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TaxBuzz Top 5 - IRS Expands Free File Program, House GOP Weighs Tax Cut Trade-Offs & More

TaxBuzz Top 5 - IRS Expands Free File Program, House GOP Weighs Tax Cut Trade-Offs & 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. House Republicans Weigh Trade-Offs Between Tax Cuts and Immigration Enforcement

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Credit: Chip Somodevilla/Getty Images

House Republicans are currently deliberating on strategies to extend the 2017 tax cuts, a key component of President Donald Trump's economic agenda, while simultaneously addressing immigration enforcement. The challenge lies in balancing these priorities without exacerbating the federal deficit.

The proposed extension of the tax cuts is estimated to cost approximately $5 trillion over the next decade. To offset this substantial expenditure, some GOP members are considering reductions in federal programs, including potential cuts to Medicaid, according to a New York Times report. Such measures could potentially have a significant impact on low-income populations.

In addition to tax policy, the party is focusing on immigration reform, including stricter border security and increased deportations. However, internal divisions have emerged regarding the specifics of these policies and their funding mechanisms. Balancing the desire for tax reductions with the need for increased spending on immigration enforcement presents a complex fiscal dilemma that has no clearcut solution.

The Republican Party's slim majority in the House further complicates the passage of comprehensive legislation. President Trump has expressed a preference for consolidating his key legislative goals into a single, comprehensive bill. However, he has also indicated openness to alternative approaches if they facilitate timely approval.

2. UK Plans to Ease Non-Dom Rules Amid Wealthy Expatriate Exodus

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Credit: Dan Kitwood/Getty Images

The United Kingdom is poised to soften its tax rules for wealthy foreigners following a significant exodus of millionaires over the past two years, reports CNBC. Chancellor Rachel Reeves announced the changes in response to mounting concerns that strict tax policies, including reforms to the non-domiciled (“non-dom”) tax status, have driven away affluent individuals, along with their investments and spending power.

The non-dom tax regime allows residents with foreign income to avoid UK taxation on those earnings, provided the funds remain overseas. While critics argue that it perpetuates inequality, proponents warn that tightening these rules too drastically has already contributed to an outflow of high-net-worth individuals.

This issue isn’t new to TaxBuzz. In a recent article, we shared the UK government’s earlier moves to reform the non-dom system, alongside debates about balancing fairness and global competitiveness. Additionally, a prior Top 5 article explored how UK taxes could impact wealthy American taxpayers.

Reeves’ proposal underscores a global challenge: designing tax systems that attract investment without alienating citizens who demand fairness. With the UK’s fiscal health under scrutiny and borrowing costs surging, the new approach could influence tax policy debates far beyond its borders.

3. IRS to Expand Free Online Tax Filing System

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Credit: HABesen/Getty Images

The IRS is expanding its free online tax filing system, reports the New York Times. This builds on last year’s pilot program to offer more taxpayers a cost-free, government-operated way to file their returns. This initiative represents a significant shift toward making the tax filing process more accessible and affordable for millions of Americans.

The expanded platform allows individuals to bypass third-party software providers, eliminating fees and reducing dependence on private companies for basic tax filing services. Initially rolled out as a limited pilot in 2024, the system now includes features to accommodate a broader range of filers, including those with slightly more complex returns.

IRS officials say this expansion is part of a larger effort to modernize the agency and improve taxpayer experiences. Recent funding from the Inflation Reduction Act has enabled upgrades to IRS technology and taxpayer services, allowing for innovations like this free filing platform.

While the initiative has received praise from consumer advocates for increasing accessibility, questions remain about its long-term impact on private tax preparation companies and whether it can handle the complexities of all types of returns.

The move aligns with broader efforts to simplify tax compliance and reduce financial burdens on low- and middle-income Americans.

4. Texas to Require Homestead Exemption Verification Every Five Years

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Credit: Donovan Reese/Getty Images

Texas homeowners will now need to verify their eligibility for homestead exemptions every five years under a new state law aimed at reducing fraudulent claims and ensuring equitable tax benefits. The Texas Comptroller's Office announced the rule, which requires homeowners to confirm that their property remains their primary residence.

As reported by Fox News 4, the homestead exemption offers significant property tax relief, allowing eligible homeowners to lower the taxable value of their primary residence. However, the new verification process is designed to address concerns about ineligible properties, such as rental homes or second residences, benefiting from these exemptions.

The process will involve property owners submitting proof of residency, such as a driver’s license or utility bills, to confirm their eligibility. The Texas Comptroller's Office has indicated that homeowners will receive notifications when their verification is due and will be provided instructions to complete the process online or by mail.

Officials expect the new policy to recover millions in lost revenue caused by improperly claimed exemptions. However, critics warn that the added administrative burden could confuse some homeowners, particularly elderly residents or those unfamiliar with digital platforms.

Homeowners who fail to comply with the verification process risk losing their exemptions and facing higher property tax bills. The Comptroller’s Office encourages homeowners to stay informed and respond promptly to verification requests to maintain their tax benefits.

5. Small Businesses Applaud Reintroduction of Main Street Tax Certainty Act

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Credit: Alexander Spatari/Getty Images

The Main Street Tax Certainty Act has been reintroduced in Congress, earning widespread praise from small business owners and advocacy groups, the National Federation of Independent Businesses reports. This bipartisan bill seeks to make permanent the 20% deduction for qualified business income under Section 199A of the tax code, a provision initially enacted as part of the 2017 Tax Cuts and Jobs Act.

Currently, this deduction is set to expire at the end of 2025. Small business advocates argue that its permanence is essential to fostering long-term growth and stability for businesses organized as pass-through entities, such as S-corporations, partnerships, and sole proprietorships.

NFIB strongly supports the bill. In a statement, the organization emphasized that the deduction has been instrumental in reducing tax burdens for millions of small business owners, allowing them to reinvest in their operations and hire additional staff.

“Small businesses rely on tax certainty to plan for the future,” NFIB President Brad Close said. “This legislation will provide much-needed predictability and help ensure that America’s job creators can continue to drive economic growth.”

Critics of the deduction argue that it disproportionately benefits wealthier business owners, but supporters counter that it plays a crucial role in leveling the playing field between small businesses and larger corporations, which already enjoy lower effective tax rates.

The bill’s reintroduction comes amid broader discussions in Congress about tax policy, including the future of several provisions from the 2017 tax overhaul that are set to expire. Small business groups are urging lawmakers to act swiftly to ensure stability for the nation’s entrepreneurs.

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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