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Kozi Checks & Balances TaxTactics News

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August 14.2025

2 Minutes Read

What the One Big Beautiful Bill Means for Your Taxes in 2026

US tax changes map showing tax cuts and increases across states.

Understanding the One Big Beautiful Bill: A Tax Revolution

The One Big Beautiful Bill Act (OBBBA), which became law in July 2025, marks a watershed moment in federal tax policy. This legislation is significant as it makes the individual tax provisions implemented under the 2017 Tax Cuts and Jobs Act (TCJA) permanent. Notably, this change prevents a tax hike from impacting 62% of tax filers from 2026 onwards, a relief for many taxpayers.

Key Benefits of the OBBBA

The OBBBA introduces a range of tax cuts that extend beyond the TCJA, incorporating new deductions for overtime and tipped income, alongside an expanded child tax credit. Furthermore, it ensures permanence for 100% bonus depreciation, which allows businesses to recoup expenses more quickly for investments made in their operations. These provisions not only stimulate economic activity but also aid in streamlining tax obligations for many individuals and enterprises.

Geographic Variability of Tax Benefits

Tax Foundation estimates reveal that the benefits of the OBBBA vary widely across the country. For instance, taxpayers in Wyoming will experience an average reduction of $5,375 in 2026, whereas those in West Virginia might only see $2,503. Additionally, mountain resort towns like Teton County, Wyoming, stand out with striking average tax cuts, potentially benefitting business owners and higher earners. This geographical disparity highlights the varying economic landscapes and needs of different communities.

The Changing Landscape of Tax Contributions

According to forecasts, while the average tax cut per individual is $3,752 in 2026, it is projected to fall to $2,505 by 2030 as some deductions expire but will rise again by 2035 owing to inflation adjustments. This fluctuation emphasizes the importance for taxpayers to stay informed about upcoming changes in tax law, which could influence their financial planning strategies.

What This Means for American Taxpayers

The OBBBA represents a significant shift in the tax landscape, providing lasting benefits for American tax filers while potentially invigorating economic growth. As taxpayers reel from previous tax cuts and prepare for new deductions, it's essential to remain engaged with the evolving narrative of federal tax legislation.

Tax Deduction Deep-Dives

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09.19.2025

Will the G7's Global Minimum Tax Give US Multinationals Competitive Edge?

Update Understanding the G7's Global Minimum Tax SolutionThe recent G7 accord on a global minimum tax represents a significant shift in international tax policy, raising questions about its implications for businesses, especially U.S. multinationals. While one key component of the agreement—a "side-by-side" solution—excludes U.S. companies from some of Pillar Two's rules, it remains to be seen whether this truly offers an advantage over competitors from other G7 nations.The Complexity of Compliance CostsOne of the most pressing concerns surrounding this tax agreement is the compliance costs associated with different tax systems. The U.S. tax code is notoriously complex, with recent IRS estimates projecting taxpayers will incur substantial out-of-pocket expenses to comply, totaling nearly 1.8% of GDP by 2025. This complexity could inherently disadvantage U.S. companies compared to their counterparts in jurisdictions with more streamlined processes.Evaluating Competitive EqualityIf we assess U.S. multinational corporations under the lens of competitiveness, the dynamics—such as U.S. domestic corporate tax rates and compliance burdens—become critical factors in evaluating potential advantages. Despite having a corporate tax rate of 21% coupled with a minimum alternative tax of 15%, the U.S. cannot simply be categorized as a tax haven. Its intricate regulations, however, may impose a heavier burden than the rules envisioned by Pillar Two.Potential Double Taxation IssuesWithout a clear side-by-side framework, U.S. firms may still risk facing double taxation due to inconsistencies in international tax crediting practices. Historically, U.S. multinationals might encounter heightened scrutiny under Pillar Two provisions, necessitating a thorough understanding of both domestic and international tax statutes to mitigate risks and avoid excess taxation.Conclusion: A Double-Edged Sword?Ultimately, while the G7's agreement on a global minimum tax can herald beneficial changes in how multinationals are taxed across borders, it's essential to approach its implementation with caution. Companies may find themselves navigating a battleground of complexities, where the anticipated advantages of compliance may be counterbalanced by the challenges posed by the components of this deal.

09.18.2025

Exploring the Progressivity of the US Tax Code: Fairness in Taxation

Update A Closer Look at the Progressivity of the US Tax Code The question of fairness in the tax code often boils down to perceptions of progressivity, or the belief that wealthier individuals should carry a larger share of the tax burden. According to the Tax Foundation's latest survey, a significant 65% of U.S. taxpayers believe the tax system is unfair, with 58% arguing that high earners should contribute more. This sentiment is particularly relevant as discussions around tax equity continue in economic and political spheres. Understanding Progressive vs. Regressive Taxation A tax system is considered progressive when those who earn more pay a higher percentage of their income in taxes. Conversely, a regressive system disproportionately impacts lower-income earners. In examining the U.S. tax structure, it’s clear that federal income taxes are largely progressive. They reflect a tiered system where tax rates increase alongside income levels. The Impact of the Progressive Tax System Data shows that the top 50% of earners are responsible for 97% of federal income tax revenue, illustrating the system’s shift toward greater progressivity over the last century. Notably, low-income families often benefit from tax credits, such as the Earned Income Tax Credit, which can lead to negative effective tax rates for those in the lowest earning bracket. Future Directions: What Lies Ahead? While the recent One Big Beautiful Bill Act (OBBBA) maintains the existing progressive structure, concerns remain about future adjustments. As fiscal discussions evolve, the integrity of the progressive framework will likely remain a pivotal issue. Stakeholders are keen to see how shifts in policy will either enhance or undermine equitable tax contributions across different income levels. Takeaway: Understanding Tax Progressivity Matters In a society where economic disparities are prevalent, understanding the implications of the tax code is crucial. For taxpayers — especially those feeling the burden of tax contributions — staying informed and engaged in these discussions can influence future policy decisions that affect equitable tax structures.

09.06.2025

Why Lowering the VAT Registration Threshold Benefits UK Economies

Update Why the VAT Registration Threshold Needs Rethinking The United Kingdom's value-added tax (VAT) registration threshold has become a hot topic among policymakers. Currently set at £90,000, this threshold is one of the highest in the OECD, which raises questions about its impact on small businesses and the economy. Instead of considering a higher VAT threshold, the government should explore lowering or potentially abolishing it altogether. The Flaws of a High VAT Registration Threshold By being below the VAT registration threshold, small businesses are exempt from collecting VAT on their sales, but they also miss out on reclaiming VAT paid on purchases. While this arrangement might seem beneficial for small firms, it inadvertently creates a financial distortion. Economically, it encourages micro-businesses to remain stagnant rather than expand, ultimately hindering overall productivity. According to the Office of Budget Responsibility (OBR), the financial impact can be substantial—an estimated annual loss of £350 million in turnover due to businesses adjusting their growth strategies to avoid surpassing the VAT threshold. The Need for Structural Reforms Raising the VAT threshold may seem like a supportive measure for small businesses; however, it leads to an inefficient market where larger firms face competitive disadvantages. Some economists, including those from the International Monetary Fund (IMF), suggest that firms close to the threshold tend to slow down their growth by approximately one percentage point, illustrating how tax policy can inadvertently stifle business growth. Looking Forward: A Better Approach Instead of increasing the VAT threshold, lowering it or simplifying the tax system could yield better results for businesses and government revenues alike. This could involve reducing exemptions or modifying compliance requirements, creating a fairer landscape for all sizes of businesses. Streamlined VAT processes could balance administrative burdens while simultaneously increasing tax compliance. Conclusion: A Call for Action As discussions around VAT policy evolve, it's crucial for stakeholders, including small business owners and policymakers, to advocate for changes that foster growth rather than encourage stagnation. The implications of maintaining an excessively high VAT registration threshold reach far beyond small businesses; they directly affect economic growth and efficiency within the UK. Engaging in a thoughtful debate over lowering this threshold can protect the interests of burgeoning entrepreneurs while strengthening the economy at large.

What the One Big Beautiful Bill Means for Your Taxes in 2026

Understanding the One Big Beautiful Bill: A Tax Revolution

Key Benefits of the OBBBA

Geographic Variability of Tax Benefits

The Changing Landscape of Tax Contributions

What This Means for American Taxpayers

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