The shutdown stalemate drags on. Lawmakers are seeking an off-ramp as the federal shutdown moves into its third week and federal employees begin missing paychecks. The Senate left town for the long weekend after failing to pass another stopgap bill, but return today for an eighth vote on the GOP-led measure to fund the government through mid-December. Politico reports that Democrats continue to hold out for a guaranteed vote on extending Affordable Care Act (ACA) subsidies that expire at year’s end, while Republicans continue to want the government reopened before negotiations proceed.
IRS confusion deepens over pay and furlough policy. Retracting earlier assurances that furloughed employees would automatically receive back pay, the IRS is now deferring to the Office of Management and Budget’s position that Congress must authorize it. The IRS is also warning that even shutdown-exempt staff could be furloughed if they take more than eight hours of leave per pay period, according to Federal News Network. Nearly half the IRS workforce is already furloughed, and those still working say the new policy was delivered verbally, without written notice.
Neal presses IRS to not delay filing season. With the IRS already strained by leadership turnover and funding cuts, Rep. Richard Neal (D-MA) urged the agency not to delay the 2026 tax filing season. In a letter to Acting IRS Commissioner Scott Bessent, the House Ways and Means Committee’s ranking member warned that a late February start would postpone tens of millions of refunds, creating hardship for families facing higher costs of living. Neal asked Treasury to confirm when the filing season will begin and how staffing reductions might affect taxpayer service, refunds, and call response times.
TPC event on October 20: New perspectives on the fiscal outlook. As policymakers grapple with long-term fiscal challenges in the wake of the One Big Beautiful Bill Act, the TPC will host “New Perspectives on the Fiscal Outlook” on October 20. Maya MacGuineas (Committee for a Responsible Federal Budget) and William Gale (TPC) will present research on debt, fiscal sustainability, and lessons from other countries’ consolidation efforts. Journalist Jordan Weissmann will moderate a panel featuring experts from the Manhattan Institute, American Action Forum, Brookings, and TPC.
Cash assistance and children: What’s next? On October 22, the Urban Institute and Berkeley Opportunity Lab will host “Cash Assistance and Children: Research Roundup and Policy Future,” to examine the long-term effects of income supports for families. Maryland Governor Wes Moore (D) will deliver a keynote moderated by MSNBC anchor Catherine Rampell. Researchers will share new evidence on how cash assistance affects children’s well-being, parental employment, and the administrative barriers that shape outcomes.
Congress could expand the Child Tax Credit. The One Big Beautiful Bill Act raised the Child Tax Credit (CTC) from $2,000 to $2,200 per child and indexed it for inflation, but left many low-income families behind because it didn’t change how the refundable portion phases in. TPC’s Elaine Maag outlines five policy options modeled by TPC to increase the CTC’s reach. One would start the credit’s refundability from the first dollar of earnings; another would remove the $1,700 refundablity cap. The five options range in cost from $1 billion to $10 billion annually, with the biggest gains for families in the lowest income quintiles.
How can states help young adults claim their earned tax benefits? Many young adults who qualify for state versions of the earned income tax credit (EITC) or child tax credit (CTC) never claim them—largely because they don’t know they’re eligible. New TPC research conducted in partnership with the Maryland’s Comptroller’s Office explores how outreach and digital design can help young workers file and access benefits. Focus groups found that participants wanted plain-language resources, in-person assistance, and relatable social media outreach. In other words, turning eligibility into access requires human-centered design along with tax policy know-how.
Do taxes really keep seniors from moving? Maybe not. In The Washington Post, Urban Institute nonresident fellow Jim Parrott argues that the capital gains tax is one reason older homeowners hesitate to sell, worsening the housing shortage. But TPC’s nonresident fellow Howard Gleckman counters in Forbes that while taxes matter for some, most seniors stay put for nonfinancial reasons—like wanting to age in place or stay near friends and doctors.
The Daily Deduction will publish once weekly until the federal government reopens and Congress returns to session.
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