House GOP struggles to shape reconciliation bill. Various news reports have detailed House Republicans’ significant hurdles to advance President Donald Trump’s fiscal agenda, as divisions over Medicaid, nutrition assistance, and taxes slowed committee progress. GOP senators are suggesting that the steep spending cuts giving House Republican moderates pause likely won’t survive in the upper chamber. “We’re not going to vote for Medicaid payment cuts,” Sen. Josh Hawley (R-MO) told Politico.
IRS budget faces steepest cuts in decades under President Trump’s proposed budget. President Trump’s fiscal 2026 budget proposal calls for a 20 percent reduction in IRS funding, which would bring the agency’s budget to its lowest point in real dollars since 2002. The administration frames the cut as a move to “disempower” the IRS following claims of political bias, though critics argue the funding reduction will hamper tax enforcement and widen the tax gap. Former IRS Commissioner Charles Rettig, appointed in the first Trump administration, warned the proposed budget would leave the agency under-resourced to handle various challenges. While taxpayer services may be protected, key modernization efforts and enforcement capacities would face cutbacks, reports Tax Notes.
More IRS layoffs loom as contract cancellations affect tech modernization. Several IRS contracts designed to support fraud detection and IT modernization have been canceled by the Department of Government Efficiency, resulting in hundreds of layoffs. The canceled agreements are part of a $1.5 billion freeze on IRS modernization contracts by outside groups like MITRE Corp., which warned that the loss of advanced analytics and support systems may compromise fraud prevention.
Trump again threatens Harvard’s tax status, despite legal and constitutional concerns. President Trump’s public threat via social media on Friday to revoke Harvard University’s tax-exempt status has prompted legal pushback and warnings of potential First Amendment violations. Experts say that while the IRS could theoretically review Harvard’s status, any move directed or influenced by the White House would violate a federal statute barring executive interference in IRS enforcement. Harvard President Alan Garber called the threat “highly illegal” and said it could set a dangerous precedent for educational institutions, reports The Wall Street Journal.
Hawaii approves hotel tax hike to fund climate resilience. Visitors to Hawaii will soon pay more to stay. The state legislature approved a bill raising the hotel tax from 9.25 percent to 11 percent starting January 2026. The increase is expected to generate up to $100 million annually, dedicated entirely to addressing climate-related threats like coastal erosion and wildfires. If signed by Gov. Josh Green (D), it will mark the first time a US state earmarks hotel tax revenue exclusively for climate change mitigation.
New tariff on Mexican tomatoes to come mid-July. Beginning July 14, the US will implement a 21 percent duty on fresh tomatoes imported from Mexico, a move aimed at revitalizing the domestic tomato industry. Currently, Mexico supplies around 70 percent of America’s fresh tomatoes, and experts estimate the duty could result in a 10.5 percent increase in retail tomato prices. The tariff follows the collapse of a longstanding pricing agreement between the two countries and that could further escalate trade tensions.
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