nation’s tax laws, including the important safeguards against improper interference with taxpayer audits and investigations,” Faulkender said, later adding, “I will comply with all relevant laws.”

He pledged to protect taxpayer privacy and said the Treasury Department “will comply with” court orders restricting the Department of Government Efficiency from accessing highly sensitive IRS databases. Some of those limitations on Elon Musk’s team have since been relaxed while legal cases play out.

“The protection of tax returns and tax return information is essential to maintaining taxpayers’ confidence in the IRS and the tax system more generally,” Faulkender wrote. “I am absolutely committed to upholding taxpayer privacy rights… if confirmed, I will ensure that any access is in compliance with the statutory protections found in the tax code.”

CORRECTION: This story has been updated to correct that Shapley is still a criminal investigator at the IRS.

Originally Appeared Here

The Internal Revenue Service (IRS) is reportedly planning to revoke Harvard’s tax-exempt status in what would be a probably illegal move amid Donald Trump’s concerted attack on the independence of US institutions of higher education.

Trump on Tuesday called for Harvard, the US’s oldest and wealthiest university and one of the most prestigious in the world, to lose its tax-exempt status, CNN first reported.

“Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting ‘Sickness?’ Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!” the US president said in a post on his Truth Social platform.

The Trump administration asked the top attorney at the IRS, the US federal tax agency, to revoke Harvard’s tax-exempt status, the Washington Post further reported. It is illegal for the president to direct the IRS to conduct an investigation or audit.

Harrison Fields, a White House spokesperson, told the Washington Post that the IRS began investigating Harvard before the president’s statement and that any investigation would be independent.

“Any forthcoming actions by the IRS will be conducted independently of the president, and investigations into any institution’s violations of its tax status were initiated prior to the president’s TRUTH,” he said, referring to the president’s social media post.

The move is a significant escalation on Trump’s attack on Harvard and his aggressive, multi-pronged assault on institutions of higher education. Stanford University has voiced support for Harvard and other schools have united in support of academic freedom.

Harvard, the flagship in the group of elite, private sector US universities known as the Ivy League, said earlier this week it would not acquiesce to a list of demands from Trump. The US education department responded by freezing $2.3bn in federal funds to the school. Even though the White House is attacking this and other institutions alleging antisemitism and negatively characterizing its teaching and academic culture as overly liberal, the Post further reported on Thursday that a review of documents showed that the government had provided no proof of lawbreaking at Harvard.

US tax law exempts charitable, religious and other social welfare organizations from paying federal taxes. Tax-exempt organizations are also barred from engaging in political activities. There is no evidence Harvard has engaged in any kind of conduct that would cause it to lose its tax exemption.

“There is no legal basis to rescind Harvard’s tax-exempt status,” Jason Newton, a Harvard spokesman, said in a statement to USA Today. “The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.”

Losing tax-exempt status could ultimately cause Harvard to lose billions. Donors would no longer be able to take a federal tax deduction on gifts to the university, and it could have to pay tax on money generated from investment in its endowment, Nathan Goldman, a tax law professor at North Carolina State University, wrote in Forbes.

Addressing reporters in the Oval Office on Thursday, Trump called Harvard a “disgrace” and “obviously antisemitic”. He said it was his understanding that no final decision had been made yet regarding its tax-exempt status.

“Tax exempt status, I mean, it’s a privilege. It’s really a privilege, and it’s been abused by a lot more than Harvard,” Trump said, suggesting that other universities could face similar consequences. “It’s something that these schools really have to be very, very careful with.”

Originally Appeared Here

Tuesday is April 15, when income taxes are due for American taxpayers. Some take it in stride, in the spirit of early 20th century U.S. Supreme Court Justice Oliver Wendel Holmes, Jr., who famously quipped that “taxes are the price we pay for a civilized society.” Others grumble at the burden of cutting a hefty check for Uncle Sam to waste on God knows what.

But for many, filing clears the way for getting a pretty fat check back from the feds in the form of a refund. What?

OK, it’s not like Uncle Sam is just doling out federal dollars to anyone. Those who get a refund paid more than the tax code says they owed — often invisibly in the form of paycheck tax withholding — and so the government is just returning the overpayment. Many financial and tax advisers urge clients to avoid it by increasing their tax withholding.

“A lot of people get excited when they receive a refund, but all that means is they overpaid their taxes throughout the year and are now getting their own money back, the money the government’s been holding on to,” said David Kline, vice president of communications and research for the California Taxpayers Association, a nonprofit tax research and advocacy group.

But hey, even if you did lose out on some interest you could have earned on the money, a refund’s like getting a little present in the mail. Nieka Bright, 41, a consultant from Oakland, said she increased her withholding so she wouldn’t end up with an April tax bill, and is expecting to get a refund this year of about $1,500, her first in “quite a while.”

“Refunds are always better than paying back the government for something that could have come out earlier in the year,” Bright said.

That may be why almost three out of four filers nationally overpay Uncle Sam and collect a refund the following spring, according to 2022 IRS data, the most recent year available, crunched by Upgraded Points, a travel and financial research company. The average refund among U.S. filers was nearly $3,300 annually.

The California average refund is close to that national figure, $3,344, 11th highest among the states, Upgraded Points data showed. Leading the states are Florida ($3,852), Texas ($3,774) and Wyoming ($3,720).

Among California’s 58 counties, seven of the 10 with the highest average federal tax refunds are in the Bay Area, the data showed. Leading them all by a wide margin is Marin, at $6,168, highest in the state and 6th highest among counties across the country. Teton County, Wyoming, had by far the highest average refund among U.S. counties: $13,168.

Other Bay Area counties in the top 10 statewide were San Mateo ($4,828), Santa Clara ($4,404), San Francisco ($4,273), Contra Costa ($3,940), Alameda ($3,584) and Napa ($3,524). The share of Bay Area filers receiving refunds ranges from 46% in Marin County to 66% in Solano County, and percentages have been decreasing in recent years.

Michael Stromberg, chief technology officer and lead data analyst at California-based Lattice Publishing, which partners with Upgraded Points to design and execute data studies, said that the average refund amount is higher in more affluent counties because with higher earners, even a small discrepancy in their withholdings can lead to a large refund.

“That trend definitely holds in the Bay Area and may even be more pronounced here because of the region’s wealth,” Stromberg said.

Stromberg said that in recent years, the national share of income tax returns that were overpaid and due either a refund check or future tax credit has been dropping, from 77% in 2017 to 70% in 2022.

California is one of 42 states that assess their own income taxes, which also are due April 15. As with federal income taxes, those who overpay will receive a refund check, but the amounts will differ due to the different state-level tax rates and codes.

California’s top level 13.3% income tax rate is the highest in the country, tax experts say, but they noted that rates for lower income brackets are lower.

“California has extremely high tax rates on high earners, but for lower- and middle-income earners, the rates aren’t particularly high,” said Jared Walczak, vice president of state projects at the Tax Foundation, a nonprofit research organization in Washington, D.C. “So in that sense, California can actually be competitive for those income brackets compared to other states. But as incomes rise, the tax burden becomes much heavier.”

Kline added that California’s top 5% of income earners pay about 62% of all the state’s personal income tax revenue.

“So we’re heavily reliant on high-income earners staying here and paying taxes,” Kline said.

Income tax is California’s single largest source of state revenue, 41%, far more than sales tax (17.25%) and corporate taxes (14.77%), making the state budget vulnerable to market swings that affect high earners’ incomes. The programs receiving the largest share of state tax revenue are health and human services (38%), K-12 education (27.35%) and higher education (8%).

The biggest recipients of federal spending are Social Security income for older people (22%), debt payments (14%), health programs (13%), Medicare health coverage for older people (13%) and national defense (13%).

President Trump and his fellow Republicans who control Congress have pledged to extend the Tax Cuts and Jobs Act that he signed in 2017 and is set to expire at the end of the year. Should that not happen, taxpayers next year may find themselves owing more and seeing smaller refunds.

“There’s a lot in flux right now that could impact taxpayers in California and across the country at the federal level,” Walczak said.

Originally Published: April 14, 2025 at 2:33 PM PDT

Originally Appeared Here

INDIANAPOLIS (WISH) — An Indiana University professor and former mayor on Friday said most local governments would have very little money to spare if lawmakers approved a property tax overhaul.

Paul Helmke is the director of the Civic Leaders Center at the IU O’Neill School of Public and Environmental Affairs. He served three terms as the mayor of Fort Wayne from 1988 to 2000. Helmke said property tax revenue is crucial for local functions such as emergency services and street repair, in addition to funding schools. Unlike income taxes, he said property tax revenue is entirely local. The state doesn’t receive any.

Indiana homeowners have endured a massive spike in assessed values since 2021. Property taxes became the top issue in the 2024 gubernatorial election and Gov. Mike Braun has campaigned for a property tax cut ever since he took office. His tax plan has gone through a total of four iterations at the Statehouse to date. At a rally in support of Braun’s proposal last month, homeowners told News 8 their bills have risen by thousands of dollars, in some cases.

Helmke said those spikes are due primarily to a combination of inflation and rising assessed values. In an interview with News 8 for Sunday’s “All INdiana Politics,” he said his own property tax bill went up 15 percent even though his rate went down.

“It’s something you could argue, well, I’m wealthier now, my house is worth more, but again, the catch is, that doesn’t mean there’s more money in your pocket,” he said. “So that’s why there’s this push for property tax refrom. When your value goes up, that doesn’t give you more money to spend, so it’s harder to pay those property taxes.

Braun originally called for lawmakers to reset property taxes to 2021 levels. The current version of the plan instead allows homeowners to claim a credit of up to 10% on their total property tax bill, to a maximum of $300. Seniors on fixed incomes could claim an additional credit of $150 while disabled veterans could get an extra $250 credit. Those two credits could not be combined with each other. House Republicans also added a long-sought business personal property tax exemption and rolled in a separate piece of legislation that requires traditional public schools to share property tax revenue with charter schools.

The measure also caps local income tax, or LIT, rates at 2.9%, down from 3.75% in current law. House Republicans have said local governments would not raise LIT rates high enough to offset homeowners’ savings under the bill. Helmke disagrees. He said the vast majority of local government units in Indiana have LIT rates so far below the 2.9% cap they could make up the lost revenue and still remain below the limit. He said it’s very likely counties will take advantage of that.

“I think for most homeowners, it’s probably going to be a wash. Because if you own a home, you could see a $300 tax reduction. Maybe not next year but in the next 2 to 3 years, you’re going to see an income tax hike that’s more than that,” he said.

Gov. Mike Braun late Thursday said he looked forward to signing the bill in its current form.

That would require the Senate to concur with the House’s package rather than send it to a conference committee, where the bill could be rewritten yet again. A motion to concur has already been filed and SB1 is listed on the Senate’s concurrence calendar for Monday. Senate President pro tempore Rod Bray, R-Martinsville, on Thursday indicated he would prefer to concur and send the bill to Braun.

“I think we’re for sure talking about it as a caucus. We’ve been looking at it very closely, our caucus members have, looking at some runs and making sure they understand how it affects their communities and so we’ll continue to talk about it over the weekend,” he said. “But it’s my strong hope that we’ll be able to concur.”

“All INdiana Politics” airs at 9:30 a.m. Sunday on WISH-TV.

SB1 offers meaningful tax relief for Hoosiers. The plan to CUT, CAP, and REFORM means relief now and systemic changes for the future to protect taxpayers. Thank you to the House for their hard work and I look forward to the Senate sending this to my desk for signature next week!

— Governor Mike Braun (@GovBraun) April 10, 2025

Originally Appeared Here

The acting head of the IRS plans to resign after being bypassed over a new agreement to share the tax data of undocumented immigrants with Homeland Security personnel, according to two people familiar with the situation.

Acting IRS commissioner Melanie Krause — the tax agency’s third leader since President Donald Trump’s inauguration — will participate in the deferred resignation program the Trump administration offered to agency employees in recent days, said the people, who spoke on the condition of anonymity for fear of reprisal.

Disagreements over the agency’s direction also factored into Krause’s decision to leave, the people said.

Losing three agency leaders in three months is “unprecedented,” one of the people said. “I don’t think we’ve seen anything like this at IRS.”

Treasury Department officials in recent days sought to circumvent IRS executives so immigration authorities could access private taxpayer information, the people said. Those conversations largely excluded Krause’s input.

Treasury Secretary Scott Bessent and Homeland Security Secretary Kristi L. Noem signed an agreement Monday allowing the practice, although IRS lawyers had counseled that the deal probably violates privacy law. Krause learned of the deal after representatives from the Treasury Department released it to Fox News, the people said.

Krause also felt unable to push back on moves the U.S. DOGE Service was forcing through the tax agency, they said, including dramatic staffing cuts, a technology infrastructure overhaul and long-term IRS priorities.

“She no longer feels like she’s in a position where she can impact the decision-making that’s happening,” said a person familiar with the situation. “And [she believes] that some of the decisions that are being made now are things the IRS can never recover from.”

A Treasury Department spokesperson said Krause led the IRS “through a time of extraordinary change” as it tries to upgrade its technology and carry out other changes to help make government more efficient. “We wish Melanie well on her next endeavor,” the spokesperson said.

Representatives from the White House did not immediately respond to a request for comment.

Krause was the IRS’s chief operations officer before she became acting commissioner on Feb. 28. Her predecessor, Doug O’Donnell, retired rather than clash with DOGE and immigration enforcement officials who wanted broad access to confidential personal taxpayer data.

O’Donnell replaced Danny Werfel, the Biden-appointed IRS commissioner who hoped to remain in office during Trump’s term. But Trump announced plans to fire him and bring on former congressman and auctioneer Billy Long, a six-term Republican lawmaker without experience on tax-writing committees.

The Trump administration has moved aggressively to bring the IRS in line with the president’s priorities. Officials held a recent gathering with tax IT engineers to discuss building a cross-government data-sharing system that would allow agencies to use personal tax information to hunt for fraud in social safety net programs. IRS lawyers warned Krause that the initiative probably violated privacy laws, which prevent the sharing of personal data even with other government agencies.

Monday’s agreement with DHS would permit immigration enforcement officials to obtain highly protected tax information for people the Trump administration hopes to detain and deport. A redacted copy of the memorandum was filed in the U.S. District Court for Washington, D.C., as part of a lawsuit brought by worker and immigrant advocacy groups seeking to block the data-sharing.

The possibility of such an agreement had raised alarms among current and former IRS officials, who said it was a privacy breach and contravened the tax agency’s longtime guarantee that taxpayers suspected of being in the country illegally wouldn’t have their information turned over to immigration enforcement. Undocumented workers’ wages are subject to the same tax withholding and reporting requirements that applies to other U.S. residents.

DHS officials previously suggested they’d ask the IRS for help locating 7 million people. There are about 11 million undocumented immigrants in the United States, according to federal officials’ estimates.

Improper disclosure of tax information is punishable with prison time and hefty fines. Taxpayers whose privacy is violated are entitled to monetary compensation.

Under the terms of Monday’s agreement, Immigration and Customs Enforcement officials must provide the targeted person’s name and address, and the specific reason the disclosure could be relevant to a non-tax-related criminal investigation.

DHS spokeswoman Tricia McLaughlin said the “government is finally doing what it should have all along: sharing information across the federal government to solve problems.”

The memorandum sets out a “clear and secure process to support law enforcement’s efforts to combat illegal immigration,” a Treasury Department spokesperson said.

John Koskinen, who was IRS commissioner under President Barack Obama and Trump, said Krause’s situation shows that the Trump administration has “no qualms” about interfering at the tax agency. It is “unheard of that you would try to manage the agency from the Treasury Department,” he said.

Krause is the latest executive to leave the IRS amid a broad leadership shake-up. Employees who accept the deferred resignation offer are set to leave the agency on April 28, roughly two weeks after the April 15 tax-filing deadline.

Dozens of IT and cybersecurity officials have been placed on leave. About 7,000 employees were laid off in February, with more cuts announced last week.

The administration plans to slash the agency’s head count by about 25 percent compared with where it was in January, as part of the White House’s effort to shrink the size of the federal government.

Originally Appeared Here