No shutdown for the holidays. President Biden signed a stopgap funding bill into law, avoiding a holiday government shutdown and extending current funding levels through March 14. The bill allocates $110 billion for disaster relief, agricultural aid, and infrastructure repairs but excludes the debt ceiling suspension. Next year’s Republican-controlled Congress will revisit the funding debate while working to advance President-elect Trump’s policy agenda.
A populist tax pitch. Former Trump adviser Steve Bannon has proposed raising taxes on corporations and the wealthy to offset revenue lost from eliminating taxes on tips, overtime pay, and Social Security income. While this stance aligns with Trump’s populist messaging, it contrasts with Trump’s signature tax cuts for businesses during his first term. However, some House GOP members have signaled a willingness to increase the corporate tax rate to help pay for other tax breaks.
New York City’s fiscal caution. A report from New York State Comptroller Thomas DiNapoli projects the city will collect $1 billion more in revenue than projected this fiscal year, driven by higher-than-expected property and business tax collections, reports TaxNotes (paywall). While revenue growth bolsters the city’s budget, the comptroller urged the city to strengthen reserves in anticipation of potential federal policy shifts, including tariffs and changes to corporate taxes under the incoming administration.
IRS revisits COVID-era tax rebates. The IRS announced automatic payments for 1 million taxpayers who were eligible for but did not claim the Recovery Rebate Credit on their 2021 tax returns. These payments, with a maximum of $1,400 per individual, aim to simplify the process for taxpayers instead of requiring them to file amended returns. Taxpayers who haven’t yet filed for 2021 have until April 15, 2025, to claim the credit.
Congress is not in session. The Daily Deduction will post Mondays until it returns. Happy Holidays!
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky.
