IRS inflation adjustments for individual taxes: How does it work? TPC’s Robert McClelland has a new brief explaining why the IRS inflation adjustment was enacted, how it works, and how the change from using the so-called headline consumer price index (CPI) to chained CPI has affected taxes. Inflation last year reached its highest level in the United States since 1981, and the IRS announced a 7.1 percent inflation adjustment for individual taxes for 2023, the largest in decades. Whether the inflation adjustment for the tax year 2024 is as significant remains to be seen.
Taxpayers can now upload more documents through the IRS website. The agency announced that taxpayers who receive certain notices requesting more information can submit documentation electronically and securely through IRS.gov. Nine notices will be available for this feature, potentially affecting over 500,000 taxpayers each year, including military personnel serving in combat zone areas and recipients of the Earned Income Tax Credit and Child Tax Credit.
Massachusetts Gov. Healey promises a tax relief package by March 1. Gov. Maura Healey plans to propose a tax package with her administration’s budget next week. The tax proposal will likely include a child tax credit, tax breaks for those over age 65, renters, and lower-income families. State lawmakers have been “lukewarm” on tax relief, given an uncertain economic outlook.
India cuts its windfall profits tax. India has cut its tax on windfall profits on crude oil and exports of aviation turbine fuel and diesel, as Indian refiners continue to stock up discounted Russian fuel amid increased domestic consumption. Last July, India levied the windfall taxes after private refiners made gains in overseas markets instead of selling domestically at a lower price.
And Pakistan hikes its tax on luxury goods. The Pakistani government will raise taxes on various luxury imports and services. The government is attempting to secure the next portion of a $6.5 billion loan from the International Monetary Fund. The luxury tax could generate an additional $650 million annually.
The Daily Deduction will resume its regular schedule on Monday, Feb. 27, when Congress returns to session.
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