Menu

Tax & Accounting News

TaxBuzz Top 5 - Trump Says He's "Taking Away" Harvard's Tax-Exempt Status, U.S. Ends De Minimis Tax Loophole & More

by
Rebekah Barton
on
5/2/2025
TaxBuzz Top 5 - Trump Says He's "Taking Away" Harvard's Tax-Exempt Status, U.S. Ends De Minimis Tax Loophole & 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. Trump Says He's "Taking Away" Harvard's Tax-Exempt Status Amid Escalating Feud

Harvard-GettyImages-2106746670-2500
Credit: Marcio Silva/Getty Images

President Donald Trump announced on May 2, 2025, that his administration is initiating the process to revoke Harvard University's tax-exempt status, intensifying the ongoing conflict between the federal government and the Ivy League institution. This decision follows the administration's earlier move to freeze over $2.2 billion in federal research funding to Harvard, citing the university's alleged failure to adequately address antisemitism and its resistance to federal demands concerning campus policies, per ABC News.

In a Truth Social post, President Trump stated that he intends on "taking away" Harvard's status, continuing,"[the university should] be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting 'Sickness?' Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!" 

P administration has formally requested the Internal Revenue Service to begin proceedings to revoke Harvard's 501(c)(3) nonprofit status, a move that would subject the university to federal income taxes and potentially deter tax-deductible donations. Legal experts note that such a revocation would be unprecedented and could face significant legal challenges, as it raises concerns about the politicization of the IRS and potential violations of constitutional protections for academic institutions. 

Harvard University has responded by filing a federal lawsuit against the Trump administration, alleging that the government's actions constitute unlawful overreach and threaten the university's academic independence. The Wall Street Journal reports that the lawsuit contends that the freezing of funds and threats to its tax-exempt status are part of a broader campaign to exert political control over higher education institutions. 

This development is part of a larger pattern of the Trump administration's confrontations with elite universities, as it seeks to enforce its policies on campus governance and ideological diversity. The outcome of this legal battle could have far-reaching implications for the relationship between the federal government and academic institutions nationwide.

2. Washington Lawmakers Withdraw News Tax Bill, Prompting Legal Showdown

Washington-State-GettyImages-1161704534-2500
Credit: Chris Boswell/Getty Images

Washington State legislators have withdrawn a proposed bill that would have imposed a tax on digital advertising revenues, a move initially intended to support local journalism. Per the Seattle Times, the decision to pull the bill came amid mounting concerns over its potential legal ramifications and opposition from various stakeholders.

The proposed legislation aimed to levy a tax on large technology companies profiting from digital advertisements within the state. Proponents argued that the tax would generate much-needed revenue to bolster struggling local news outlets, thereby preserving journalistic integrity and public access to information.

However, critics contended that the bill could violate the First Amendment and potentially lead to protracted legal battles. Concerns were also raised about the bill's potential to discourage investment in the state's digital economy.

In response to the withdrawal, several media organizations and advocacy groups have signaled their intent to pursue legal action, asserting that the state's failure to support local journalism constitutes a neglect of public interest responsibilities. They argue that without legislative measures to address the financial challenges facing local news, communities risk losing vital sources of information and accountability.

The unfolding situation highlights the complex interplay between taxation, free speech, and the sustainability of journalism in the digital age. As legal proceedings loom, stakeholders on all sides are preparing for a contentious debate over the future of news media support in The Evergreen State.

3. U.S. Ends De Minimis Loophole, Imposes Steep Tariffs on Chinese Imports

China-GettyImages-1134298251-2500
Credit: Henglein and Steets/Getty Images

Effective May 2, 2025, the United States has terminated the "de minimis" tariff exemption for goods imported from China and Hong Kong. Previously, this provision allowed packages valued under $800 to enter the U.S. duty-free, benefiting e-commerce platforms like SHEIN and Temu. With the exemption's removal, the New York Times notes, these low-value imports are now subject to tariffs of up to 145%, leading to increased prices and potential delays for consumers.

The Trump administration justifies this policy shift as a measure to curb the influx of synthetic opioids, such as fentanyl, and to address what it perceives as unfair trade practices by China. The de minimis loophole had been exploited by Chinese retailers to bypass tariffs, contributing to a surge in low-cost imports.

The immediate impact includes significant price hikes on products from affected retailers. SHEIN and Temu have already increased prices on various items, with some products seeing up to a 91% rise. Additionally, the increased scrutiny and customs requirements are expected to extend delivery times, affecting the fast-fashion model these companies rely on. 

While the policy aims to boost domestic manufacturing and reduce illicit drug imports, critics argue that it disproportionately affects low-income consumers who depend on affordable goods from platforms like those mentioned above. Furthermore, the increased tariffs may strain U.S.-China trade relations, as China has already imposed retaliatory tariffs on American goods.

The long-term implications of this policy change remain to be seen, but it marks a significant escalation in the ongoing trade tensions between the U.S. and China, with potential ripple effects across global supply chains and e-commerce markets.

4. Montana Legislature Approves Property Tax Relief Package Targeting Second Homes

Montana-GettyImages-1319525178-2500
Credit: Shunyu Fan/Getty Images

On April 30, 2025, the Montana Legislature passed a comprehensive property tax relief package aimed at reducing the tax burden on primary residences while increasing taxes on second homes and short-term rentals. The legislation, comprising House Bill 231 and Senate Bill 542, now awaits Governor Greg Gianforte's signature, which is anticipated given his prior support for the measures.

The bills propose a $400 rebate for primary homeowners this year, with further tax reductions planned for the following year. To offset these cuts and maintain funding for local services, the legislation increases taxes on second homes, Airbnb-style rentals, and certain business and agricultural properties.

While the package received bipartisan support, it also faced criticism. Opponents argue that the legislation merely shifts the tax burden without addressing underlying issues in the state's property tax system. According to the Montana Free Press, concerns were also raised about the complexity of implementing the new tax structure and potential legal challenges due to the rapid amendments made in the session's final days. 

Supporters contend that the measures are a necessary step toward equitable tax reform, providing relief to homeowners who have experienced significant property tax increases in recent years. They advocate that this legislation aims to balance the tax system without reducing overall revenue for essential public services. 

As Montana awaits the governor's decision, the passage of this tax relief package marks a significant development in the state's ongoing efforts to address property tax concerns and promote fiscal equity.

5. GOP Divided Over SALT Deduction Cap, Threatening Trump's Tax Agenda

Congress-GettyImages-1328998981-2500
Credit: Stefani Reynolds/Bloomberg/Getty Images

A growing rift within the Republican Party over the state and local tax (SALT) deduction cap is complicating efforts to pass President Trump's expansive tax reform package. The current $10,000 cap, established by the 2017 Tax Cuts and Jobs Act, is set to expire at the end of this year. Lawmakers from high-tax states like New York, New Jersey, and California are pushing to raise or eliminate the cap, arguing it unfairly burdens their constituents, reports Kiplinger.

Representatives Mike Lawler (R-NY) and Nick LaLota (R-NY) have proposed increasing the cap to $100,000 for individuals and $200,000 for couples, aiming to address what they describe as a "marriage penalty" in the current tax code. Other proposals suggest more modest increases, such as a $30,000 cap for single filers. These lawmakers have indicated they may withhold support for the broader tax package if their concerns aren't addressed. 

The proposed tax package, dubbed the "big, beautiful bill," seeks to make the 2017 tax cuts permanent and introduce new tax breaks, including eliminating taxes on tips and Social Security income. However, the estimated $4.5 trillion cost over the next decade has raised concerns among fiscal conservatives, who are demanding significant spending cuts to offset the deficit impact. 

The internal GOP disagreements, particularly over the SALT cap, pose a significant challenge to unifying the party around the tax reform agenda. With narrow majorities in both chambers, NBC notes that Republican leaders must navigate these divisions with particular care if they want to successfully advance the legislation. The outcome of these negotiations will have substantial implications for taxpayers, especially those in high-tax states.

Which headline this week most interests you?

Feature Image Credit: Yaorusheng/Getty Images

share this post
Search for matches...
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.

Recommended Professionals

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

Need help selecting a firm?

Use our specialized search engine and get matched to the best accounting and tax firm for your needs.

Get Started

Related Posts

Latest Posts