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GOP starts crucial week with key tax, spending issues unanswered

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House Republicans are struggling to resolve key issues with President Donald Trump’s multitrillion-dollar tax package after weekend talks, including a change in the deduction cap for state and local taxes and a potential hike in the rate for high earners.

Key GOP-led committees dribbled out parts of their plan over the weekend, such as an increase in the maximum child tax credit to $2,500 and raising the estate tax exemption to $15 million. Those were items in an incomplete menu of proposals required to be released before Monday.

On the government savings side, the Energy and Commerce Committee proposed on Sunday a controversial work requirement system for Medicaid beneficiaries and potential cost-shifts to the states also tied to the insurance program for millions of poor and disabled Americans.

But that left some of the most politically tricky components unaddressed, until lawmakers return to the issues Monday. Trump wants to eliminate the carried-interest tax break used by venture capital and private equity fund managers and boost levies on executive compensation. He’s also endorsed upping the top income tax rate to 39.6% for individuals making $2.5 million or more and couples earning at least $5 million, though he’s retreated somewhat on pushing that proposal.

Perhaps the most politically fraught question is how much to raise the deduction for state and local taxes, which Trump capped at $10,000 in 2017 and members who represent high-tax states like New York, New Jersey and California have been longing to increase. It’s particularly challenging for Republicans in those states — some of whom want the limit lifted to $30,000 or even higher to answer demands of frustrated constituents. 

But the revenue that the lower cap currently generates is badly needed to pay for the tax cuts Trump wants to aim at his middle-class and working-class base, such as eliminating taxes on tips and overtime.

Such details have hit a House GOP self-imposed deadline, however.

Speaker Mike Johnson and his lieutenants continue to eye Memorial Day, later this month, for final House passage of the overall bill. And this week has been set for key remaining committees to finalize their parts, so that an overall bill can be cobbled together and advanced.

If they miss that deadline, as analysts consider likely, another more difficult deadline looms.

Republicans are planning to use the tax bill to advance a $5 trillion debt-limit increase, and Treasury Secretary Scott Bessent told lawmakers Friday that his department’s ability to use special accounting maneuvers to stay within that ceiling limit could be exhausted in August. He urged them to act by mid-July. Still, he said in a Bloomberg Television interview Monday that “the tax bill is moving along very well — better than I could have imagined.”

If the GOP cannot get the tax package done in time, they could pass a standalone bill on their own, though that might be politically challenging if done without spending cuts. Otherwise they could work with Democrats, but they would likely use their leverage to try negotiating for spending increases, as they have in the past.

Starting Tuesday, key hearings kick off at House committees including the tax-writing Ways and Means panel. Also up: the Energy and Commerce Committee, which oversees health-care spending. A draft plan for Medicaid changes fails to make the largest-scale measures that the Freedom Caucus has pushed — risking blowback for GOP leaders soon from conservatives.

Under the current draft, at least 13.7 million people would lose health insurance by 2034, also curtails some Affordable Care Act coverage, according to analysis from the non-partisan Congressional Budget Office.

The GOP’s razor-thin 220-213 majority has made party unity vital. But that’s a tall order when, for example, fiscally conservative Republicans from low-tax states oppose a boost to the so-called SALT cap, seeing it as a boon to the rich in largely Democratic states. 

A decision on SALT and other issues could be announced after a meeting between party leaders and some of these lawmakers Monday morning. Also awaiting decisions are Trump’s hopes to end taxes on tips, overtime and Social Security benefits, as well as tax credits for auto loans and for building domestic factories. The last two were designed to blunt the sticker shock of Trump’s tariffs regime.

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Accounting

Total college enrollment rose 3.2%

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Total postsecondary spring enrollment grew 3.2% year-over-year, according to a report.

The National Student Clearinghouse Research Center published the latest edition of its Current Term Enrollment Estimates series, which provides final enrollment estimates for the fall and spring terms.

The report found that undergraduate enrollment grew 3.5% and reached 15.3 million students, but remains below pre-pandemic levels (378,000 less students). Graduate enrollment also increased to 7.2%, higher than in 2020 (209,000 more students).

Graduation photo

(Read more: Undergraduate accounting enrollment rose 12%)

Community colleges saw the largest growth in enrollment (5.4%), and enrollment increased for all undergraduate credential types. Bachelor’s and associate programs grew 2.1% and 6.3%, respectively, but remain below pre-pandemic levels. 

Most ethnoracial groups saw increases in enrollment this spring, with Black and multiracial undergraduate students seeing the largest growth (10.3% and 8.5%, respectively). The number of undergraduate students in their twenties also increased. Enrollment of students between the ages of 21 and 24 grew 3.2%, and enrollment for students between 25 and 29 grew 5.9%.

For the third consecutive year, high vocational public two-years had substantial growth in enrollment, increasing 11.7% from 2023 to 2024. Enrollment at these trade-focused institutions have increased nearly 20% since pre-pandemic levels.

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Interim guidance from the IRS simplifies corporate AMT

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Jordan Vonderhaar/Photographer: Jordan Vonderhaar/

The Internal Revenue Service has released Notice 2025-27, which provides interim guidance on an optional simplified method for determining an applicable corporation for the corporate alternative minimum tax.

The Inflation Reduction Act of 2022 amended Sec. 55 to impose the CAMT based on the “adjusted financial statement income” of an “applicable corporation” for taxable years beginning in 2023. 

Among other details, proposed regs provide that “applicable corporation” means any corporation (other than an S corp, a regulated investment company or a REIT) that meets either of two average annual AFSI tests depending on financial statement net operating losses for three taxable years and whether the corporation is a member of a foreign-parented multinational group.

Prior to the publication of any final regulations relating to the CAMT, the Treasury and the IRS will issue a notice of proposed rulemaking. Notice 2025-27 will be in IRB: 2025-26, dated June 23.

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Accounting

In the blogs: Whiplash | Accounting Today

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Conquering tariffs; bracing for notices; FBAR penalty timing; and other highlights from our favorite tax bloggers.

Whiplash

Number-crunching

  • Canopy (https://www.getcanopy.com/blog): “7-Figure Firm, 4-Hour Workweek: 5 Questions to Ask Yourself.”
  • The National Association of Tax Professionals (https://blog.natptax.com/): This week’s “You Make the Call” looks at Sarah, a U.S. citizen who moved to London for work in 2024. On May 15, 2025, it hit her that she forgot to file her 2024 U.S. return. Was she required to file her 2024 taxes by April 15?
  • Taxable Talk (http://www.taxabletalk.com/): Anteing up with Uncle Sam: The World Series of Poker is back, and one major change this year involves players from Russia and Hungary. After suspension of tax treaties with those nations, players will have 30% of winnings withheld. 
  • Parametric (https://www.parametricportfolio.com/blog): Direct indexing seems to come with a common misunderstanding: On the performance statement, conflating the value of harvested losses with returns. 

Problems brewing

  • Taxing Subjects (https://www.drakesoftware.com/blog): No chill is chillier than the client’s at the mailbox when an IRS notice appears out of the blue. How you can educate — and warn — them about the various notices everybody’s that favorite agency might send.
  • Dean Dorton (https://deandorton.com/insights/): Perhaps because they can be founded on trust, your nonprofit clients are especially vulnerable to fraud.
  • Global Taxes (https://www.globaltaxes.com/blog.php): When it’s your time, it’s your time: The clock starts on FBAR penalties when the tax forms are due and not when penalties are assessed — and even the death of the taxpayer doesn’t extend the deadline.
  • TaxConnex (https://www.taxconnex.com/blog-): Your e-commerce clients can muck up sales tax obligations in many ways. How some of the seeds of trouble might hide in their own billing system.
  • Sovos (https://sovos.com/blog/): What’s up with the five states that don’t have a sales tax?
  • Taxjar (https://www.taxjar.com/resources/blog): Humans are still needed to handle sales tax complexity, with real-world examples.
  • Wiss (https://wiss.com/insights/read/): A business — and business-advising — success story from a California chicken eatery.

Almost half done

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