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TaxBuzz Top 5 - NYC Real Estate Developers Find Tax, Labor Loophole, "No Tax on Tips" Becomes Nevada Political Flashpoint & More

by
Rebekah Barton
on
11/14/2025
TaxBuzz Top 5 - NYC Real Estate Developers Find Tax, Labor Loophole, "No Tax on Tips" Becomes Nevada Political Flashpoint & 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. NYC Developers Build Exactly 99-Unit Buildings to Dodge New Labor and Tax Requirements

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Credit: zxvisual/Getty Images

In a striking sign of tax policy shaping real-estate development, developers in New York City are increasingly filing plans for apartment buildings with exactly 99 units, just under the threshold where new labor and tax rules apply. 

The culprit: the state’s new 485‑x program, which replaced the prior 421-a tax incentive. Under 485-x, developers building 100 or more units must pay construction workers a minimum of $40 per hour, adding roughly 2% to total costs for typical projects—and significantly more (10–30%) in certain areas for larger buildings. Real Estate Board of New York data show that in Q3 2025, there were 21 applications filed for exactly 99-unit buildings, a dramatic jump from just 13 such filings in total between 2008-2023.

By contrast, projects of 150 units or more — subject to steeper wage mandates and higher cost burdens under the tax/legal regime — remain scarce. Developers say this “unit cap” reflects a rational response to policy design: staying just below the 100-unit trigger avoids the extra cost while still enabling scale.

Critics argue the strategy exacerbates the housing crisis, limiting large-scale construction and reducing total unit production precisely when NYC needs it most. As Zachary Steinberg of REBNY said: “We need tools that will help produce as many units as possible … and can’t be doing 99 units at a time.”

2. One-Time 5% Wealth Tax Initiative Gains Steam in California

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Credit: Steve Proehl/Getty Images

Last month, we introduced a California ballot initiative that would result in one-time 5% tax on the global net worth of approximately 200 billionaires residing in the state. The measure is continuing to gain steam in recent weeks. 

Economists behind the proposal suggest the tax is modest relative to the gains of the richest Californians. As one economist put it: “The tax is small relative to the massive gains billionaires have made yet large enough to preserve programs that are crucial for California’s economy.” Supporters, including the union Service Employees International Union United Healthcare Workers West (SEIU-UHW), argue the one-time nature of the tax and its narrow target (billionaires only) make it both fair and politically viable. 

Opponents raise concerns about capital flight and business relocation. As economist Enrico Moretti warned, “It would increase the chances of these people to relocate … It would also reduce the chances that these people bring their companies and their employees to California in the future.” 

With canvassing expected to begin soon and signature-gathering underway, the proposed “Billionaires Tax Act 2026” could become the nation’s first large-scale wealth-tax referendum. If placed on the ballot, it will test whether targeted wealth levies can gain support in states already chasing corporate investment and high-net-worth residents.

3.  Government Funding Bill Slashes $28B Hemp Industry Windfall

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Credit: Jose S/Getty Images

A sweeping federal government funding bill includes provisions that could effectively gut parts of the U.S. hemp industry, placing up to $28 billion of market value at risk. The measure restricts the sale of many hemp-derived intoxicants (e.g., Delta-8 THC), while preserving CBD and industrial hemp, a move industry leaders say will erase key revenue streams.

Supporters of the restriction argue it protects children and enforces age verification—claiming the current regulatory gap allows widespread use of untested products. Critics call the approach “overbroad” and warn it will hurt small businesses, farm-state economies like Kentucky and Colorado, and tax revenue projected from the sector. The timing is critical: the language is embedded in a must-pass funding bill tied to ending the federal government shutdown.

As one insider said, “This provision could stall the entire funding package if the Senate refuses to acquiesce.” Whether the hemp ban survives intense lobbying and amendment fights may shape not only the fortunes of a nascent industry, but also signals how Congress uses federal funding bills to impose wide-ranging tax and regulatory shifts.

4. Nevada’s “No Tax on Tips” Measure Picks Up GOP Pushback Amid Industry Clashes

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Credit: Rolf_52/Getty Images

Nevada’s “no tax on tips” provision — part of the federal One Big Beautiful Bill that allows tipped workers to deduct up to $25,000 of tip income — has become a political flashpoint, drawing both strong backing and unexpected resistance within the GOP.

Supporters say the policy is tailor-made for Nevada’s economy, where tipped work (in hospitality, gaming, restaurants) is widespread. One server told Nevada Public Radio: “That tip income represents a significant amount of my income … if that $25,000 stays off your taxable income, that can save you real money.” 

However, even before full implementation, lawmakers and analysts are raising doubts. GOP Senator Ron Johnson said the idea of exempting tip income is “not growth-oriented,” indicating concern that the deduction may lack broad economic benefit.  The powerful Culinary Workers Union Local 226, representing thousands of tipped hospitality workers, is skeptical too. Secretary-Treasurer Ted Pappageorge called the proposal a “bait and switch,” pointing out that the deduction is temporary, doesn’t cover certain gratuities, and fails to address the sub-minimum wage for many tipped workers. 

Nevada’s business interests are also uneasy: restaurateurs worry the measure could drive higher labor costs or complicate tax reporting. Meanwhile, Democrats in Nevada warn the policy may benefit higher-earning tipped workers more than lower-income staff. 

5. UK Government Scraps Tax Hike for High Earners Amid Party Backlash

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Credit: WPA Pool/Getty Images

The UK government has back-pedalled on a planned rise in the 45% income tax rate for top earners after mounting resistance from within the ruling party and concerns over electoral fallout. The issue has been highly controversial, and even led to Ferrari slashing shipments to the UK in October 2025.

Finance Minister Rachel Reeves had earlier signalled that higher earners could pay more as part of a broader “fair share” agenda. But under pressure from Labour MPs representing affluent constituencies, she announced that the 45% rate would remain unchanged. An internal Treasury memo noted: “We recognise the political and economic realities limit our room for manoeuvre.”

Analysts say the move reflects the tension between policy ambition and political feasibility. Economist David Smith of the London School of Economics commented, “This U-turn is emblematic of a government caught between bold tax pledges and the consequences of implementation.”

Critics argue the decision leaves a multi-billion-pound hole in the budget. With no immediate alternative tax identified, commentators warn that spending cuts or new revenue tools will be necessary. Conservative MP Richard Denham said the reversal shows a “lack of fiscal direction.” The story is also significant for its its wider lessons: even governments with strong mandates can struggle to increase taxes on affluent voters when political costs become visible. 

Which headline this week most interests you?

Feature Image Credit: Bernd Obermann/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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