Tax Notes Talk 2026 U.S. Tax Legislation Forecast
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Jan 2, 2026 In this engaging discussion, Jeremy Scott, Chief Operating Officer at Tax Analysts and a savvy tax policy analyst, dives into the whirlwind of U.S. tax developments from 2025 and speculates on 2026. He highlights the expansive OB-3 tax bill, detailing changes in individual rates and the implications for employers regarding tip deductions. Jeremy also sheds light on the evolving role of tariffs in revenue generation, underscores the IRS's staffing challenges, and predicts a politically charged legislative landscape ahead.
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OB‑3: Biggest But Familiar Tax Overhaul
- OB-3 is likely the largest U.S. tax bill ever, but much of it simply extended existing provisions rather than introducing radical change.
- Republicans passed large permanent rate extensions quickly to avoid individual tax increases and secure narrow majorities' votes.
Compromise On Tips And Social Security
- The bill created a new deduction for the first $25,000 of tips and overtime, shifting reporting burdens to employers.
- A $6,000 deduction for those over 65 reduced but did not eliminate taxation of Social Security income.
Strengthen Tip Reporting Practices
- Employers should tighten tip and overtime reporting procedures to ensure proper classification and compliance.
- Prepare payroll systems and training now to avoid filing‑season surprises and audit risks.