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TaxBuzz Top 5 - Trump Suggests Social Security Should Be Tax-Free, Senate Blocks Bill to Expand Child Tax Credit & More

TaxBuzz Top 5 - Trump Suggests Social Security Should Be Tax-Free, Senate Blocks Bill to Expand Child Tax Credit & More

Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.

We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.

1. Trump Suggests Social-Security Should Be Tax-Free for Seniors

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Credit: Alex Wong/Getty Images

Former President Donald Trump, the Republican presidential nominee, recently advocated for making Social Security payments tax-free for seniors. This position was expressed on his social media platform, Truth Social, where he declared, "SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!" However, Trump did not provide specifics on how this policy would be implemented.

Per a FOX Business report, historically, about 40% of Social Security recipients pay federal income taxes on their benefits due to other substantial income, according to the Social Security Administration. Trump’s proposal may face significant congressional resistance if pursued.

A recent Gallup poll revealed heightened concerns among U.S. adults regarding the future availability of Medicare and Social Security benefits, with 75% of those 65 and younger worried about Medicare and 80% concerned about Social Security. These figures have risen from last year. The federal government’s 2023 expenditure on Social Security and Medicare was $2.2 trillion, underscoring the programs' financial significance.

Despite the growing concern, Trump's proposal aims to alleviate some financial burden on seniors, though its feasibility and details remain unclear.

2. Senate Blocks Bill to Expand Child Tax Credit

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Stefani Reynolds/Bloomberg/Getty Images

A bill to expand the child tax credit and restore business tax breaks failed to advance in the Senate, largely due to Republican opposition. Majority Leader Chuck Schumer, D-N.Y., challenged Republicans to support the tax cut package, emphasizing benefits for low-income families and local businesses. According to the Associated Press, the vote was 48 in favor and 44 opposed, falling short of the needed 60 votes. Three Republicans joined Democrats in support, while two independents, Joe Manchin and Bernie Sanders, opposed it.

The bill, which passed the House with strong support, would have made the child tax credit more refundable and reinstated business tax breaks for new equipment and R&D expenses. Despite behind-the-scenes negotiations, both parties accused each other of not being serious. Republicans preferred the bill to go through the Senate Finance Committee for amendments.

Schumer showcased the bill to counter accusations from Republican VP nominee JD Vance that Democrats are "anti-family." Senate Republicans, however, argued that a better deal could be negotiated next year.

3. Mayor Wu’s Tax Relief Plan for Boston Homeowners Faces Legislative Hurdles

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Karl Poss/Getty Images

Boston Mayor Michelle Wu's initiative to shift more of the city’s property tax burden onto local businesses faced a setback as the home rule petition failed to pass in the Senate during the final day of formal sessions on Beacon Hill. Despite securing some modifications for House approval, the measure did not advance, WBUR reports.

Mayor Wu proposed the change to mitigate significant tax increases for Boston homeowners, which could rise by 33% due to the declining value of office buildings from increased remote work and state-imposed limits on tax rate differences between commercial and residential properties. Although the Senate might still pass the measure during informal sessions, Wu is preparing to inform residents about potential tax hikes under state law Prop 2 ½ without legislative relief.

Greg Maynard, executive director of the Boston Policy Institute, shared the broader implications, noting concerns about Boston’s future without new office towers and increased commercial property values to support budget growth.

Additionally, two other home rule petitions for Boston also failed to pass: one for increasing liquor licenses and another for restructuring the Boston Planning and Development Agency. In related news, Boston’s Chief of Planning, Arthur Jemison, announced his resignation effective September 13, citing family reasons.

4. Maine Senator Introduces Tax Credit Bill to Aid Working Waterfronts Affected by Natural Disasters

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Edwin Remsberg/Getty Images

Maine Senator Angus King has introduced a bill to offer tax credits to working waterfronts in Maine that have been affected by natural disasters. This bill comes in the wake of severe storms and record high tides in January, which caused over $3 billion in damage to Maine's coastline. The bill proposes a 30 percent tax credit on up to $1 million in mitigation costs for these working waterfronts.

Senator King emphasizes that the bill aims to provide businesses with the necessary financial resources to strengthen their infrastructure against future storms. This initiative is part of a broader effort to support Maine's coastal communities and ensure their resilience against climate change and extreme weather events, news network WGME reports.

Additionally, the bill aligns with other recent efforts by Senator King and the Maine delegation to secure funding for coastal resilience, including a $5 million grant from the National Oceanic and Atmospheric Administration (NOAA) to address climate impacts on Maine's coastal communities​

5. Major Tax-Free Shopping Weekend Arrives in Ten States

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Isabel Pavia/Getty Images

Dates for Sales Tax Holidays:

  • Arkansas: August 5-6
  • Florida: July 29 - August 11
  • Iowa: August 4-5
  • Missouri: August 4-6
  • New Mexico: August 4-6
  • Ohio: August 1-8
  • Oklahoma: August 4-6
  • South Carolina: August 4-6
  • Virginia: August 4-6
  • West Virginia: August 4-7

Why It Matters:

This annual event provides a much-needed tax break for families preparing for the new school year. With the cost of school supplies and clothing on the rise, these sales tax holidays offer financial relief. Families with children in elementary through high school are expected to spend $874.68 on average this year on back-to-school purchases. However, with the high cost of living, many parents are finding it difficult to afford these expenses, making the tax-free weekends especially significant.

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Rebekah Barton

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