Topic · 13 episodes
US Tax Policy
US Tax Policy is shifting on multiple fronts in 2026. The One Big Beautiful Bill Act created a tip income deduction for 70+ occupations and launched Trump Accounts — $1,000 federal seed deposits for eligible newborns. The IRS replaced its First Time Abatement program with automatic penalty relief. Meanwhile, Treasury Secretary Bessent spooked Wall Street with a since-deleted X post — no rule filed — and House Republicans are racing a $95 billion budget bill toward midterms with zero spending offsets.
Frequently asked
What is the tip tax deduction in the One Big Beautiful Bill Act?
Under Section 224 of the One Big Beautiful Bill Act, tipped workers — waiters, bartenders, hairdressers, and 70+ other occupations — can deduct up to $25,000 in qualified tips from federal income taxes for tax years 2025–2028. The deduction is above-the-line, but payroll taxes still apply and state conformity is unresolved.
What are Trump Accounts and who qualifies for the $1,000 deposit?
Trump Accounts, launched July 4, 2026, are minor IRAs seeded with a $1,000 federal deposit under IRC § 6434. Only children born between January 1, 2025 and December 31, 2028 qualify — roughly 1.4 million of the 6 million registered. No earned-income requirement applies.
What changed with IRS penalty relief in summer 2026?
On July 8, 2026, the IRS issued IR-2026-83, replacing its 25-year-old First Time Abatement program with the Automatic Exemption from Penalty. Taxpayers with three years of clean compliance now receive relief automatically — no form required. Estimated tax penalties remain excluded, and reasonable cause relief faces new visibility risks.
Is Treasury cracking down on Wall Street tax strategies like box-spread ETFs?
Treasury Secretary Scott Bessent posted on X on July 22, 2026, warning that strategies including 351 conversions and box-spread ETFs 'may' be abusive. No rule was filed. The post was later deleted, but Affiliated Managers Group shares dropped immediately — the chilling effect lingered without any formal legal line drawn.
Can Congress stop Trump's tariff powers?
In the current US tax policy and trade debate, Senator Ron Wyden's Congressional Trade Powers Reform Act of 2026 would require congressional approval for tariffs under Sections 232, 201, and 301. But Democrats hold only 47 Senate seats, making a veto override mathematically impossible — diagnosing a real structural problem without a viable cure.
Episodes
U.S. debt just hit $40 trillion—here's what Congress faces now on revenues and spendingThe U.S. national debt crossed $40 trillion on August 18, 2026, during economic growth — not a recession. Annualized interest costs now exceed $1.21 trillion, surpassing the entire defense budget. The average interest rate on federal debt doubled from roughly 1.5% in 2021 to over 3% by 2026, making the debt burden self-reinforcing.
Treasury and IRS just filed rules to bar non-citizens from refundable tax credits meant for AmericansTreasury's proposed rule REG-119882-25 would bar certain non-citizens from claiming refundable tax credits — the EITC, Child Tax Credit, and American Opportunity Credit — but it is not yet law. Current IRS practice still governs. The estimated savings range of $700 million to $2.6 billion signals Treasury lacks reliable data on who currently claims these credits.
Trump administration proposes inflation indexing for capital gains—a rare 20-year policy shiftThe Trump administration's 2026 capital gains indexation proposal would cost $1 trillion over ten years if retroactive, versus $170 billion if prospective-only. The top 0.1% of earners would receive an average $350,000 tax break; the bottom 40% would receive zero. Legal obstacles have blocked this policy for over 30 years.
Trump administration floats capital gains tax cuts on home sales as midterm voter pledgeThe Trump administration is floating two housing tax moves simultaneously: a federal capital gains exemption increase on home sales (experts say enactment before November is unlikely) and pressure to block New York City's pied-à-terre tax — both proposals benefit the same high-wealth homeowners, with no legislation behind either.
Trump refunded $128 billion in struck-down tariffs while Vegas workers still squeezed by high costsThe U.S. government refunded roughly $100 billion in IEEPA tariffs — Apple received $2.2 billion in a single quarter — but the legal mechanism only reimburses importers of record, not consumers or workers. Las Vegas hospitality workers squeezed by a discretionary-spending slump have no path into that refund pipeline.
New ITEP report shows Trump's tax changes raise rates for most Americans while delivering trillion-dollar benefits to the wealthyAn April 2026 ITEP report found that middle-income Americans pay roughly $900 more this year under Trump-era tax policy, while the top 1% receives about $1 trillion in cuts over ten years. Microsoft paid just 2.44% in federal taxes on $101 billion in pretax income — a direct product of the same law.
Treasury Secretary Bessent just flagged 'abusive' Wall Street tax products — IRS is cracking down nowTreasury Secretary Scott Bessent posted on X on July 22, 2026, warning that Wall Street tax strategies — including 351 conversions and box-spread ETFs — 'may' be abusive. No rule was filed. Affiliated Managers Group shares dropped immediately on ambiguity alone. The post was later deleted, leaving the chilling effect but no formal legal line.
Senator Wyden just introduced a bill to curb Trump's tariff powers — here's the constitutional clashSenator Ron Wyden's Congressional Trade Powers Reform Act of 2026 would require congressional approval for tariffs under Sections 232, 201, and 301 — but Democrats hold only 47 Senate seats, making a veto override mathematically impossible. The bill correctly diagnoses a structural problem Congress created over 90 years of open-ended tariff delegation, without offering a viable cure.
The U.S. just slapped 25% tariffs on Brazilian sugar, paper, and steel over unfair trade practicesOn July 15, 2026, the U.S. imposed 25% tariffs on most Brazilian imports — including sugar, steel, and paper — effective July 22, citing six specific unfair trade practices under Section 301. Critically, the U.S. already runs a trade surplus with Brazil, which a senior administration official acknowledged but dismissed as irrelevant.
House Republicans scrambling to pass a third budget bill by week's end before midterm electionsHouse Republicans are pushing a third party-line reconciliation bill — a $95 billion resolution with zero spending offsets — ahead of the 2026 midterms. Budget Committee Chair Jodey Arrington, who publicly demanded offsets, signed off on a framework with none. A $7 billion gap between the House defense allocation and the White House's Iran War request is fracturing the coalition before any floor vote.
The IRS just replaced First Time Abate with automatic penalty relief this summerOn July 8, 2026, the IRS issued IR-2026-83, replacing its 25-year-old First Time Abatement program with the Automatic Exemption from Penalty (AEP). Eligible taxpayers with three years of clean compliance now receive penalty relief automatically — no form required. Estimated tax penalties remain excluded, and reasonable cause relief faces new visibility risks.
The IRS just spelled out which waiters, bartenders, and salon workers can deduct tipsTipped workers — waiters, bartenders, hairdressers, and 70+ other occupations — can deduct up to $25,000 in qualified tips from federal income taxes for tax years 2025–2028 under Section 224 of the One Big Beautiful Bill Act. The deduction is above-the-line, but payroll taxes still apply and state conformity remains unresolved.
The federal government just started depositing $1,000 into Trump Accounts for American babiesTrump Accounts launched July 4, 2026, but only about 1.4 million of the 6 million registered children — those born between January 1, 2025 and December 31, 2028 — qualify for the $1,000 federal seed deposit under IRC § 6434. The accounts function as traditional IRAs for minors, with no earned-income requirement.