May flowers are blooming and so are conversations about tax policy changes that could significantly impact your planning! This week, we examine analysis on how capping business SALT deductions could generate revenue but potentially slow economic growth as Congress considers extending TCJA provisions, alarming reports that the IRS lost 11% of its workforce in Q1 with revenue agents experiencing the highest departure rates, and the newly announced 2026 HSA contribution limits increase to $4,400 for self-only coverage and $8,750 for family coverage. We also highlight Commerce Secretary Lutnick’s statement about replacing the IRS with an “External Revenue Service” to administer tariffs, and economic experts questioning whether the administration’s tariff strategy will achieve its stated goal of revitalizing domestic manufacturing.
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Disallowing Business SALT Raises Significant Revenue for Reconciliation but Slows Economic Growth
From the Tax Foundation
Policymakers will soon decide the fate of the state and local tax (SALT) deduction cap as they consider extending the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). Since 2018, individual SALT deductions have been capped at $10,000, offsetting part of the cost of the broader tax cuts. These cuts for individuals all expire after the end of this year. The looming expirations have sparked debate about making the cap more generous as part of Congress’s reconciliation package, along with possible limits on pass-through workarounds and SALT deductions taken by corporations. While capping business SALT could raise additional revenue, it would risk slowing economic growth.
Revenue Agents Who Conduct Audits Lead IRS Job Losses
From the Tax Adviser
The IRS lost 11% of its staff through voluntary separations and terminations in the first three months of 2025, and the largest percentage of those who left were revenue agents who conduct audits, a government watchdog said in a report. After the period covered by the report from the U.S. Treasury Inspector General for Tax Administration (TIGTA), the IRS has approved thousands more employees for voluntary separations, TIGTA said. And more job losses are likely as government agencies comply with executive orders from President Donald Trump.
HSA Inflation-Adjusted Maximum Contribution Amounts for 2026 Announced
From the Journal of Accountancy
The maximum contribution to an HSA that may be made for calendar year 2026 by an individual with self-only coverage under a high-deductible health plan (HDHP) will be $4,400, a $100 increase from 2025. For an individual with family coverage, the maximum contribution will be $8,750, which is $200 higher than the current limit. The $1,000 “catch-up” additional contribution that may be made by individuals who are age 55 or older before the end of the tax year is unchanged because it is set by statute (Sec. 223(b)(3)).
Lutnick Says Administration Wants to Replace the IRS (Tax Notes)
From Tax Notes
Commerce Secretary Howard Lutnick said the Trump administration aims to replace the IRS with an “External Revenue Service” to administer tariffs, but tax policy watchers doubt the new agency would collect enough revenue to adequately fund the government. Lutnick, during an April 30 meeting with President Trump and members of his Cabinet, said that “hundreds and hundreds of billions of dollars” from Trump’s proposed tariff regime will allow for the creation of an “External Revenue Service” that would administer tariffs instead of taxes.
Economists Question Goals and Approach of U.S. Tariffs
From CPA Practice Advisor
President Donald Trump has said his tariffs on countries around the world will bring “jobs and factories roaring back” to the U.S. Keith Maskus, professor of economics emeritus at the University of Colorado-Boulder, is among the economists and business representatives who don’t think that will happen. The sweeping tariffs have been slapped on allies and adversaries alike. The U.S. Chamber of Commerce asked the Trump administration for exemptions to help small businesses that import goods and to “stave off a recession.” “The idea that seems to underlie Trump’s basic objective here in bringing back manufacturing really goes back to the 19th century when a particular product could be produced in one location from beginning to end,” said Maskus, who was the chief economist at the U.S. State Department in the Obama administration and a lead economist at the World Bank.
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