The “big, beautiful bill” signed into law by President Trump in July provides a bevy of new tax cuts and deductions that could lower taxes for millions of Americans, according to a recent analysis from the Tax Foundation.
The typical filer could see a tax cut of $3,752 in 2026, the nonpartisan think tank found. But the impact will also vary geographically, with some residents in some states likely receiving a bigger tax benefit than others under the new law, Garrett Watson, director of policy analysis, told CBS MoneyWatch.
For instance, the biggest average cut will go to residents of Wyoming, with a reduction of $5,374, according to his analysis of the law’s impact.
The geographic differences are due partly to variations in the average income of each state, given that the law provides bigger tax cuts to high-income Americans compared with low-income households, Watson noted. Other provisions also could help some regions more than others. That includes the higher deduction cap for state and local taxes, which will give more of a lift to people in states with high property taxes, such as New Jersey and New York.
“Places with higher incomes are going to have higher nominal tax cuts,” Watson said. “The largest tax benefits are going to the mountain states — it’s due to a subgroup of higher-income business owners.”
Residents of Mississippi and West Virginia are likely to see the smallest tax cuts next year, the analysis found. Incomes in those states tend to be lower than the national average, with median household income in Mississippi standing at about $55,000 as of 2023 and $60,000 for West Virginians, according to the Federal Reserve Bank of St. Louis. The national household median income is about $80,600.
The Tax Foundation analysis projects the average tax cut in tax year 2026, meaning that these numbers reflect the reductions for the next calendar year. Although many of the law’s provisions are effective in 2025, the IRS is still working out the details on some of them, which means lower tax withholding for the new provisions won’t be fully in place until 2026, Watson said.
Bigger refunds?
Tax refunds are also likely to be larger in early 2026, when people file their taxes for the 2025 calendar year, Watson said, although he hasn’t calculated the potential impact.
Seniors who can claim a new $6,000 deduction for people over 65 under the law may get a bigger refund, as well as taxpayers across the board due to the higher standard deduction, said Mark Steber, chief tax officer at Jackson Hewitt.
Because of the tax changes in the new law, Steber recommends that people start preparing now. For example, workers who are newly eligible for tax breaks on tips and on overtime pay should keep track of such income.
“Having this much time left in the year allows taxpayers to make any necessary adjustments to help increase a refund or lower an amount due, and can be as simple as adjusting the withholding on a W-4,” Steber told CBS MoneyWatch.
The top 1% of earners around the U.S. — those with incomes over $1.1 million — will receive a $75,410 annual tax break from the new law in 2026, according to a separate analysis from the Tax Policy Center, nonpartisan think tank. That compares with an average tax break of $150 for households in the bottom 20% of the income distribution, or people earning less than $36,000 a year, and of $1,780 for earning $66,801 to $119,200.
To be sure, many of new law’s tax cuts will depend on an individual’s financial circumstances. For instance, a low-income worker who earns tips or overtime could see a much bigger tax cut due to the law’s “no tax on tips” and “no tax on overtime” provisions, Watson noted.
“If a taxpayer isn’t taking tips or overtime or new car loan deduction, they may see a lower benefit,” he said.
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
Opinions expressed by Entrepreneur contributors are their own.
There’s a common debate about whether to diversify your income or stay specialized, although the statistics are factual. Nearly half of Americans have at least two revenue streams, and multimillionaires have at least seven. The reason is simple. Having multiple income streams equips you with options and provides you with financial stability.
Once you decide to have multiple revenue streams or you already have them, the most critical thing to keep in mind is taxes and remaining compliant. However, more crucial is to plan so you have plenty of time to define a strategy and save for tax payments. Never wait until the last moment.
Step 1: Treat each income stream like a business
Whether you earn a W-2 salary, work as a freelancer or contractor, consult, rent properties, or trade stocks and other assets, each activity follows its own set of tax rules.
You wouldn’t declare Airbnb earnings under your payroll, for example. First, you must set up the correct legal entity, such as a single-member LLC, S-Corp or C-Corp. Ticking the right boxes can significantly reduce your liability. A building contractor with multiple earning streams might benefit from switching from an LLC to an S-Corp, which could potentially save you up to $20,000 in taxes.
If you own properties and rent them out, you will want to separate your expenses. It can boost deductions significantly. It is also a way to accelerate depreciation write-offs, allowing you to retain more cash now instead of waiting 20 years.
If you are selling one or several properties, you need to check out a 1031 to defer capital gains taxes by rolling your profits into a different investment.
Step 2: Pay taxes as if your life depended on it
This year, you cashed in on consulting, bonuses, stock options or a side gig. Think ahead, because you don’t want April to bring an unexpected tax bill that devastates your cash flow. That’s the reality for many who ignore quarterly taxes.
So, set aside 25 to 30% of every non-W-2 dollar. Track earnings, make quarterly payments and avoid penalties or fines or both. Vendors accept payments quarterly. You should treat IRS installments the same way.
Most people wait until March, then frantically search through their emails for receipts and invoices. Not a good idea. Start thinking about taxes in July, when you can make smart, sensible and timely moves. If you are a freelancer or contractor, you may deduct expenses such as your home office, internet bill and travel to meetings with clients, including business lunches.
Please don’t become the entrepreneur who misses a $3,000 gasoline deduction because they didn’t track their mileage to all those meetings and lunches. There’s no need to go to extremes, either, so don’t try to claim dog grooming or any other suspicious “business expense,” as it will raise red flags.
“The optimal tax strategy isn’t always about pushing every possible benefit to its limit — it’s often about creating a framework that allows for consistent, long-term, justifiable tax efficiency,” said George Dimov, CPA, who helps professionals navigate the complex tax and planning system.
It’s a good idea to maintain all your records in a spreadsheet or app to log expenses as they happen, and you’ll thank yourself when tax season arrives.
If you are a US citizen earning abroad, operating a business from Thailand, or consulting for clients in Europe, taxes can become overwhelming. Tax law has a provision that allows approximately $120,000 of foreign-earned income to be excluded from US taxes. Be sure to check this number annually, as the exact amount changes frequently.
The foreign tax credit can also save you from paying taxes twice if you are taxed overseas. However, you must report all relevant information, including foreign businesses, bank accounts and even small investments. There are fines of about $10,000 for failing to report a foreign bank account.
Research as much as you can about international taxes or consult an expert who knows the subject and can save you time, trouble, and money.
Bottom line: multiple streams call for multiple planning layers
More income streams mean more options, but also more tax complexity. Success lies in structure, timing, and ongoing management. Structure your entity to match your objectives. Pay quarterly. Plan mid-year. Track everything. However, taxes don’t have to be a nightmare.
There’s a common debate about whether to diversify your income or stay specialized, although the statistics are factual. Nearly half of Americans have at least two revenue streams, and multimillionaires have at least seven. The reason is simple. Having multiple income streams equips you with options and provides you with financial stability.
Once you decide to have multiple revenue streams or you already have them, the most critical thing to keep in mind is taxes and remaining compliant. However, more crucial is to plan so you have plenty of time to define a strategy and save for tax payments. Never wait until the last moment.
The Republican-backed fiscal package signed into law by President Trump on July 4 includes a temporary tax break that stands to benefit millions of Americans: a provision that allows eligible workers to avoid paying federal income tax on tips.
The “big, beautiful bill,” as the legislation was dubbed, tasked the Trump administration with publishing a list of occupations that qualify for the tax break within 90 days of the bill’s passage. Now, the Treasury Department has issued that list, which includes 68 occupations ranging from traditional tipped jobs like waiters to some that don’t typically invite gratuities, such as plumbers, electricians and air conditioning repairers.
The list, which was first reported by Axios, isn’t final, as it must still be published in the Federal Register. But the Treasury Department notes that the IRS expects the final list to “be substantially the same as this preliminary list.”
The new tax rule could save qualifying tipped workers about $1,300 each, according to the White House. Some restrictions built into the law could limit the tax break’s value, while some people in jobs on Treasury’s list — but that don’t typically receive tips — might not derive much benefit from the change.
“Those in the hospitality industry will be the big winners under this new policy,” noted law firm Fisher Phillips in a Sept. 2 blog post about the proposed list of covered occupations.
The Treasury Department and White House didn’t immediately respond to a request for comment.
What are the “no tax on tips” restrictions?
First, a worker will only qualify for the tax break if their occupation is on Treasury’s list of jobs that qualify for “no tax on tips.”
The provision also contains other restrictions, including:
Tipped workers must earn less than $150,000 a year to qualify, or $300,000 for married couples who file their taxes jointly
Workers may claim a maximum of $25,000 per year in tipped income
The provision is only valid through 2028, and is currently scheduled to expire after that tax year
Here are the proposed jobs that qualify for the provision
The Treasury Department has identified eight types of occupations in which workers could avoid taxes on their tips. The examples in the parentheses below are jobs listed by Treasury for each subcategory.
Beverage & Food Service
Bartenders (mixologists, sommeliers)
Wait staff (cocktail servers, dining car attendants)
Food servers, non-restaurant (room service staff, beer cart attendants)
Dining room and cafeteria attendants and bartender helpers (bussers, bar backs)
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
Comerica Park, where the Detroit Tigers play, attracts tens of thousands of fans to downtown every game.
Detroit could generate tens of millions of dollars each year with a tax on tickets to sports and entertainment events, raising revenue that could reduce property taxes, fund city services, and help attract national events, according to a new study.
The Citizens Research Council of Michigan released the study Wednesday, pointing out that “Detroit is one of the few major cities in the U.S. that does not levy entertainment/amusement/admissions tax.”
Detroit has four professional sports teams downtown — the Tigers, Red Wings, Pistons, and Lions. Detroit City Football Club, a professional soccer team, is building a new stadium in Southwest Detroit set to open in 2027. The city is also home to dozens of entertainment venues, such as Fox Theatre, the Fillmore Detroit, Little Caesars Arena, the Masonic Temple, Detroit Opera House, the Fisher Theatre, the Aretha Franklin Amphitheatre, and Saint Andrew’s Hall, among many others.
While the city has missed out on revenue from the tax, the report said Detroit can learn from its experiences.
“Several Michigan cities serve as regional hubs for culture, commerce, sports teams, concerts, and conventions,” Eric Lupher, president of the Citizens Research Council, said. “Detroit stands alone as the largest city in this role, with four major professional sports teams, concert halls, theaters, and other venues that attract attendees from throughout Southeast Michigan and beyond.”
Detroit could raise more than $50 million a year with an admission tax, depending on the rate and how it’s applied. A 3% tax on admissions would bring in about $14.1 million, while a 10% rate could generate as much as $36.9 million, according to the report.
The study broke down how much each of Detroit’s professional sports teams could contribute based on ticket sales. In the most recent seasons, an admissions tax would have generated:
Lions (Ford Field): $0.99M at 3% to $3.3M at 10%.
Tigers (Comerica Park): $1.95M at 3% to $6.5M at 10%.
Red Wings (Little Caesars Arena): $2.31M at 3% to $7.7M at 10%.
Pistons (Little Caesars Arena): $1.29M at 3% to $4.3M at 10%.
At their attendance peaks in the past decade, Detroit’s four teams could have generated more than $28 million from a 10% admissions tax.
That estimate doesn’t include the numerous other concert venues in Detroit, or big music festivals such as Movement. Revenue could also be generated at events like the Detroit Grand Prix.
The revenue from the tax could be used to bolster city services that are stretched thin during major events, to diversify Detroit’s tax base, or to reduce the city’s notoriously high property taxes.
“An admission tax has the potential to contribute meaningful property tax relief to Detroiters who pay among the highest tax burdens in the nation,” the study noted.
It estimated that admissions tax revenue could lower Detroit’s property tax millage by as much as 5.7 mills.
Lupher said a local admissions tax would be “a strategic tool to diversify revenue, reduce resident tax burdens, and ensure that economic activity benefits municipal sustainability.”
Lupher added, “While it cannot solve all fiscal challenges, a local-option admissions tax provides a pragmatic, targeted means of recovering costs and investing in core services. With careful legislative drafting, public education, and transparent allocation, this tax could strengthen Detroit’s financial position and improve fairness in urban tax policy.”
The report also suggested dedicating a portion of the revenue to a fund for attracting major events, such as the NFL Draft, NCAA tournament games, or even a Super Bowl. The idea is “self-perpetuating as major events would draw attendees to pay the tax and position the city to draw new events.”
To impose a local admissions tax, state lawmakers would need to authorize it, the report states.
In ruling against the sweeping tariffs that President Donald Trump purported to impose under the International Emergency Economic Powers Act (IEEPA), the U.S. Court of Appeals for the Federal Circuit did not settle the question of whether that law authorizes import taxes. Nor did it uphold the injunction that the Court of International Trade (CIT) issued against the tariffs on May 28. But the Federal Circuit agreed with the CIT that the tariffs are unlawful, and its reasoning highlights the audacity of Trump’s claim that IEEPA empowers him to completely rewrite tariff schedules approved by Congress.
The decision addresses two challenges to Trump’s tariffs, one brought by several businesses and one filed by a dozen states. Both sets of plaintiffs argued that Trump had illegally seized powers that belong to Congress.
The Constitution gives Congress, not the president, the power to “lay and collect taxes, duties, imposts and excises.” And although Congress has delegated that authority to the president in “numerous statutes,” the Federal Circuit notes in an unsigned opinion joined by seven members of an 11-judge panel, it has always “used clear and precise terms” to do so, “reciting the term ‘duties’ or one of its synonyms.” Furthermore, Congress always has imposed “well-defined procedural and substantive limitations” on the president’s tariff powers.
IEEPA, by contrast, “neither mentions tariffs (or any of its synonyms) nor has procedural safeguards that contain clear limits on the President’s power to impose tariffs.” Yet under Trump’s reading of the statute, it empowers him to impose any tariffs he wants against any country he chooses for as long as he deems appropriate, provided he perceives an “unusual and extraordinary threat” that constitutes a “national emergency” and avers that the import taxes will “deal with” that threat.
To justify his tariffs, Trump declared two supposed emergencies, one involving international drug smuggling and the other involving the U.S. trade deficit. The former “emergency,” he said, justified punitive tariffs on goods from Mexico, Canada, and China, with the aim of encouraging greater cooperation in the war on drugs. The latter “emergency,” he claimed, justified hefty, ever-shifting taxes on imports from dozens of countries, which he implausibly described as “reciprocal.”
Leaving aside the question of whether it makes sense to characterize drug trafficking and trade imbalances, both of which are longstanding phenomena, as “unusual and extraordinary” threats, Trump’s attempted power grab is striking even for him. “Since IEEPA was promulgated almost fifty years ago, past presidents have invoked IEEPA frequently,” the Federal Circuit notes. “But not once before has a President asserted his authority under IEEPA to impose tariffs on imports or adjust the rates thereof. Rather, presidents have typically invoked IEEPA to restrict financial transactions with specific countries or entities that the President has determined pose an acute threat to the country’s interests.”
Trump claims to have discovered a heretofore unnoticed tariff power in an IEEPA provision that authorizes the president to “regulate…importation.” And that power, he avers, is not subject to any “procedural and substantive limitations” except for the pro forma requirement that he declare a national emergency based on a foreign threat. As the Federal Circuit dryly observes, “it seems unlikely that Congress intended, in enacting IEEPA, to depart from its past practice and grant the President unlimited authority to impose tariffs.”
Trump’s assertion of that authority “runs afoul of the major questions doctrine,” the Federal Circuit says. According to the Supreme Court, that doctrine applies when the executive branch asserts powers of vast “economic and political significance.” In such cases, “the Government must point to ‘clear congressional authorization’ for that asserted power,” the appeals court notes. “The tariffs at issue in this case implicate the concerns animating the major questions doctrine as they are both ‘unheralded’ and ‘transformative.’” The Supreme Court “has explained that where the Government has ‘never previously claimed powers of this magnitude,’ the major questions doctrine may be implicated.”
The Federal Circuit was unimpressed by the government’s citation of United States v. Yoshida International, a 1975 case in which the now-defunct Court of Customs and Patent Appeals approved a 10 percent import surcharge that President Richard Nixon had briefly imposed in 1971 under the Trading With the Enemy Act (TWEA). Although Nixon relied on a different statute, the government’s lawyers noted, the court concluded that the phrase “regulate importation” in TWEA encompassed tariffs.
Even assuming that conclusion was correct, the Federal Circuit says, Yoshida “does not hold that TWEA created unlimited authority in the President to revise the tariff schedule, but only the limited temporary authority to impose tariffs that would not exceed the Congressionally approved tariff rates.” Trump, by contrast, claims IEEPA gives him carte blanche to set tariffs, regardless of what Congress has said.
“The Government’s expansive interpretation of ‘regulate’ is not supported by the plain text of IEEPA,” the Federal Circuit says. “The Government’s reliance on the ratification of our predecessor court’s opinion in [Yoshida] does not overcome this plain meaning.” The appeals court adds that “the Government’s understanding of the scope of authority granted by IEEPA would render it an unconstitutional delegation.”
Four judges agreed with the majority that IEEPA “does not grant the President authority to impose the type of tariffs imposed by the Executive Orders.” But they went further in a separate opinion, arguing that the statute does not authorize the president to impose any tariffs at all.
As Reason‘s Eric Boehm notes, the appeals court nevertheless vacated the CIT’s injunction and remanded the case for further consideration in light of the Supreme Court’s June 27 decision in Trump v. CASA. In that June 27 ruling, the Court questioned universal injunctions that judges had issued in two birthright citizenship cases “to the extent that the injunctions are broader than necessary to provide complete relief to each plaintiff with standing to sue.”
Although the Supreme Court “held that the universal injunctions at issue ‘likely exceed the equitable authority Congress has granted to federal courts,’” the Federal Circuit notes, “it ‘decline[d] to take up…in the first instance’ arguments as to the permissible scope of injunctive relief. Instead, it instructed ‘[t]he lower courts [to] move expeditiously to ensure that, with respect to each plaintiff, the injunctions comport with this rule and otherwise comply with principles of equity’ as outlined in the opinion. We will follow this same practice.”
On remand, the Federal Circuit says, “the CIT should consider in the first instance whether its grant of a universal injunction comports with the standards outlined by the Supreme Court in CASA.” The CIT, in other words, is tasked with deciding what sort of order is appropriate to grant the plaintiffs “complete relief.” Alternatively, as Boehm suggests, Congress could intervene by asserting the tariff authority that Trump is trying to usurp.
DES MOINES, Iowa — The numbers were picked Saturday night for an estimated $1 billion Powerball jackpot, although it’s not immediately clear if anyone was a big winner.
The numbers drawn were 3, 18, 22, 27 and 33, with the Powerball 17.
No one has matched all six numbers since May 31, allowing the jackpot to swell to $1 billion, which would be the sixth-largest prize in the game’s history. As ticket sales climbed this week, game officials raised the estimated Saturday night jackpot to $1 billion from $950 million, before taxes. Payments would be spread over 30 years, or a winner can choose an immediate lump sum of $453 million, again before taxes.
The odds of matching all six numbers are astronomical: 1 in 292.2 million. The odds of getting struck by lightning are far greater. But with so many people putting down money for a chance at life-changing wealth, someone eventually wins.
Powerball, which costs $2 per ticket, is played in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Drawings are held each week on Monday, Wednesday and Saturday nights.
Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.
Anyone running their own business—or managing finances for one—you know how quickly bookkeeping can become a full-time job. Between tracking expenses, managing invoices, running payroll, and prepping for tax season, it adds up fast. That’s why many business owners turn to Intuit QuickBooks for accounting assistance, and right now, there’s a rare chance to get it without the usual subscription commitment.
For a limited time, you can grab Intuit QuickBooks Desktop Pro Plus 2024 for one Windows device with a lifetime license for $199.97 (regularly $699).
Why this version stands out
QuickBooks has long been a go-to for small to mid-size businesses, but in recent years, Intuit has leaned heavily into subscription pricing—making it harder to find versions that you can just pay for once and own. This lifetime license bucks that trend.
QuickBooks Desktop also appeals to those who prefer a local installation over cloud-based software. You’re not tied to an internet connection, and your data stays under your control. That’s particularly valuable if you handle sensitive financial records or work in industries with strict compliance needs.
Good fit for small-business owners and freelancers
Whether you’re managing a freelance design studio, a local coffee shop, or a growing consulting firm, this one-time purchase is a smart long-term investment. The software supports up to 100 different company files, which makes it versatile enough for those with multiple business ventures.
There’s no shortage of subscription services asking for your credit card every month, and fortunately, this isn’t one of them. If you’re ready to simplify your finances without adding to your overhead, this deal on QuickBooks Desktop Pro Plus 2024 might be one of the more practical decisions you make this year.
Anyone running their own business—or managing finances for one—you know how quickly bookkeeping can become a full-time job. Between tracking expenses, managing invoices, running payroll, and prepping for tax season, it adds up fast. That’s why many business owners turn to Intuit QuickBooks for accounting assistance, and right now, there’s a rare chance to get it without the usual subscription commitment.
For a limited time, you can grab Intuit QuickBooks Desktop Pro Plus 2024 for one Windows device with a lifetime license for $199.97 (regularly $699).
Oregon could become the second U.S. state to require electric vehicle owners to enroll in a pay-per-mile program as lawmakers begin a special session Friday to fill a $300 million transportation budget hole that threatens basic services like snowplowing and road repairs.
Legislators failed earlier this year to approve a transportation funding package. Hundreds of state workers’ jobs are in limbo, and the proposal for a road usage charge for EV drivers was left on the table.
Hawaii in 2023 was the first state to create a mandatory road usage charge program to make up for projected decreases in fuel tax revenue due to the growing number of electric, hybrid and fuel-efficient cars. Many other states have studied the concept, and Oregon, Utah and Virginia have voluntary programs.
The concept has promise as a long-term funding solution, experts say. Others worry about privacy concerns and discouraging people from buying EVs, which can help reduce transportation emissions.
“This is a pretty major change,” said Liz Farmer, an analyst for The Pew Charitable Trusts’ state fiscal policy team, noting “the challenge in enacting something that’s dramatically different for most drivers.”
Oregon’s transportation department says the budget shortfall stems from inflation, projected declines in gas tax revenue and other spending limits. Over the summer, it sent layoff notices to nearly 500 workers and announced plans to close a dozen road maintenance stations.
Democratic Gov. Tina Kotek paused those moves and called the special session to find a solution. Republican lawmakers say the department mismanaging its money is a main issue.
Kotek’s proposal includes an EV road usage charge that is equivalent to 5% of the state’s gas tax. It also includes raising the gas tax by 6 cents to 46 cents per gallon, among other fee increases.
The usage charge would phase in starting in 2027 for certain EVs and expand to include hybrids in 2028. Should the gas tax increase be approved, EV drivers either would pay about 2.3 cents per mile, or choose an annual flat fee of $340. Drivers in the program wouldn’t have to pay supplemental registration fees.
Drivers would have several options for reporting mileage to private contractors, including a smartphone app or the vehicle’s telematics technology, said Scott Boardman, policy adviser for the transportation department who works on the state’s decade-old voluntary road usage charge program.
As of May, there were over 84,000 EVs registered in Oregon, about 2% of the state’s total vehicles, he said.
Under Hawaii’s program, which began phasing in last month, EV drivers can pay $8 per 1,000 miles driven, capped at $50, or an annual fee of $50.
In 2028, all EV drivers will be required to enroll in the pay-per-mile program, with odometers read at annual inspections. By 2033, the program is expected to expand to all light-duty vehicles.
In past surveys commissioned by Oregon’s transportation department, respondents cited privacy, GPS devices and data security as concerns about road usage charges.
Oregon’s voluntary program has sought to respond to such concerns by deleting mileage data 30 days after a payment is received, Boardman said. While plug-in GPS devices are an option in the program, transportation officials anticipate moving away from them because they’re more expensive and can be removed, he added.
Still, not everyone has embraced a road usage charge. Arizona voters will decide next year whether to ban state and local governments from implementing a tax or fee based on miles traveled after the measure was referred to the ballot by the Republican-majority Legislature.
Many people don’t realize that “both your vehicle and your cellphone capture immense amounts of data about your personal driving habits already,” said Brett Morgan, Oregon transportation policy director for the nonprofit Climate Solutions.
Morgan added that road usage charges exceeding what drivers of internal combustion engines would pay in gas taxes could dissuade people from buying electric and hybrid cars. Already, federal tax incentives for EVs are set to expire under the tax and spending cut bill recently passed by the GOP-controlled Congress.
“We are definitely supportive of a road usage charge that has EVs paying their fair share, but they should not be paying extra or a penalty,” Morgan said.
Oregon could become the second U.S. state to require electric vehicle owners to enroll in a pay-per-mile program as lawmakers begin a special session Friday to fill a $300 million transportation budget hole that threatens basic services like snowplowing and road repairs.
Legislators failed earlier this year to approve a transportation funding package. Hundreds of state workers’ jobs are in limbo, and the proposal for a road usage charge for EV drivers was left on the table.
Hawaii in 2023 was the first state to create a mandatory road usage charge program to make up for projected decreases in fuel tax revenue due to the growing number of electric, hybrid and fuel-efficient cars. Many other states have studied the concept, and Oregon, Utah and Virginia have voluntary programs.
The concept has promise as a long-term funding solution, experts say. Others worry about privacy concerns and discouraging people from buying EVs, which can help reduce transportation emissions.
“This is a pretty major change,” said Liz Farmer, an analyst for The Pew Charitable Trusts’ state fiscal policy team, noting “the challenge in enacting something that’s dramatically different for most drivers.”
Oregon’s transportation department says the budget shortfall stems from inflation, projected declines in gas tax revenue and other spending limits. Over the summer, it sent layoff notices to nearly 500 workers and announced plans to close a dozen road maintenance stations.
Democratic Gov. Tina Kotek paused those moves and called the special session to find a solution. Republican lawmakers say the department mismanaging its money is a main issue.
Kotek’s proposal includes an EV road usage charge that is equivalent to 5% of the state’s gas tax. It also includes raising the gas tax by 6 cents to 46 cents per gallon, among other fee increases.
The usage charge would phase in starting in 2027 for certain EVs and expand to include hybrids in 2028. Should the gas tax increase be approved, EV drivers either would pay about 2.3 cents per mile, or choose an annual flat fee of $340. Drivers in the program wouldn’t have to pay supplemental registration fees.
Drivers would have several options for reporting mileage to private contractors, including a smartphone app or the vehicle’s telematics technology, said Scott Boardman, policy adviser for the transportation department who works on the state’s decade-old voluntary road usage charge program.
As of May, there were over 84,000 EVs registered in Oregon, about 2% of the state’s total vehicles, he said.
Under Hawaii’s program, which began phasing in last month, EV drivers can pay $8 per 1,000 miles driven, capped at $50, or an annual fee of $50.
In 2028, all EV drivers will be required to enroll in the pay-per-mile program, with odometers read at annual inspections. By 2033, the program is expected to expand to all light-duty vehicles.
In past surveys commissioned by Oregon’s transportation department, respondents cited privacy, GPS devices and data security as concerns about road usage charges.
Oregon’s voluntary program has sought to respond to such concerns by deleting mileage data 30 days after a payment is received, Boardman said. While plug-in GPS devices are an option in the program, transportation officials anticipate moving away from them because they’re more expensive and can be removed, he added.
Still, not everyone has embraced a road usage charge. Arizona voters will decide next year whether to ban state and local governments from implementing a tax or fee based on miles traveled after the measure was referred to the ballot by the Republican-majority Legislature.
Many people don’t realize that “both your vehicle and your cellphone capture immense amounts of data about your personal driving habits already,” said Brett Morgan, Oregon transportation policy director for the nonprofit Climate Solutions.
Morgan added that road usage charges exceeding what drivers of internal combustion engines would pay in gas taxes could dissuade people from buying electric and hybrid cars. Already, federal tax incentives for EVs are set to expire under the tax and spending cut bill recently passed by the GOP-controlled Congress.
“We are definitely supportive of a road usage charge that has EVs paying their fair share, but they should not be paying extra or a penalty,” Morgan said.
Kansas City loves its Chiefs. And loves love apparently.
Following Taylor Swift‘s Instagram post announcing her engagement to Travis Kelce, the Kansas City Star reports that H&R Block, headquartered in Kansas City, informed its employees that they could go home early to “celebrate love.”
Tiffany Monroe, H&R Block’s chief people officer, sent an email to the company, stating:
“Let’s be honest: between checking social feeds, debating, potential wedding playlists, and most importantly — telling your friends what married filing jointly means, I know focus is in short supply this afternoon,” she wrote.
“So here’s the deal: if you’re so inclined, call it early. Go home. Celebrate love. Speculate about the dress. Argue whether the reception will be held in KC or a castle in Europe,” Monroe wrote, adding, “pick things back up tomorrow when the internet calms down.”
Ajay Anand, CEO of the diamond retailer Rare Carat, told Business Insider that Swift’s ring could be valued at about $1 million. Celebrate love indeed.
Kansas City loves its Chiefs. And loves love apparently.
Following Taylor Swift‘s Instagram post announcing her engagement to Travis Kelce, the Kansas City Star reports that H&R Block, headquartered in Kansas City, informed its employees that they could go home early to “celebrate love.”
More than $250 million down, another $530 million to go.
That’s how much of a projected $783 million state budget hole the Colorado legislature filled by the time a special session called to address the impact of the federal tax bill ended Tuesday afternoon — and the larger amount that still remains. Erasing the rest of the red ink will fall to Gov. Jared Polis, who plans to rebalance this year’s budget in the coming days through a mix of cuts to state funding and a big dip into the rainy-day fund.
Over six days, the legislature’s majority Democrats fulfilled their part of a plan worked out with the governor’s office: to pass legislation that is expected to generate enough revenue to close about a third of the shortfall projected for the state’s budget in the current fiscal year, which began July 1. They ended tax breaks and found other ways to offset declining state income tax revenue, while leaving spending cuts largely for Polis to decide.
“What we did here in this special session is soften the blow,” said Sen. Jeff Bridges, a Greenwood Village Democrat who chairs the legislature’s budget committee. “But when the federal government cuts $1.2 billion in revenue from the state with a stroke of a pen, after we’ve already cut $1.2 billion (from the budget) in the regular session, that’s a tough deficit to come back from in a way that doesn’t impact the people of Colorado.”
The special session ended with 11 bills going to Polis for final approval. Five sought to fill the budget gap, largely by ending tax incentives for businesses and high-income earners.
The single largest revenue-raising measure, House Bill 1004, will auction off tax credits that can be claimed in future tax years for a discount. Backers expected that bill to bring in an additional $100 million to state coffers this year, at the expense of about $125 million in future years.
Together, those measures add up to $253 million in revenue to reduce the projected deficit — money that Democrats say represents averted cuts to Medicaid, schools and hospitals.
“Colorado legislators stepped up and helped protect children’s food access and minimized the devastating cost increases to health insurance premiums across the state, to the best of our ability,” Polis, who signed two of the new bills earlier Tuesday, said in a statement.
The legislature’s Joint Budget Committee expects to meet Thursday to hear Polis’ plan to address the remaining $500 million or so, including mid-year spending cuts.
As part of his call for a special session on Aug. 6, Polis announced a statewide hiring freeze. He said in an interview before the session started that he hoped to avoid cuts to K-12 education, but he has left all other options on the table, including Medicaid program spending.
The plan also factors in a significant use of reserves to offset some of the remaining gap.
Partisan debates
Over the past week, Republicans fought the Democrats’ bills, but strong Democratic majorities in both legislative chambers all but preordained the outcome.
“Not only did we increase taxes, we’re balancing the budget on the back of small businesses,” said Sen. Barbara Kirkmeyer, a Brighton Republican on the budget committee.
One of the bills heading to Polis would erase a fee paid by the state to businesses for collecting sales taxes — an outdated subsidy, according to Democrats, and an unnecessary new burden now put on businesses, according to Republicans.
Republicans said before the session that they’d likely challenge several bills in court over allegations that they violate provisions in the Taxpayer’s Bill of Rights that require voter approval for tax increases. Kirkmeyer and Rep. Rick Taggart, a Grand Junction Republican who’s also on the budget committee, said bills going to the governor that would eliminate some tax credits and allow the sale of tax credits against future collections seemed particularly vulnerable to a challenge under TABOR.
Debate throughout the special session took a distinctly partisan edge. Democrats laid the cuts on congressional Republicans and President Donald Trump and called the federal tax bill a de facto theft of benefits from the poorest Coloradans to benefit the wealthiest.
Republicans countered that the federal bill delivered much-needed tax cuts, and they said Democrats sought to yank those away instead of cutting partisan priorities.
Legislators begin to gather in the Senate Chambers before the start of another day of the special legislative session at the Colorado State Capitol in Denver on Aug. 26, 2025. (Photo by RJ Sangosti/The Denver Post)
Bills on wolves, artificial intelligence
Other bills passed sought to respond to different aspects of the federal bill, formerly known as the “One Big Beautiful Bill Act,” as well as other priorities.
Lawmakers stripped general fund money away from the voter-approved program to reintroduce wolves in the state, though releases are expected to continue this winter. They tweaked ballot language for a measure about taxes for universal school meals to allow that money to go to general food assistance, as well, if voters approve it in November.
The legislature also approved a bill allowing state Medicaid program to pay Planned Parenthood for services provided, after the federal government specifically barred federal money from going to the organization.
Polis included in his call of the session that lawmakers address concerns swirling around the state’s first-in-the-nation regulations of artificial intelligence after a similar effort in the spring blew up. The rules now in law go into effect in February.
After days of bruising negotiations, lawmakers punted on any new changes and delayed the existing rules from going into effect until the end of June — giving them time to resume the debate during the next regular legislative session in January.
Colorado won’t have to claw back nearly $60 million it paid to public hospitals, including Denver Health and more than two dozen rural facilities, under a deal announced Tuesday to end the state’s court battles with UCHealth.
“We thank UCHealth for working with us to resolve this issue in a manner that protects all Colorado hospitals,” Kim Bimestefer, executive director of the Colorado Department of Health Care Policy and Financing, said in a news release.
UCHealth sued the department, alleging it had incorrectly labeled two of its hospitals as public, rather than private nonprofits. A Denver District Court judge agreed, and ordered the state to reclassify Memorial Hospital in Colorado Springs and Poudre Valley Hospital in Fort Collins. The department filed an appeal in July.
Their classification matters because of the state’s provider tax.
Hospitals pay about $1.3 billion each year, gaining about $500 million in federal matching funds. Most come out ahead, though those with relatively few patients covered by Medicaid lose out. In future years, the state will have to reduce its tax rate under provisions of H.R. 1, colloquially known as President Donald Trump’s “big beautiful bill.”
The state pools the money by hospital type, and distributes it based on how each facility’s Medicaid share compares to the others in their group.
Moving Memorial and Poudre Valley from the public to the private bucket means that less money remains for all public hospitals to divide up, and that Memorial and Poudre Valley likely will get more back from the provider tax, because they’re being compared against hospitals that generally see fewer Medicaid patients.
The state said that to retrospectively reclassify the UCHealth hospitals and distribute the funds accordingly, it would have to take back $59.7 million paid last year to 29 publicly owned hospitals.
Denver Health didn’t comment on the possibility, but a group representing 13 Eastern Plains hospitals said some wouldn’t be able to hand over a significant chunk of cash, because they already used their share of the provider tax to pay employees and cover other expenses.
Under the agreement, the Department of Health Care Policy and Financing will drop its appeal, and UCHealth won’t demand redistribution of provider taxes it paid in previous years.
UCHealth president and CEO Elizabeth Concordia said the system supports the provider tax program, and thanked the state for working together on a solution.
“The greatest successes for patients and our state happen when hospitals, HCPF and the administration work together collaboratively,” she said in a news release.
The hospital system also agreed to donate $5.7 million to compensate public hospitals that may lose out with less money coming into their bucket. The Colorado Hospital Association will help determine how to divide up the donation.
“Instability or uncertainty in the fee could have pushed vulnerable hospitals past the breaking point,” Jeff Tieman, president and CEO of the Colorado Hospital Association, said in a news release. “UCHealth’s approach to waive changes for last year and invest millions this year demonstrates a real commitment to protecting access to care in rural Colorado. We are deeply grateful for their partnership.”
BRUSSELS — President Donald Trump vowed to impose new tariffs and export curbs on countries with digital taxes or regulations that affect American technology companies.
Trump didn’t mention specific places but his comments were taken as a threat against the European Union’s digital rules to rein in companies like Google, Apple, and Meta.
In a post on Truth Social late Monday, Trump said he would “stand up to Countries that attack our incredible American Tech Companies.”
“Digital Taxes, Digital Services Legislation, and Digital Markets Regulations are all designed to harm, or discriminate against, American Technology.”
The 27-nation EU has cracked down on Big Tech companies with sweeping rules. The bloc’s Digital Services Act aims to clean up social media and online platforms and its Digital Markets Act is designed to prevent digital monopolies, under threat of hefty fines for breaches.
Some individual European Union countries like France, Italy and Spain have a digital services tax, as does Britain.
The Trump administration has long held the EU’s tech regulations in contempt and tech companies have chafed against them.
Trump also complained that big Chinese tech companies get “a complete pass” from the rules. “This must end,” he said and vowed that “unless these discriminatory actions are removed,” he would “impose substantial additional Tariffs” on the offending nation’s exports to the U.S. and also “institute Export restrictions on our Highly Protected Technology and Chips.”
The EU’s executive Commission pushed back.
“It is the sovereign rights of the EU and its member states to regulate economic activities on our territory, which are consistent with our democratic values,” Commission spokesman Thomas Regnier said at a regular press briefing.
Trump’s latest salvo comes a week after Washington and Brussels released a joint statement on their trade deal that included a pledge to “address unjustified digital trade barriers.”
In June, Trump threatened to suspend trade talks with Canada forced Prime Minister Mark Carney over Ottawa’s plan to impose a digital services tax on technology companies, forcing Carney to abandon the tax.
Food inflation lifted to 4.2% this month from 4% in July, according to according to the British Retail Consortium-NIQ Shop Price Monitor.
Fresh food inflation sped to 4.1% for the month on the back of rising dairy prices, figures show (Yui Mok/PA)
Food prices have risen at their fastest pace for 18 months, with chocolate, butter and eggs leading the way, new figures reveal.
According to the British Retail Consortium (BRC)-NIQ Shop Price Monitor, foodinflation jumped to 4.2% in August, up from 4% in July, the highest level since February 2024.
Experts warned the surge adds even more pressure on families already struggling with the cost of living crisis.
Fresh food prices climbed 4.1% last month, driven by soaring dairy costs, up from 3.2% in July, while ambient food – like tinned and packaged goods – slowed slightly to 4.2% year-on-year, down from 5.1% in July.
The new figures also showed that overall shop price inflation increased to 0.9% in August, despite price deflation of 0.8% for non-food products.
The uptick in food prices comes after the Bank of England said earlier this month that the increase in national insurance contributions in April had contributed to accelerating food prices.
Helen Dickinson, chief executive of the BRC, said: “Shop price inflation hit its highest rate since March last year, fuelled by food price rises.
“This adds pressure to families already grappling with the cost of living.
“Retailers continue doing everything they can to limit price rises for households, but as the Bank of England acknowledged, the £7 billion in new costs flowing through from last year’s budget has created an uphill battle for retailers.”
More than 60 retail bosses, including chiefs at Tesco, Sainsbury’s and Boots, warned Chancellor Rachel Reeves last week that raising taxes further in the autumn budget could contradict her plans to improve UK living standards.
In the letter, co-ordinated by the BRC, the bosses said they were expecting the rate of food and drink inflation to reach 6% later this year.
Mike Watkins, head of retailer and business insight at NIQ, said: “The uptick in prices reflects several factors: global supply costs, seasonal food inflation driven by weather conditions, the conclusion of promotional activity linked to recent sporting events, and a rise in underlying operational costs.
“As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills.”
In this instance, it comes down to taxes and a legal loophole that allows companies taking on STEM workers under a program known as Optional Practical Training (OPT) to avoid paying in to federal programs like Medicare and Social Security, or at least allows those companies to pay less in payroll taxes than they would for U.S. citizens or legal residents.
In the OPT program, “there’s no wage obligation in the way that there is in H-1B where we’re very tied to an obligated wage,” Anne Walsh, a partner at the San Francisco-based law firm Corporate Immigration Partners, told Newsweek. “That said, they must be compensated and experience the working conditions that are comparable to other similarly situated U.S. employees.”
How Popular Is STEM-OPT?
The OPT program allows companies to take on student visa holders for a limited term, either during their studies or after their graduation, while their F-1 visa is still valid.
In fiscal year 2024, U.S. companies employed 109,661 people on OPT. Amazon far outpaced other employers, with 10,167 OPT workers on its payroll, followed by the University of California system with 2,916. Google took on 2,454.
The program has expanded since its creation in 1992, with a lobbying effort in the 2000s leading U.S. Citizenship and Immigration Service (USCIS) to raise the cap on participants and extend the length of time allowed.
With over 200 companies making use of the OPT program, immigration critics have warned that is just another way they see American workers being pushed aside for cheaper labor.
“The OPT program is one of the most widely-used guest worker programs despite never being approved by Congress,” Jeremy Beck, co-president of immigration think-tank NumbersUSA, told Newsweek. “Business lobbyists pitched the idea of using OPT to get around the H-1B cap to the Bush Administration, which complied. The Obama and Biden Administrations expanded the program.”
U.S. Immigration and Customs Enforcement (ICE) told Newsweek that it regulates STEM-OPT through a 2016 final rule, which affirmed that student visa holders – who primarily use this program – were not required to pay into Social Security, Medicare or federal unemployment because of their status.
The rule granted employers the ability to save around 7.5 percent compared to the taxes and benefits they would pay for a U.S. resident or citizen worker. Another estimate, reported by Bloomberg in 2021, put the savings closer to 15 percent. Multiplied out, that potentially equals hundreds of millions of dollars staying on corporate balance sheets that would otherwise be paid into the federal tax pool under FICA.
Debate Over American Worker Displacement
In 2020, NAFSA, a non-profit professional organization focused on international education, published a report that said the set up left foreign students without the same benefits and certainties as other employees. It also alleged that the government was not doing enough to address deficiencies in the system itself.
Five years later, those concerns have only grown.
“Employers who hire OPT workers instead of Americans don’t have to pay payroll taxes, essentially giving them a discount for not hiring American workers,” Beck said. “OPT is one of many guestworker programs that displace qualified Americans in favor of exploitable foreign workers.”
ICE has made it clear that DHS does not have the power to change tax rules and laws – that remains the purview of Congress and the IRS. The agency affirmed in its 2016 final rule that it could only administer the program with the rules as they were, and are.
Newsweek reached out to the IRS for comment but did not hear back ahead of publication.
Walsh said that, despite the criticisms of the program, she believed the employers she works with on a regular basis were using STEM-OPT as something of a last resort.
“The obligations on the employer are definitely not as easy as hiring a qualified and willing U.S. worker,” she said. “They’ve got these obligations to fill out forms, to ensure proper supervision, to submit the required reporting at 12 months, and ensure that there’s no material changes that they have to report.”
The idea that employers would be motivated by tax breaks or tax loopholes in hiring is “specious, politically motivated, and without evidence,” said Dr. Fanta Aw, executive director and CEO of NAFSA.
“The real issue is that U.S. innovation requires expertise, especially in STEM fields, and international talent plays a vital role in meeting that need for expertise,” Aw said.
Will Anything Change?
University students walk past the Natural Sciences and Mathematics build on the campus of Cal State University Dominguez Hills, Carson, USA. Image for illustration purposes only. University students walk past the Natural Sciences and Mathematics build on the campus of Cal State University Dominguez Hills, Carson, USA. Image for illustration purposes only. Getty Images
That sits in contrast with the frustration being voiced, primarily on social media, that American workers – specifically highly educated college graduates – are being overlooked for roles they are qualified for while some of the best-paying jobs in the country go to workers on guest visas.
In March, Arizona Republican Representative Paul Gosarreintroduced legislation aimed at tackling the OPT pipeline. He said his Fairness for High-Skilled Americans Act, first filed in President Donald Trump‘s first term, would terminate the program.
“The OPT program completely undercuts American workers, particularly higher-skilled workers and recent college graduates, by giving employers a tax incentive to hire inexpensive, foreign labor under the guise of student training,” Gosar said in a March 25 press release, in which he called employers using the program “greedy”.
Getting Congress to pass such reform like this appears unlikely, with many other immigration bills dying in committee despite calls from both Republicans and Democrats for change.
Beck told Newsweek that NumbersUSA was making Gosar’s bill a priority, to ensure the end of the OPT program.
For Walsh’s clients, they want something different: a clearer pathway for legal status for the foreign students they take on.
“The frustration around having little to no option on the completion of STEM-OPT continues to get louder and louder,” Walsh said. “They want this talent, they don’t want them because they’re foreign workers, they want them because they’re positively contributing to growing their U.S. businesses and enabling the companies to hire more U.S. workers through their talents. So that continues to be a frustration that just gets louder and louder.”
No primary residence exclusion available: When selling a second home, you can’t use the primary residence exclusion that allows $250,000/$500,000 in tax-free gains.
Multiple tax reduction strategies exist: Various approaches can help reduce your capital gains tax burden on second home sales.
Key strategies include: Increasing your cost basis with improvements, potentially using 1031 exchanges, or offsetting gains with investment losses.
Understanding second home capital gains
Whether it’s a mountain house in Aspen, CO or a beach condo in Atlantic City, NJ, your vacation home (and any second home) is considered a capital asset under IRS rules. Unlike primary residences, second homes that are not used as primary residences, including vacation homes and investment properties, are considered to be capital assets under IRS rules and do not qualify for the capital gains tax exclusion.
The amount of capital gains tax you’ll owe on the sale of a second home depends on several factors, including how long you owned the property and your income level. For 2025, the long-term capital gains rates are:
0% for single filers with taxable income up to $48,350 and married couples filing jointly up to $96,700
15% for most middle-income taxpayers
20% for single filers with income over $533,401 and married couples over $600,051
High-income earners may also face the 3.8% net investment income tax, making the effective rate as high as 23.8%.
Adjust your cost basis with acquisition costs and improvements
One of the most effective ways to reduce capital gains is to increase your cost basis — the amount you originally paid for the property plus qualifying improvements.
What you can add to cost basis:
Acquisition costs:
Purchase price
Closing costs
Title insurance
Attorney fees
Recording fees
Survey costs
Capital improvements: Capital improvements are permanent repairs or upgrades, not including routine repairs or maintenance. Examples include:
Room additions
Deck or patio installations
New roofing
HVAC system upgrades
Kitchen or bathroom renovations
Landscaping (permanent features)
Security systems
Selling expenses: You can also increase your cost basis by adding any qualifying real estate fees, such as real estate commission and closing costs, paid when selling your second home.
Example: If you purchased your second home for $400,000 and sold it for $500,000, it would initially appear that you profited $100,000. But if you also spent $15,000 on acquisition costs, $20,000 to renovate the bathrooms, $25,000 to put on a new roof, and $30,000 in real estate commission, your cost basis may be $490,000, reducing your taxable gain to just $10,000.
If you’ve rented out your second home, you can claim depreciation deductions that reduce your taxable rental income. However, when you sell, you’ll face depreciation recapture.
If you previously rented out the second home, you may also face depreciation recapture, which means any depreciation claimed during rental years will be taxed at a 25% rate when you sell.
While depreciation recapture adds to your tax burden, the annual depreciation deductions during ownership can provide significant tax benefits that may outweigh the recapture cost, especially if you’re in a higher tax bracket during rental years than when you sell.
Convert your vacation home to a rental property
Renting out the property would allow you to treat it as an investment and claim depreciation and other deductions. Converting your second home to a rental property offers several advantages:
Annual depreciation deductions (typically 3.636% of the property’s value per year for residential rental property)
Deductible expenses, including maintenance, property management, insurance, and property taxes
Potential for rental income to offset ownership costs
This strategy works best if you have time before needing to sell and can generate meaningful rental income.
Revenue Procedure 2008-16 provides safe harbors under which the IRS will not challenge whether a dwelling unit qualifies as property held for use in a trade or business:
For property you’re selling (relinquished property):
Own the property for 24 months before the exchange
Rent the unit at fair market rental for fourteen or more days in each of the two 12-month periods
Restrict personal use to the greater of fourteen days or ten percent of the number of days that it was rented at fair market rental
For property you’re acquiring (replacement property):
Same requirements must be met for 24 months after the exchange
Important: 1031 Exchanges of vacation properties or second homes that do not follow the safe harbor guidelines may still qualify for tax-deferred exchange treatment, but you should consult with legal and tax advisors.
Offset gains with investment losses
Tax-loss harvesting involves selling securities at a loss to offset gains in other investments. According to theIRS Publication 550, if your capital losses exceed your capital gains, you can reduce your taxable income by up to $3,000 for the year and carry forward excess losses to future years underInternal Revenue Code Section 1211.
How it works:
Offset like-kind gains first: Short- and long-term losses must be used first to offset gains of the same type, as outlined inIRS Publication 544
Apply excess losses: If your losses of one type exceed your gains of the same type, then you can apply the excess to the other type
Reduce ordinary income: You can use up to $3,000 in net losses to offset your ordinary income perIRC Section 1211(b)
Carry forward: You can also carry forward any excess losses to offset capital gains and income tax in future years, as specified inIRS Publication 550, Chapter 4
Watch out for wash sale rules: If you buy the same investment or any investment the IRS considers “substantially identical” within 30 days before or after you sold at a loss, you won’t be able to claim the loss. This is governed byInternal Revenue Code Section 1091 and detailed inIRS Publication 550, Chapter 4.
Consider your holding period
If you’ve owned your second home for more than a year, you’ll typically pay a long-term capital gains tax between 0% and 20%, depending on your earnings. Short-term capital gains are treated as regular income and taxed according to ordinary income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% or 37%.
Key timing considerations:
Use tax-advantaged accounts
Assets held within tax-advantaged accounts — such as 401(k)s or IRAs — aren’t subject to capital gains taxes while they remain in the account. While you can’t hold real estate directly in most retirement accounts, you can:
Self-directed IRAs: Some allow real estate investments
Real Estate Investment Trusts (REITs): Hold these in tax-advantaged accounts
Real estate crowdfunding: Some platforms offer tax-advantaged options
Roth IRAs and 529 accounts have big tax advantages — if you follow the account rules, you can withdraw money from those accounts tax-free.
Tax-efficient investment strategies
Beyond tax-loss harvesting, consider these approaches:
Tax-efficient fund selection: Choose index funds or tax-managed funds with lower turnover
Asset location: Hold tax-inefficient investments in tax-advantaged accounts
Rebalancing strategy: Rather than reinvest dividends in the investment that paid them, rebalance by putting that money into your underperforming investments to avoid selling strong performers
Inherited property benefits
If you inherit property, you receive a “stepped-up basis” equal to the fair market value at the time of inheritance, effectively eliminating built-in capital gains. This strategy involves:
Estate planning with family members
Considering lifetime gifts vs. inheritance
Understanding generation-skipping transfer tax implications
Important: This requires careful estate planning and should involve an estate planning attorney.
Convert your vacation home to your primary residence to claim the primary residence capital gains exclusion
Making the property your primary residence can qualify you for the capital gains tax exclusion underInternal Revenue Code Section 121. You may qualify to exclude up to $250,000 of gain from your income, or up to $500,000 if you file a joint return with your spouse, as detailed inIRS Publication 523.
Requirements:
You must meet both the ownership test and the use test — you must have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale, perIRC Section 121(a) andTreasury Regulation 1.121-1(c).
Remember, tax laws are complex and change frequently. The strategies outlined here provide a framework for reducing capital gains taxes, but implementation should always involve qualified tax professionals who can tailor advice to your specific situation.
Frequently asked questions: Minimizing capital gains tax while selling a vacation home
What’s the difference between short-term and long-term capital gains tax rates?
If you’ve owned your vacation home for more than one year, you’ll pay long-term capital gains rates of 0%, 15%, or 20% depending on your income level, as outlined inIRC Section 1(h). Properties held for one year or less are subject to short-term capital gains, which are taxed as ordinary income at rates up to 37%, perIRS Publication 550.
Can I convert my vacation home to a primary residence to qualify for the capital gains exclusion?
Yes, you can potentially exclude up to $250,000 ($500,000 for married couples) by making it your primary residence for at least 2 out of the 5 years before selling, according toIRC Section 121 andIRS Publication 523. However, recent changes limit this strategy for converted properties.
What is the Net Investment Income Tax, and how does it affect vacation home sales?
The Net Investment Income Tax adds a 3.8% surtax on capital gains if your modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly), underIRC Section 1411 and detailed inIRS Form 8960.
How can I reduce my taxable income in the year I sell?
Consider maximizing retirement contributions, harvesting losses from other investments, timing the sale for a lower-income year, or spreading the sale across tax years using an installment sale underIRC Section 453 andIRS Publication 537.
Should I consider an installment sale?
An installment sale spreads the gain over multiple years, potentially keeping you in lower tax brackets and avoiding the Net Investment Income Tax threshold. This is governed byIRC Section 453 and explained inIRS Publication 537.
Can I gift part of my vacation home to reduce capital gains?
Yes, gifting portions to family members can reduce your overall gain, though recipients receive your cost basis. Each person can exclude gains up to their individual limits if they qualify. Gift tax rules underIRC Section 2501 andIRS Publication 559 apply.
What if I inherited the vacation home?
Inherited property receives a “stepped-up basis” equal to fair market value at the time of inheritance underIRC Section 1014, potentially eliminating most capital gains. This is explained inIRS Publication 551.
Can I do improvements right before selling to reduce gains?
Capital improvements that add value or extend the property’s life can be added to your basis, reducing taxable gain. However, routine repairs don’t qualify unless they’re part of a larger improvement project, perIRS Publication 523.
How does the timing of my sale affect my tax rate?
Your tax rate depends on your total income in the year of sale. Consider selling in a year when you have lower income, are between jobs, or have recently retired. The brackets are outlined inIRS Publication 17.
What records do I need to minimize my tax bill?
Keep records of your original purchase price, all capital improvements, selling expenses, and any depreciation claimed. Documentation is crucial for calculating your basis correctly, as required forSchedule D andForm 8949.
Can I offset gains with losses from other investments?
Yes, you can use capital losses from stocks, bonds, or other investments to offset capital gains from your vacation home sale. Net losses up to $3,000 can offset ordinary income, with excess losses carried forward, underIRC Section 1211.
Should I consider a charitable remainder trust?
A charitable remainder trust can provide income while reducing capital gains taxes and providing charitable deductions. You transfer the property to the trust, which sells it tax-free and pays you income. This strategy is governed byIRC Section 664 andIRS Publication 559.
Rumors spread online Friday that the U.S. government will soon be issuing stimulus checks to taxpayers in certain income brackets.
But Congress has not passed legislation to authorize such payments, and, according to the IRS, no new stimulus checks will be distributed in the coming weeks.
THE FACTS: This is false. Taxpayers will not receive new stimulus checks of any amount this summer, an IRS official said. Stimulus checks, also known as economic impact payments, are authorized by Congress through legislation and distributed by the Treasury Department. Republican Sen. Josh Hawley of Missouri last month introduced a bill that would send tax rebates to qualified taxpayers using revenue from tariffs instituted by President Donald Trump. Hawley’s bill has not passed the Senate or the House.
The IRS announced early this year that it would distribute about $2.4 billion to taxpayers who failed to claim on their 2021 tax returns a Recovery Rebate Credit — a refundable credit for individuals who did not receive one or more COVID-19 stimulus checks. The maximum amount was $1,400 per individual.
Those who hadn’t already filed their 2021 tax return would have needed to file it by April 15 to claim the credit. The IRS official said there is no new credit that taxpayers can claim.
Past stimulus checks have been authorized through legislation passed by Congress. For example, payments during the coronavirus pandemic were made by possible by three bills: the Coronavirus Aid, Relief and Economic Security Act; the COVID-related Tax Relief Act; and the American Rescue Plan Act.
In 2008, stimulus checks were authorized in response to the Great Recession through the Economic Stimulus Act.
The Treasury Department, which includes the Internal Revenue Service, distributed stimulus payments during the COVID-19 pandemic and the Great Recession. The Treasury’s Bureau of the Fiscal Service, formed in 2012, played a role as well during the former crisis.
Hawley in July introduced the American Worker Rebate Act, which would share tariff revenue with qualified Americans through tax rebates. The proposed rebates would amount to at minimum $600 per individual, with additional payments for qualifying children. Rebates could increase if tariff revenue is higher than expected. Taxpayers with an adjusted annual gross income above a certain amount — $75,000 for those filing individually — would receive a reduced rebate.
Hawley said Americans “deserve a tax rebate.”
“Like President Trump proposed, my legislation would allow hard-working Americans to benefit from the wealth that Trump’s tariffs are returning to this country,” Hawley said in a press release.
Neither the Senate nor the House had passed the American Worker Rebate Act as of Friday. It was read twice by the Senate on July 28, the day it was introduced, and referred to the Committee on Finance.
President Donald Trump’s tariffs are bad. But even if one were opposed to the tariffs on principle, they might be seduced by the revenue they generate and the potential of that revenue to make some progress toward reducing the deficit. The tariffs are expected to collect $300 billion annually—nearly matching the amount collected by the corporate income tax ($350 billion). It’s not a small amount of money. Trump has stated that his goal is to eliminate income taxes and replace them with tariff revenue.
Last month, Trump and Sen. Josh Hawley (R–Mo.) proposed tariff rebate checks, similar to the stimulus checks that were handed out during the COVID-19 pandemic, in an amount equal to the revenue that is to be collected—or possibly more. Hawley’s legislation proposes sending at least $600 to eligible adults and dependent children, and Trump has voiced support for sending money to “people of a certain income level,” who are most likely to spend that money quickly rather than save or invest it. This is a massively inflationary impulse, much like what we saw during the pandemic, and it will expand the deficit even more. This is a bad idea layered on top of bad ideas, and it will make the tax code even more progressive by effectively creating a negative income tax for those in the bottom tax brackets while fueling inflation.
We are currently running a budget deficit of close to $2 trillion, which Trump has made practically no effort to reduce by cutting expenses. He pledges instead to cut the deficit by increasing revenue from tariffs but plans to hand out the windfall in the form of rebate checks. Our last experience with a give-back program like this was a quarter-century ago.
The government was running a fairly large budget surplus in FY 2000—totaling over $236 billion—and lawmakers made impassioned arguments about how to spend it: Some wanted new domestic programs, others pressed for tax cuts, while then–Federal Reserve Chairman Alan Greenspan urged paying down the debt and retiring Treasury bonds. When George W. Bush became president shortly thereafter, he proposed immediate tax relief in the form of $300 and $600 rebate checks to singles and married couples, respectively, a key piece of the Economic Growth and Tax Relief Reconciliation Act of 2001.
Bush prevailed, and roughly 95 million households received checks. The surplus evaporated, federal spending surged on defense and homeland security following 9/11 later that year, and that was the end of the surplus—forever.
It is possible that the tariff rebate checks will not be inflationary. No one knows all the variables that cause inflation. Milton Friedman famously argued that it was “always and everywhere a monetary phenomenon,” but inflation is also a psychological phenomenon—when people believe prices will rise, they often act in ways that make it happen. Trump is playing with fire, especially as he is in search of a Fed chairman who will be amenable to large interest rate cuts. The 2021–22 experience is instructive: a combination of pandemic-era stimulus checks, ultralow interest rates, and supply-chain bottlenecks helped fuel the fastest inflation in four decades, peaking at over 9 percent in mid-2022. We could find ourselves in an environment where Trump successfully creates inflation with the rebate checks and then has a captive Federal Reserve that is powerless to do anything about it.
The Bush rebate checks totaled about $38 billion. Trump’s proposal could amount to hundreds of billions. Still, the inflationary effect would depend partly on whether households spend the checks quickly or save them.
One of the criticisms of Bush’s rebate checks was that they were unevenly applied and did not go to the people who mainly paid the taxes—they went to everyone, which is a very populist approach. The argument could be made that, by aiming these proposed rebate checks specifically at lower-income households, they will benefit those who shoulder the hidden cost of tariffs, since tariffs disproportionately raise the price of basic consumer goods such as clothing, food, and household items, which make up a larger share of lower-income budgets.
It’s possible that one of the ulterior motives of the tariffs is flattening the tax code. This would shift the tax burden to people of all income levels, rather than the current income tax, which burdens half of the population while the other half pays very little or nothing. That is not something that has been articulated by the administration, however, and returning all the collected revenue seems counterproductive.
Trump has also proposed eliminating income taxes entirely for people making less than $200,000 a year, which would result in only the top 5 percent of taxpayers paying any income taxes at all. Trump is trending toward policies that would have only the wealthy pay taxes—an idea shared by the likes of Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.). Fiscal conservatives, however, voted for Trump in droves on his promises to reduce the deficit and lower taxes, and they are having buyer’s remorse. We shouldn’t have tariffs, and to the extent that we have income taxes at all, they should be flat and fair. Instead, we are headed toward a hyperprogressive tax code, accompanied by growth-killing tariffs.
The window to take advantage of clean energy credits is running out.
After three years, the sun is setting on a series of tax credits aimed at lowering the cost of buying electric vehicles, as well as installing solar panels, heat pumps and other clean energy technologies in your home.
That’s because, in July, Congress passed President Trump’s sweeping budget package, known as the One Big Beautiful Bill Act, which phases out the Biden-era clean energy subsidies earlier than originally outlined in the Inflation Reduction Act (IRA) under which they were established.
For example, the Residential Clean Energy Credit originally offered homeowners a 30% tax credit for installing rooftop solar, storage batteries and other qualifying clean energy systems through 2032. Under the new budget law, however, the deadline to install the technology has been moved up to Dec. 31, 2025.
Here’s a list from the U.S. Climate Alliance, a bipartisan coalition of governors, of additional tax credits that are still available under the IRA, along with the new deadline for eligibility.
New electric vehicle: Up to $7,500 for qualifying vehicles purchased before Sept. 30, 2025
Used electric vehicle: Up to $4,000 for qualifying vehicles purchased before Sept. 30, 2025
Keep in mind, there are limits to the total amount of credits you can claim. For example, the Energy Efficient Home Improvement Credit caps homeowner tax credits on clean energy upgrades at $3,200 per year, according to the Internal Revenue Service. There are also caps on individual items, such as a $250 cap on exterior doors and a $500 cap on the cost of multiple doors installed.
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
ANNAPOLIS, Md. — Maryland’s first-in-the-nation tax on digital advertising violated the Constitution, a federal appeals court says, because blocking Big Tech from telling customers about the tax violates the companies’ right to free speech.
Supporters say Maryland needed to overhaul its tax methods in response to significant changes in how businesses advertise. The tax focuses on large companies that make money advertising on the internet such as Meta, Google and Amazon, who say they’re being unfairly targeted.
The ongoing legal fight is being watched by other states that are considering taxes for online ads. Maryland estimated the tax could raise about $250 million a year to help pay for a sweeping K-12 education measure.
Maryland’s law says the companies must not only pay the tax, but avoid telling customers how it affects pricing, with no line items, surcharges or fees, said the appeals court Friday in siding with trade associations fighting the tax.
Judge Julius Richardson cited the Colonial-era Stamp Act, which helped spark the Revolutionary War, and wrote that “criticizing the government — for taxes or anything else — is important discourse in a democratic society.”
The plaintiffs contended Maryland lawmakers were trying to insulate themselves from criticism and political accountability by forbidding companies from explaining the tax to their customers.
“A state cannot duck criticism by silencing those affected by its tax,” the judge wrote.
The unanimous ruling by the 4th U.S. Circuit Court of Appeals reverses a decision by U.S. District Judge Lydia Kay Griggsby and sends the case back to her with instructions to consider an appropriate remedy in light of the panel’s decision.
Trade groups praised the decision.
“Maryland tried to prevent criticism of its tax scheme, and the Fourth Circuit recognized that tactic for what it was: censorship,” said Paul Taske, co-director of the NetChoice Litigation Center, said in a statement.
Maryland Comptroller Brooke Lierman, who is the defendant in the case, and the Maryland attorney general’s office, who is representing the state, declined to comment Monday.
The law has been challenged in multiple legal venues, including Maryland Tax Court, where the case is ongoing.
The law imposes a tax based on global annual gross revenues for companies that make more than $100 million globally.
Under the law, the tax rate is 2.5% for businesses making more than $100 million in global gross annual revenue; 5% for companies making $1 billion or more; 7.5% for companies making $5 billion or more and 10% for companies making $15 billion or more.
The Maryland General Assembly, which is controlled by Democrats, overrode a veto of the legislation in 2021 by then-Gov. Larry Hogan, a Republican.
