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TaxBuzz Top 5 - MI Taxpayers Face Fallout from OBBBA, Chicago Mayor's Tax Plans Could "Scare Businesses Away" & More

by
Rebekah Barton
on
8/1/2025
TaxBuzz Top 5 - MI Taxpayers Face Fallout from OBBBA, Chicago Mayor's Tax Plans Could "Scare Businesses Away" & 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. Michigan Taxpayers Face Fallout from Trump’s “One Big Beautiful Bill”

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Michigan officials are bracing for significant fiscal repercussions following the passage of President Trump’s “One Big Beautiful Bill” (OBBB). The massive federal tax and spending package, which includes sweeping changes to Medicaid reimbursements and federal tax policy, may reduce revenue flowing into the state budget next year, complicating both Medicaid expansion efforts and ongoing school funding plans.

Under the legislation, The Detroit News reports, Michigan stands to lose an estimated $200 million in federal matching funding, as provisions limit the automatic inflation boost—known as the Consumer Price Index growth adjustment—that states previously received. The adjustments also affect reimbursements for Medicaid programs and Child Health Insurance Program (CHIP), potentially pressing Michigan lawmakers to scramble for new revenue streams or program cuts to stay compliant.

Michigan legislators voiced concern over projections that OBBB would shift the remaining Medicaid expansion costs onto the state by 2026, threatening funding for the 1.7 million residents relying on the program. State Budget Director Jim Hiller warned, “These federal changes force tough choices about sustaining essential services without raising taxes.”

Local leaders are considering options, including adjusting unemployment insurance and rebalancing property tax relief programs. These options may come under debate during Michigan’s midterm budget review, scheduled for October 2025.

Though billed as a triumph for tax reform, OBBB’s impact at the state level shows how far-reaching federal legislation can ripple into state budgets.

2. Chicago Tribune Warns Mayor's Tax Plans Could Scare Businesses Away

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Credit: James Gilbert/Stringer/Getty Images

Chicago Mayor Brandon Johnson is under fire from The Chicago Tribune, which in a scathing editorial warned that his proposed tax policies are like an early Halloween scare, risking to drive businesses out of the city just as he tries to raise new revenue to close a projected $1.2 billion deficit.

Specifically, Johnson floated reviving the corporate head tax, a per-employee levy phased out in 2011, and floated a payroll excise tax targeting companies with high-paid employees, mirroring Seattle’s JumpStart model. Critics argue these proposals could deter hiring, stifle investment, and further erode Chicago’s economic competitiveness.

Mayor Johnson has also indicated potential new taxes targeting universities, endowments, and nonprofits traditionally exempt from property tax. Supporters, including progressive think tanks, estimate that a payroll tax on workers earning over $200,000 could generate $1.5 billion annually. Advocate Julie Dworkin of the Institute for the Public Good said, “Corporations can afford to contribute more… we just need the will to do it.”

Yet Tribune readers and business leaders are already pushing back. The editorial board criticized Johnson for announcing aggressive tax ideas before his working group has even met, suggesting the exercise was window dressing for a preordained agenda.

For now, aldermen remain cautious. The City Council unanimously rejected a proposed $300 million property tax increase last year and is likely to resist new analogous measures.

3. IRS Launches Major Overhaul of 50-Year-Old Tax IT Infrastructure

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Credit: Skyhobo/Getty Images

The IRS has officially kicked off a sweeping modernization of its core tax-processing infrastructure—centered around the Integrated Data Retrieval System (IDRS), a 50-year-old platform vital to refund processing, taxpayer records, and customer service. The overhaul, under intense scrutiny from the Department of Government Efficiency (DOGE), aims to consolidate legacy systems and transition toward real-time, cloud-ready processing.

Some goals of the overhaul are to:

  • Merge individual and business tax return systems into a unified tax engine
  • Support real-time national processing of tax data
  • Include tools to detect and recover erroneous payments
  • Fully retire traditional mainframe systems once new infrastructure is online
  • Build a unified API framework leveraging cloud providers and tech firms including Palantir and AWS.

These changes come amid increasing efforts to modernize the IRS’ technology stack, which still relies on outdated COBOL- and assembly‑based systems like the Individual Master File, highlighted by GAO as high-risk due to aging hardware and insufficient staffing.

4. Austin Eyes Major Property Tax Hike to Address Budget Gap

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Credit: franckreporter/Getty Images

Per The Austin American-Statesman, Austin city officials are weighing a significant property tax increase to address a projected $300 million budget shortfall, with proposals expected to be discussed as part of the fall 2025 budget review. City Manager Alison Thomas warned that city expenses are outpacing revenue growth, particularly in areas like public safety, housing, and homelessness services. While no final decision has been made, some council members are urging swift action to avoid service cuts.

The proposed increase—estimated between 0.3% and 0.5%—could generate between $150 million and $250 million annually, depending on property valuation and available exemptions. Austin’s current effective property tax rate of roughly 0.42% is already higher than that of other large Texas cities, such as San Antonio (0.28%) and Dallas (0.41%). Still, local leaders argue that growing demands for fire, EMS, and affordable housing justify the change.

Mayor Kirk Watson acknowledged the fiscal pressure but emphasized the need for community input and a phased approach. If approved, the new tax rate would take effect in January 2026. With town halls and budget hearings scheduled over the coming weeks, the proposal is likely to face scrutiny from homeowners, especially in neighborhoods experiencing rapid gentrification. The city plans to explore low-income homeowner relief options as part of the final package.

5. Georgia Confirms: No Sales Tax Holiday This Year

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Georgia consumers won’t get a tax break this summer, despite anticipation to the contrary. The state’s Department of Revenue confirmed that there will be no general sales tax holiday in August 2025, contradicting past rumors of the event's revival. That means no tax-free shopping on school supplies, clothing, computers, or hurricane preparedness items statewide. 

This year’s tax calendar starkly contrasts with nearby states helping families save during back-to-school season. For instance, Virginia’s three-day holiday begins August 1, exempting qualifying school supplies ($20 or under), clothing ($100 or less), energy-efficient appliances, and hurricane preparedness items. Online and in-store purchases qualify. 

Meanwhile, Ohio’s expanded two-week holiday runs August 1–14, covering all tangible personal property priced at $500 or less—including furniture, electronics, and groceries—both in stores and online. 

And, in West Virginia, residents can shop tax-free Aug. 1–4 on qualifying apparel ($125 or less), laptops/tablets ($500 or less), school supplies, and sports gear. 

Georgia’s absence of a tax holiday leaves its families paying full price, while states not too far away offer relief that supports retailer traffic and household budgeting.

Which headline this week most interests you?

Feature Image Credit: Justin Sullivan/Staff/Getty Images

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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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