As the U.S. federal, state, and local governments, as well as countries around the world, continue to implement measures to support their economies amid the coronavirus (COVID-19) pandemic, our experts are providing trusted analysis of the latest coronavirus tax developments to better inform policymakers, journalists, and taxpayers.
If you are new to the Tax Foundation’s work, you can learn more about who we are and what we do here. You can also stay informed on the latest coronavirus tax updates with our weekly newsletter. As an independent 501(c)(3) nonprofit, we rely on the generosity of people like you to make our work here possible.
The major tax-related benefits in the $1.9 trillion economic relief plan are a third round of direct payments, extended unemployment insurance (UI) benefits and a $10,200 unemployment insurance income exemption for 2020, and an expansion of the Child Tax Credit.
6 min read
Congress chose to exempt forgiven Paycheck Protection Program (PPP) loans from federal income taxation. Many states, however, remain on track to tax them by either treating forgiven loans as taxable income, denying the deduction for expenses paid for using forgiven loans, or both.
7 min read
The American Rescue Plan Act’s restriction on states’ Fiscal Recovery Funds being used to directly or indirectly offset a net tax cut is vague and raises difficult questions of interpretation and application. A broad interpretation of this prohibition may be unconstitutional.
19 min read
The government of Hartford County, Connecticut is in line to receive $173 million in local aid under the American Rescue Plan Act (ARPA). There’s only one problem: the government of Hartford County doesn’t exist, nor do any of Connecticut’s other counties have county-level government despite being allocated a collective $691 million under the bill.
4 min read
State and local tax policy have always mattered, but the rise of remote work is bringing tax burdens and economic competitiveness to the forefront. It is a development that states cannot afford to ignore.
5 min read
As the Biden administration and Congress consider making the expanded child tax credit permanent, a nearly $1.6 trillion expansion of tax code-administered benefits, they should consider financing it in a way that doesn’t create significant headwinds to economic recovery.
3 min read
Consumer prices rose by 7 percent in 2021, the highest annual rate of inflation since 1982. Where did this inflation come from and what might its impacts be? Tax and fiscal policy offer important clues.
5 min read
The 2022 tax filing season is about to begin. With expected delays, pandemic-related troubles, and a backlog of over 8 million unprocessed returns from the 2021 tax filing season, Garrett Watson joins Jesse Solis to discuss what all these troubles will mean for taxpayers in what is shaping up to be a chaotic spring.
New research shows that the United States had the second largest fiscal response to the COVID-19 pandemic globally. But did this magnitude of stimulus have the economic impact policymakers were hoping for?
Well-designed Net Operating Loss (NOL) provisions benefit the economy by smoothing business income, which mitigates entrepreneurial risk and helps firms survive economic downturns.
24 min read
As the U.S. grapples with rising price inflation, a large and growing national debt, as well as a possible economic slowdown due to Omicron, the decision to provide additional fiscal support will prove to be a difficult one. Policymakers can debate how much stimulus is appropriate, but what is clear is that the U.S. fiscal support so far during the pandemic outranks nearly every industrialized country.
3 min read
Senior policy analyst Garrett Watson joins host Jesse Solis to discuss the Build Back Better Act’s prospects and what tax changes—ranging from the SALT deduction to the Child Tax Credit—could change in order to gain enough support for passage.
Norway’s proposed reductions in income tax have the potential to increase disposable income for workers that can potentially raise consumption and contribute to economic growth. However, the increase of the wealth and indirect taxes is likely to step up the complexity of the tax system and create additional distortions.
3 min read
Infrastructure has made its way across the finish line, but the tax debate is far from over on Capitol Hill. Senior policy analyst Garrett Watson joins host Jesse Solis to walk us through the latest iteration of Democrats’ trillion-dollar reconciliation package and the myriad tax changes that are being proposed to finance this deal.
President Biden and Congressional Democrats introduced a scaled-back proposal of their reconciliation package, with House leadership saying they hope to vote on this new trillion-dollar package ASAP. We talk through what made it into the deal, what was cut, and what the impact of these tax changes would be.
While taxes are not at the root of supply chain disruptions, improvements to the tax code could make supply chains more resilient in the future.
3 min read
Kentucky and Tennessee won an important legal victory Friday when a federal court ruled that the American Rescue Plan Act (ARPA)’s restrictions on state fiscal autonomy were unconstitutional and enjoined (blocked) the enforcement of those provisions against both states.
7 min read
We discuss where the reconciliation package on Capitol Hill stands and talk through recent Tax Foundation modeling, which found that the plan may not have the economic boost its proponents have claimed.
Given the restrictions on the use of federal relief funding, and the significantly higher tax burdens on employment that will result if trust funds are not replenished, applying federal aid to these trust funds should be an urgent priority.
10 min read
Lawmakers are considering policy changes within the reconciliation bill that would reduce private R&D within the pharmaceutical industry and reduce the number of new drugs coming to market. Instead of hampering medical progress, policymakers should work to ensure that the tax code remains conducive to R&D spending and the resulting innovation.
5 min read
According to the Tax Policy Center, an estimated 60 percent of U.S. households paid no income tax in 2020, up from around 43 percent of households in 2019.
4 min read
The good news is that lawmakers avoided raising taxes to cover the cost of the new spending and instead used some reasonable fees and asset sales. The bad news is that half of the offsets come from unused, debt-financed COVID-19 relief funds and the economic return on many of these investments is questionable.
7 min read
As economies are starting to recover and growth is expected to rebound in the region during 2021, Asian and Pacific countries should start exploring changes to their fiscal tax policies while carefully evaluating the optimal time for eliminating fiscal stimulus and temporary tax relief.
4 min read
New Treasury Department data released on the advance Child Tax Credit payments shows the distribution by state, including how much, on average, households in each state received. The expansion will only be in effect for the 2021 tax year—if policymakers wish to continue providing the increased benefits, they must address the administrative and revenue costs of the policy.
4 min read
In 2020 and 2021, Congress enacted three rounds of economic impact payments (EIPs) for direct relief to households amidst the pandemic-induced downturn. Survey data from the U.S. Census Bureau indicates that households increasingly saved their EIPs or used them to pay down debt rather than spend them.
5 min read
The United Nations (UN) recently released its annual “World Investment Report,” which shows the dramatic fall in global foreign direct investment (FDI) caused by the COVID-19 crisis.
3 min read