Double or repeal the SALT cap? Blue-state Republicans and Democrats are lobbying President-elect Trump to lift the $10,000 cap on state and local tax (SALT) deductions enacted in the 2017 Tax Cuts and Jobs Act. Proposals range from doubling the cap to a full repeal, with implications for higher-income households and battleground districts in high-tax states.
IRS prepares for a streamlined 2025 tax filing season. The IRS has announced the 2025 tax season will begin on Jan. 27, featuring expanded tools and filing options due to modernization efforts. Direct File, which allows taxpayers to fill out and submit their returns with IRS software, will be available in 25 states with live chat, mobile access, and expanded credit eligibility. Free File also returns, offering free third-party tax preparation software for eligible taxpayers earning up to $84,000 annually.
A push for a national consumption tax. Rep. Buddy Carter (R-GA) has introduced H.R. 25, the Fair Tax Act, proposing to repeal most the existing tax code and replace it with a broad-based national sales tax. While touted as raising 23 cents in revenue for every dollar paid by a consumer, the sales tax rate would be close to 30 percent. It would also provide a monthly “prebate” based on federal poverty levels and household size. Similar proposals have been introduced in prior congressional sessions and failed to gain momentum.
California wildfire victims get tax extensions. Tax filing deadlines for Los Angeles County residents have been extended to October 15, 2025, due to the devastating wildfires impacting the region. This extension applies to individual, corporate, and pass-through entity returns and quarterly estimated payments. Governor Gavin Newsom and President Biden have declared states of emergency, enabling taxpayers to claim disaster loss deductions.
The United Kingdom’s borrowing costs have reached a 16-year high. As a result, UK Finance Minister Rachel Reeves faces tough choices to meet her fiscal targets. Per the BBC, Reeves has vowed not to borrow for "day-to-day" government expenses and wants to reduce debt as a share of national income by the end of the current parliamentary term. Economist John Gieve told the BBC that following that guideline could force Reeves to consider higher taxes or public spending cuts.
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