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TaxBuzz Top 5 - Michigan Approves 24% Marijuana Tax, GOP Proposes Daily Tax on Legislators During Shutdown & More

by
Rebekah Barton
on
10/3/2025
TaxBuzz Top 5 - Michigan Approves 24% Marijuana Tax, GOP Proposes Daily Tax on Legislators During Shutdown & 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 Approves 2026 Budget With New 24% Marijuana Tax

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Credit: Jose S/Getty Images

Michigan lawmakers passed an $81 billion state budget for fiscal 2026 after weeks of tense negotiations, narrowly avoiding a government shutdown. Central to the deal is a 25% wholesale tax on marijuana sales, projected to raise about $420 million annually, much of it earmarked for road and infrastructure funding.

The move is already controversial. Cannabis industry leaders warn the steep levy will drive consumers back to the black market or across state lines. “Michigan’s cannabis industry is already under tremendous strain … The new tax move forward is disappointing,” said dispensary owner Sue LaBonville of Sanford.

Per the Detroit Free Press, lawmakers have split along familiar lines. Supporters pitched the tax as a way to shore up state revenues without cutting core services. Opponents, including Sen. Jeff Irwin (D-Ann Arbor), countered that it will undermine the legal market. “This is going to drive Michigan customers out of the legal market … Stop bringing your money to Michigan,” he told Bridge Michigan.

In addition to cannabis taxation, the budget also funds free school meals statewide, locks in record per-pupil funding of roughly $10,050 per student, cuts more than 1,700 vacant state jobs, and limits corporate incentive spending. It also includes GOP-backed tax exemptions on tips, overtime, and Social Security, costing about $188 million annually.

The marijuana tax now becomes a high-stakes experiment. If revenues meet expectations, Michigan could model how states fund infrastructure through cannabis. If the levy drives users off-platform, it may serve as a cautionary tale for other states weighing similar tax hikes.

2. Paxton Orders 4 Texas Cities to Halt Tax Hikes as Audits Come Under Scrutiny

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Credit: Donovan Reese/Getty Images

Texas Attorney General Ken Paxton is demanding that four municipalities—Odessa, La Marque, Tom Bean, and Whitesboro—suspend recently passed property tax increases while his office probes whether they violated a new state law requiring timely audits. 

Under Senate Bill 1851, which became effective Sept. 1, 2025, cities cannot adopt a tax rate exceeding the “no-new-revenue” level unless they have filed compliant audits and financial statements. Paxton’s office says it received complaints that several of these cities missed deadlines or filed incomplete audits. 

In letters to the cities, shared by the Texas Tribune Paxton’s office asserted: “Texas auditing laws require cities to file their annual report and financial statements by a certain point… But several municipalities seemingly failed to do so … It appears Odessa was not in compliance with SB 1851.”  The cities pushed back. Odessa, for instance, said the law should not apply retroactively, citing the definition of “tax year” in Texas law as the calendar year. The city also criticized Paxton for issuing demands before even notifying them of the underlying complaint. 

La Marque’s interim city manager acknowledged the audit was late but said the city believed the law wouldn’t kick in until 2026. Whitesboro officials, meanwhile, confirmed their rate hike—from $0.38 to $0.58 per $100 of taxable value—was meant to fund firefighters, road repairs, and a new water tower.

This showdown comes amid broader state efforts to tighten local tax oversight: Republican lawmakers have pushed multiple bills aimed at curbing municipal taxing power and increasing auditor accountability. As Paxton uses his new enforcement tool, the key questions will be: 1) whether the investigations hold up legally, and 2) how cities will adjust in what some see as an escalating tug-of-war over local fiscal sovereignty.

3. GOP Proposes Taxing Lawmakers During Shutdown with Daily Penalties

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Credit: Andrew Harrer/Bloomberg

As the government shutdown drags on, Republicans have floated an audacious countermeasure: impose a daily tax on elected lawmakers to punish inaction. The proposal comes from Sen. Bernie Moreno (R-Ohio), who plans to introduce the SHUTDOWN Act (Stop Holding Up Taxpayers, Deny Wages On Washington’s Negligence). 

Moreno argues it’s only fair that members of Congress feel the financial pain. “Democrats like Hakeem Jeffries want to get paid for shutting the government down,” he said in a statement. “If Congress can’t do the bare minimum, we don’t deserve a paycheck.” 

Under current law, though, lawmakers must be paid during a shutdown—that’s mandated by the U.S. Constitution. And, the 27th Amendment bars Congress from changing its own pay during the term it applies to, limiting how direct cuts or suspensions might work.  Moreno’s workaround? A tax mechanism that would bite into their pay, rising each day the shutdown persists. Supporters see it as moral accountability; critics see constitutional and logistical landmines.

Some Republicans are also backing a constitutional amendment to dock member pay during funding lapses. Rep. Ralph Norman (R-S.C.) reintroduced such a proposal, declaring: “During shutdowns… we should not expect taxpayers to continue paying us for inaction. No one else in America would get paid for failing to fulfill their duties.”

Whether either idea has legs is another question. Legal experts will almost certainly challenge any mechanism that cuts or taxes legislator compensation midterm, citing constitutional protections. But politically, the proposals signal mounting frustration among Republican leaders aiming to shift public ire—and pressure—to Democratic counterparts.

4. Most Americans Support Keeping ACA Subsidies, Poll Shows

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Credit: YinYang/Getty Images

A new Kaiser Family Foundation (KFF) poll shared by Reuters finds that 78% of Americans want Congress to extend the enhanced Affordable Care Act (ACA) tax credits set to expire at year’s end.  Support crosses party lines: 92% of Democrats, 82% of independents, and 59% of Republicans, including 57% of MAGA-aligned voters, favor renewing the subsidies. 

These credits help lower premiums for people who buy insurance on ACA marketplaces. If they lapse, many experts warn premiums could more than double. Specifically, the average cost for subsidized enrollees could jump 114%, rising to about $1,904.  About 24 million Americans get their insurance through these marketplaces — the financial impact would fall hardest on them, especially in states that have not expanded Medicaid. 

KFF President Drew Altman put it bluntly: “There is a hot debate in Washington about the looming ACA premium hikes, but our poll shows that most people in the marketplaces don’t know about them yet and are in for a shock when they learn about them in November.” 

The poll was conducted Sept. 23–29, 2025, just before the federal government shutdown began Oct. 1. 

As lawmakers negotiate federal spending, the fate of these ACA tax credits has become a central battleground. The poll suggests strong public backing, but with limited awareness about the impending changes, the consequences could catch many off guard.

5. California Doubles Down on Clean Tech With Extended Tax Breaks

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Credit: Phonlamai Photo/Getty Images

California has moved to expand and prolong its tax incentives for renewable energy and advanced manufacturing, says Bloomberg. Gov. Gavin Newsom signed Senate Bill 86 (S.B. 86) on October 1, 2025, extending exemptions from sales and use taxes for qualifying equipment used in eligible clean energy and advanced manufacturing projects. 

Key features of the law include:

  • The tax break now applies not only to solar, wind, and battery projects, but also nuclear and fusion technologies. 
  • The program’s administration is backed by $100 million per year from 2026 to 2027. 
  • To date, since its inception in 2010, the exemption has supported 354 projects and delivered roughly $1.3 billion in tax relief. 

Earlier this year, the California Senate unanimously passed the bill and extended the program’s expiration out past 2026. As federal incentives face shifting winds and uncertainty, California’s move shows states may be prepared to pick up more of the mantle in supporting clean energy deployment and manufacturing.

Which headline this week most interests you?

Feature Image Credit: Gary Kemp Photography/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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