Treasury tightens clean energy credit rules tied to China and other “adversaries.” The Trump administration has issued new guidance that would further limit which clean energy projects can qualify for certain federal tax credits when they rely on foreign materials or ownership ties. Bloomberg reports on Treasury guidance that describes restrictions affecting components such as battery cells and solar wafers, with an emphasis on limiting material from China and other US adversaries. The guidance gives the IRS up to six years to audit for compliance.
Tennessee pitches “no jock tax” as a Super Bowl advantage. Tennessee lawmakers are leaning into the state’s tax structure as part of the push to bring the Super Bowl to Nashville. A Finance, Ways and Means Committee discussion highlighted how some states tax visiting athletes for income earned while playing there, often called a “jock tax.” Rep. William Lamberth (R-TN) said Tennessee does not impose that tax, arguing it could make the state more competitive for major sporting events, and the state’s tourism commissioner suggested a Super Bowl announcement could come as soon as this year.
Massachusetts fast-tracks decision on whether to delay key federal tax changes. Massachusetts is moving quickly to decide how, and how fast, to conform to major federal tax changes from last year’s reconciliation law. Gov. Maura Healey (D-MA) has proposed delaying five federal provisions that her administration says would otherwise reduce state revenues by $442 million in the current fiscal year and more than $250 million in each of the next two years. The plan would phase in conformity over two years, with immediate conformity (as of January 1, 2026) for full expensing of domestic research and experimental costs, while delaying other business provisions until tax year 2027.
Today’s debt trajectory is unlike past postwar eras. TPC’s Gene Steuerle and Jon Schwabish make the case that the modern US debt picture is historically unusual: Deficits remain large even outside recessions, and rising interest costs make the path harder to reverse. They note that last year’s reconciliation law is projected to add at least $4.1 trillion to deficits over the next decade, but it is only one contributor to a broader trend that could push federal debt above $56 trillion, about 120 percent of GDP, by 2036. The authors argue that while fiscal stimulus can cushion downturns, repeated decisions to avoid paying for policy choices have increased debt burdens over time.
New international tax rules shift incentives, but don’t simplify much. International tax changes enacted last year may look technical, but they could meaningfully alter incentives for where multinational firms invest and report income. TPC’s Thomas Brosy explains that the law replaces GILTI and FDII with new regimes and removes tangible-asset deductions that previously shaped how foreign and export-related income was taxed. The revisions may tilt incentives toward domestic investment at the margin, but they likely do not do much to curb profit shifting. Changes are estimated to reduce federal revenue by about $170 billion over ten years, while leaving businesses with yet another layer of complexity in an already crowded international tax system.
Itemized: Fact of the Week. Black married couples are more likely than White married couples to face a marriage penalty when filing a joint return: 46 percent of Black couples face a penalty compared with 43 percent of White couples, and Black couples are less likely to get a marriage bonus (36 percent versus 43 percent). The gap is larger for couples with $50,000 to $100,000 in combined income: 59 percent of Black couples faced a penalty compared with 51 percent of White couples.
The Daily Deduction will resume its regular schedule next week, when Congress returns.
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