As the dust settles from President Trump’s summer tax overhaul, policy impacts are showing up in unexpected places. Taxpayers are likely to see larger-than-expected refunds in 2026 due to IRS withholding delays. Meanwhile, new capital gains exemptions may change exit planning for business owners.
Student loan forgiveness is back—temporarily—for millions enrolled in legacy plans. And on the global front, the U.S. is projected to outpace Italy and Greece in national debt by decade’s end. Each headline points to the growing complexity of planning amid regulatory whiplash.
Here’s what tax professionals need to know this week.
1. IRS Delays Could Deliver $50 Billion in Surprise Refunds
Taxpayers—especially high earners—may receive much larger refunds or owe less when they file in 2026, thanks to retroactive cuts from Trump’s “Big Beautiful Bill” and the IRS’s delay in updating 2025 withholding tables.
Key insights:
- $50B in taxpayer savings projected, largely skewed to high-income households
- SALT deduction cap raised from $10K to $40K
- Average refund may increase by $500, but lower-income filers see limited gains
Tax professionals should advise clients now on adjusting withholdings if they want to access savings before 2026.
2. Trump’s Tax Law Makes Small Business Sales More Lucrative
Thanks to changes in qualified small business stock (QSBS) treatment, many business owners now stand to gain millions more when selling—especially if they convert to C corp status under the expanded rules.
What’s changed:
- Tax-free gain cap raised from $10M → $15M
- Holding period dropped from 5 years → 3 years
- Asset cap lifted from $50M → $75M, expanding eligibility
Advisors should revisit entity structure and exit strategy planning for owners eyeing sales in the next 3–5 years.
3. Student Loan Forgiveness Resumes—for ICR & PAYE Plans
After a lawsuit settlement with the American Federation of Teachers, the Trump administration agreed to reinstate debt forgiveness under two legacy repayment plans—ICR and PAYE. But the window is temporary.
Details:
- Forgiveness restored for 2.5M borrowers
- ICR and PAYE to be phased out July 1, 2028
- Borrowers should track payments and remain enrolled to qualify
Clients should confirm their eligibility and remain proactive about any upcoming plan transitions.
4. Social Security Benefits to Rise 2.8% in 2026
Social Security Administration Blog
The SSA has announced a 2.8% COLA increase beginning in January 2026. The average monthly retirement benefit will rise by $56, with SSI recipients receiving their increased payments starting Dec 31.
Additional adjustments:
Taxable maximum earnings rise to $184,500
- COLA slightly below the 10-year average (3.1%)
- Medicare changes to be announced separately in November
Advisors should update retirement income projections and communicate these changes with older clients.
5. U.S. Debt Set to Surpass Italy and Greece by 2030
New IMF forecasts show U.S. debt rising from 125% to 143% of GDP by 2030—outpacing even Greece. Trump’s sweeping tax cuts and a defense buildup are driving the sharp rise in borrowing.
Notable projections:
- $7 trillion projected in annual deficits by 2029
- European nations are cutting debt while U.S. accelerates spending
- Defense spending (including the “golden dome”) cited as major contributor
Clients should be aware of potential long-term risks to fiscal policy and U.S. credit stability.
Your Takeaway This Week
With the IRS behind, refund season ahead, and tax laws still morphing, this week highlights how disconnected legislation and implementation have become. From large refunds to legacy loan forgiveness and high-stakes business exits, the ripple effects of summer’s reforms are only beginning.
Tax professionals who can guide clients through the transition (with an eye on long-term impacts) will deliver the greatest value.
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