Treasury plans new limits on refundable credits for some immigrants. The Treasury Department plans to draft rules that would reclassify certain refundable tax credits as “federal public benefits,” which could bar some immigrant taxpayers from claiming them even if they file and pay taxes and otherwise qualify. According to the Treasury announcement, the change would affect the refundable portions of the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Saver’s Match Credit. Tax experts tell the Associated Press that DACA recipients, some Temporary Protected Status holders, certain foreign workers and students, and some families with US-citizen children could be affected depending on the final rule. Critics also argue that overriding the tax code requires Congressional action.
Roth conversions face new ‘tax torpedo’ risks under Trump tax law. Roth IRA conversions remain a popular way to shift savings into accounts that grow and can be withdrawn tax free, but new provisions enacted in the One Big Beautiful Bill Act (OBBBA) could complicate the tax math. CNBC explains how converting pretax balances raises taxable income, which can trigger phaseouts or reductions for new deductions such as the $6,000 deduction for older Americans, or the higher state and local tax (SALT) deduction cap. This could push some filers into an effectively higher tax rate and affect access to benefits like the zero percent long-term capital gains rate.
TPC is tracking billions of tariff policy combinations. TPC’s John Wong explains how TPC is modeling the complexity of tariffs with innovations in its approach. TPC’s new “tariff engine” calculates the tariff rate on each product, from each country, by day. In a single year, that’s 120 million tariff rates for just one policy, or ten billion tariff rates for all policies across two years. It enables more precise and relevant insights into an ever-changing economy. You can see it in action regularly at TPC’s tariff tracker.
Will existing rules weaken OBBBA’s investment incentives? TPC’s Elena Patel and University of Georgia’s Erin Towery examine whether OBBBA’s business incentives will deliver the intended boost to domestic investment once they interact with existing corporate tax rules. Provisions such as restored full expensing for domestic research and development, 100 percent bonus depreciation, temporary expensing for new US manufacturing facilities, and looser interest limits can reduce taxable income without changing book income, potentially increasing exposure to the 15 percent Corporate Alternative Minimum Tax and other minimum-tax regimes. They conclude that the interactions raise questions about how much relief large corporations will ultimately see.
Next week at the Urban Institute: Connecting families with state tax credits. The Urban Institute and the Comptroller of Maryland will host an event on improving access to state income-boosting tax credits, with a focus on Maryland’s largest state tax benefits. The event will feature a keynote conversation between Maryland Comptroller Brooke Lierman and Urban Institute president Sarah Rosen Wartell. It will also include a panel discussion among experts to discuss gaps between policy and practice, lessons from 2025, and promising outreach, community engagement, and filing support strategies to help ensure eligible households receive the credits for which they qualify. Register here for the December 2 hybrid event, taking place from 12:30 to 2:00 pm.
The Daily Deduction posts once this week, as Congress is not in session. Happy Thanksgiving.
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