Tax Newsletter - October 2026

Treasury and the IRS will propose regulations regarding the federal Saver’s Match program, which begins in 2027.

The Saver’s Match will provide eligible taxpayers with a maximum 50% match on the first $2,000 of qualified retirement savings contributions made to an employer-sponsored retirement plan or IRA, up to $1,000 annually, and will be paid for eligible taxpayers starting in 2028, based on contributions made for the 2027 tax year.

This replaces the Saver’s Credit for retirement savings contributions and helps taxpayers participate in eligible retirement savings programs.

Regulations.gov 📌 outlines anticipated rules for implementing the program and request public comments to help develop proposed regulations. Comments can be submitted at Regulations.gov by October 5, 2026.

• In July 2026 📌, the Social Security system provided over $138.4 billion in monthly benefits to more than 71.3 million retired or disabled workers and their spouses, survivors, and dependents.
• Since 1984, beneficiaries with income above certain statutory thresholds are subject to federal income taxation for up to 50% of their Social Security benefits.
• Since 1993, beneficiaries with income above a higher set of statutory thresholds are subject to federal income taxation on up to 85% of their Social Security benefits.
• The proportion of beneficiaries who have taxable Social Security benefits is rising.
• The percentage of all Social Security benefits that beneficiaries paid as federal income taxes rose from 2.2% in 1994 to 6.2% in 2025.
• In 2025, the Social Security trust funds were credited with $57.8 billion 📌 from the taxation of Social Security benefits, or 4.0% of the trust funds' total income.
• Also in 2025, income to the Medicare Hospital Insurance trust fund from the taxation of Social Security benefits was $41.1 billion 📌, or 8.9% of the trust fund's total income.

Why Are Social Security Benefits Taxed?

Taxation of Social Security benefits began with the Social Security Amendments of 1983. There were two primary reasons 📌 for taxing Social Security benefits.

• The first was to improve tax equity by treating Social Security benefits more like other forms of retirement income and other income designed to replace lost wages.
• The second was to provide revenue to strengthen the financial solvency of the Social Security trust funds.

Taxable Social Security Benefits

Under current law, a statutory formula determines the tax liability on Social Security benefits. The formula depends on the amount of a taxpayer's Social Security benefits, other income, tax filing status, and other factors. Social Security beneficiaries whose provisional income is above one of two statutory thresholds pay federal income taxes on a portion of their Social Security benefits. Provisional income roughly equates to modified adjusted gross income plus 50% of Social Security benefits.

Generally, up to 85% of Social Security benefits may be taxable 📌 for recipients whose provisional income exceeds either of two statutory thresholds based on filing status:

• Taxpayers filing as single with provisional income less than $25,000 and taxpayers filing joint returns with provisional income less than $32,000 do not pay federal income tax on their Social Security benefits.
• Taxpayers filing as single with provisional income between $25,000 and $34,000 and taxpayers filing joint returns with provisional income between $32,000 and $44,000 pay federal income tax on up to 50% of their Social Security benefits.
• Taxpayers filing as single with provisional income greater than $34,000 and taxpayers filing joint returns with provisional income greater than $44,000 pay federal income tax on up to 85% of their Social Security benefits.

Federal income tax liability on Social Security benefits increases with income.

• Holding benefits constant: As non–Social Security income increases, provisional income increases, and therefore the taxable amount of Social Security benefits increases.
• Holding non-Social Security income constant: As Social Security benefits increase, the taxable amount of Social Security benefits increases.

Federal Income Tax on Taxable Social Security Benefits

The federal tax rate and the amount of federal income tax owed on taxable Social Security benefits are determined separately through the federal income tax system. They are based on the taxpayer's other taxable income and marginal tax rate. Revenue from federal income taxes paid on Social Security benefits is credited to the Social Security and Medicare Hospital Insurance (HI) trust funds.

Who Is Affected by Social Security Benefit Taxation, and by How Much?

The Congressional Budget Office estimates that 48% of Social Security beneficiaries 📌 will pay income tax on their Social Security benefits in 2026. A 2015 Social Security Administration analysis 📌 projected that more than 56% of Social Security beneficiary families will owe income tax on their Social Security benefits in 2050.

The proportion is growing because Social Security benefits are indexed to wage growth and adjusted for inflation, whereas the provisional income thresholds used to determine the taxable amount of Social Security benefits are fixed by statute and not indexed for inflation or wage growth. The intent behind using static thresholds in the 1983 legislation was  📌that eventually all Social Security benefits would become subject to taxation due to increases from wage and price growth.

The taxable amount of Social Security benefits as a percentage of all Social Security benefit payments has grown from 12.2% in 1994 to 38.2% in 2023 (Figure 1, blue line). As the proportion of Social Security benefits that is taxable has risen, the taxes paid on Social Security benefits have also risen. For each dollar of Social Security benefits paid in 1994, approximately 2.2 cents were paid as federal income tax. This share of all Social Security benefits paid as federal income tax roughly tripled from 2.2% in 1994 to 6.2% in 2025, or 6.2 cents paid as income tax for each dollar of Social Security benefits. (Figure 1, orange line).

How Important Is Benefit Taxation to the Trust Funds?

The income taxes paid on the first 50% of Social Security benefits are credited to the Social Security trust funds. In 2025, this was $57.8 billion, or 4.0% of the Social Security trust funds' total income. Under their intermediate assumptions, the Social Security trustees project that income taxes as a share of total revenue will grow to 5.6% in 2033. 📌

The income taxes paid on the next 35% of taxable Social Security benefits (from 50% to 85%) are credited to the HI trust fund. In 2025, this was $41.1 billion, 📌 or 8.9% of total HI trust fund income. Under their intermediate assumptions, the Medicare trustees project that income taxes as a share of total revenue will increase to 12.6% in 2035.

Have Bills Been Introduced to Change the Taxation of Social Security Benefits?

Several bills have been introduced in the 119^th Congress to modify or repeal the taxation of Social Security benefits in § 86 of the Internal Revenue Code 📌. The following bills are some examples of bills that would eliminate or modify the taxation of Social Security benefits.

Eliminate Social Security Benefit Taxation

H.R. 904, 📌 the No Tax on Social Security Act; S. 458 📌 and H.R. 1040, 📌 the Senior Citizens Tax Elimination Act; and H.R. 2621, 📌 the REAL AMERICA Act, would exclude all Social Security benefits from gross income, thereby eliminating the federal income taxation of Social Security benefits. General revenues would be appropriated in amounts needed to hold the Social Security and HI trust funds harmless from the loss of income tax revenues.

Modify Social Security Benefit Taxation

H.R. 1129, the TRUST Act, would raise the thresholds to $50,000 and $59,000 for taxpayers filing as single and $64,000 and $76,000 for taxpayers filing joint returns. Inflation adjustments would be applied to the thresholds for determining taxable Social Security benefits.

S. 358 📌 and H.R. 2266, 📌 the RETIREES FIRST Act, would replace the two-tier provisional income thresholds under current law with a single set of higher thresholds: $34,000 for taxpayers filing as single and $68,000 for taxpayers filing joint returns. Beneficiaries with provisional income above the thresholds would pay income taxes on up to 85% of their Social Security benefits. Inflation adjustments would be applied to the thresholds for determining taxable Social Security benefits.

S. 1109, 📌 the Social Security Check Tax Cut Act, would temporarily reduce the amount of Social Security benefits–except disabled worker benefits–and tier one Railroad Retirement benefits included in income for taxation. It would reduce the amount of those benefits that are taxable under current law by 10% for tax year 2026 and by 20% for tax year 2027. The taxation of Social Security disability benefits would be unchanged. General funds would be appropriated in amounts needed to hold the Social Security and HI trust funds harmless from the loss of income tax revenues.

§ 104 of H.R. 9519 📌 and S. 5042, 📌 the Social Security 2100 Act, would replace the two-tier provisional income thresholds under current law with a single set of higher thresholds: $35,000 for taxpayers filing as single and $50,000 for taxpayers filing joint returns. Beneficiaries with provisional income above the thresholds would pay income taxes on up to 85% of their Social Security benefits. (The HI trust fund would be held harmless.) These changes would apply to tax years 2027-2036.

S. 5084 📌 would apply inflation adjustments to the thresholds for determining taxable Social Security benefits.

Treasury and the Internal Revenue Service (IRS) have issued proposed regulations to end federal tax-exempt status for private schools that engage in racial discrimination, delivering on President Trump's Executive Orders ending discrimination and restoring merit-based opportunity.

Background

Federal law provides tax-exempt status to organizations that operate exclusively for charitable and educational purposes. For decades, the Supreme Court has recognized that eligibility for tax-exempt status is conditioned on compliance with fundamental public policy, including the prohibition against racial discrimination.

The proposed regulations update Treasury and IRS guidance to reflect that longstanding principle, as established in Brown v. Board of Education, Bob Jones University v. United States, and Students for Fair Admissions v. Harvard, and provide greater clarity for private educational institutions regarding the nondiscrimination requirements associated with federal tax-exempt status. 

Proposed Regulations

Under the proposed rule, a private school would not qualify for Federal tax-exempt status under § 501(c)(3) if it adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin. The rule would apply across admissions, educational policies, scholarships and loans, athletics, and every other school-administered or school-supported program.

The proposed regulations would apply to tax-exempt private primary and secondary schools, colleges, universities, professional schools, and trade schools. Treasury and the IRS estimate that the proposal may affect as many as 18,000 private educational institutions.

The proposal would also eliminate outdated provisions of IRS guidance that permitted schools to favor certain racial preferences in admissions, facilities, programs, scholarships, and financial assistance.

Treasury and the IRS have concluded that these provisions are inconsistent with a uniform nondiscrimination standard and are incompatible with the Supreme Court’s case law.

The proposal would not prevent a private school from maintaining a religious mission, curriculum, or program of religious observance. Religious schools may continue to select students based on genuine religious affiliation or membership to remain consistent with existing federal law.

The proposal allows schools to continue expanding educational opportunities to assist disadvantaged students using race-neutral criteria such as family income, geographic location, first-generation status, individual hardship, military family status, or academic achievement when awarding admission or financial assistance. However, schools may not make decisions or confer benefits on the basis of race, color, or national or ethnic origin.

The final regulations would apply to taxable years beginning on or after May 31, 2027, providing affected institutions with sufficient time to review and update their policies to bring admissions, scholarship, and other policies into compliance. 

The proposed regulations are available here. 📌  

Why did TIGTA do this audit?

Non-filers are taxpayers who do not timely file a required tax return. IRS accessed the Small Business/Self-Employed Division’s approach to addressing non-filers. The IRS generally sends up to two notices requesting that selected non-filers file a return.

In FY 2018, the IRS developed a Non-filer Strategy incorporating recommendations from our prior reports and other oversight organizations. From Tax Years (TY) 2015 through 2022, potential non-filers increased by 5.9 million as the IRS prioritized other inventories. The gross Tax Gap is the estimated difference between the amount of tax owed, and the amount paid voluntarily on time. For TY 2022, the projected gross Tax Gap is $696 billion. Approximately $63 billion (9 %) is due to non-filers.

What did TIGTA find?

As of June 30, 2025, more than a year after the IRS began its most recent high-income non-filer initiative, nearly 33,700 taxpayers remained in first notice status, preventing further collection action. IRS estimated that continuing the enforcement process on these taxpayers could result in secured returns or tax assessments for 10,482 cases involving 9,119 taxpayers and approximately $321 million in potential additional tax due. After IRS raised this issue, the IRS moved the cases out of first notice status in March 2026. 

TIGTA also found that nearly 11,000 cases involving 8,853 taxpayers remained unworked in the queue as of June 30, 2025 (the queue is a list of collection inventory awaiting further assignment). Prioritizing these cases could result in secured returned or tax assessments for 2,962 cases involving 2,399 taxpayers and approximately $91 million in potential additional tax due.

The IRS has released draft Schedule 3-A 📌 (Form 1040), Federal Public Benefit, which introduces an additional eligibility check for taxpayers claiming certain refundable credits.

Schedule 3-A applies when a taxpayer claims the earned income credit (EIC), additional child tax credit (ACTC), refundable American opportunity credit or refundable adoption credit.

Part I calculates whether a portion of these refundable credits is considered a federal public benefit. If the calculation produces a benefit, the taxpayer is asked whether they want to receive it. A taxpayer who answers yes proceeds to Part II, which asks whether the taxpayer or spouse is a U.S. citizen, U.S. national or qualified alien.

Form 1040, Line 32b, plays an important role in the new process. If the taxpayer chooses not to receive the federal public benefit or does not meet the Part II eligibility requirement, the Schedule 3-A, Line 6, amount is reported on Line 32b. Taxpayers who meet the eligibility requirement enter zero.

Form 1040 Sch 3A Entry Line

Instructions for Form 1040 and Sch 3A have not been issued in draft form.

IRS Schedule 3-A for 2026 is designed for taxpayers claiming specific refundable tax credits, including the earned income credit (EIC) and additional child tax credit (ACTC). This form helps determine eligibility for these credits before they are applied to a taxpayer's refund.

Purpose of IRS Schedule 3-A in 2026

Schedule 3-A serves several important functions for taxpayers.

• Claiming Refundable Credits – Schedule 3-A is specifically for taxpayers claiming refundable credits like the EIC and ACTC.
• Eligibility Checkpoint – It introduces a new checkpoint to verify eligibility for certain tax credits before they are processed.
• Part of Form 1040 – This schedule must be attached to Form 1040 if applicable credits are being claimed.
• Impact on Refunds – The completion of Schedule 3-A can directly affect the amount of refund a taxpayer receives based on their eligibility for credits.

Key Take Aways

The draft directs taxpayers to complete Schedule 3-A only when claiming one or more of these four credits:

• Earned income credit (EIC)
• Additional child tax credit (ACTC)
• Refundable American opportunity credit
• Refundable adoption credit

Schedule 3-A does not determine whether a taxpayer meets the underlying requirements for one of these credits. Instead, it calculates whether a portion of the affected refundable credits is a federal public benefit and determines whether the taxpayer can receive that amount.

How does the new refund checkpoint work?

Part I of draft Schedule 3-A is titled Federal Public Benefit (Refunded Portion of Certain Refundable Credits). It calculates the aggregate refunded portion of the affected refundable credits that is treated as a federal public benefit. The calculation uses amounts from the taxpayer's Form 1040 or other applicable return and Schedule 2. On Line 6, the taxpayer compares the amount calculated on Line 2 with the amount on Line 5.

• If Line 2 is not more than Line 5, there is no federal public benefit. The taxpayer enters zero on Line 6, stops completing Schedule 3-A and enters zero on Form 1040, Line 32b.
• If Line 2 is more than Line 5, the taxpayer subtracts Line 5 from Line 2. The resulting amount is the taxpayer's federal public benefit. That amount is entered on Line 6 and leads to the next checkpoint.
• Line 7 asks whether the taxpayer wants to receive the federal public benefit. A taxpayer who answers no stops and carries the Line 6 amount to Form 1040, Line 32b. A taxpayer who answers yes proceeds to Part II to determine eligibility to receive the benefit.

Eligibility becomes part of the refund analysis

Part II asks whether the taxpayer or spouse is a U.S. citizen, U.S. national or qualified alien. Under the proposed regulations, status is determined on the date the taxpayer files the return that first claims the affected credit, including an early, late or amended return. For a joint return, one spouse's qualifying status is sufficient.

The proposed regulations would also require the taxpayer or one spouse filing jointly to make the applicable declaration under penalty of perjury on the return or schedule prescribed by the IRS. If the answer is yes, the taxpayer enters zero on Schedule 3-A, Line 8, and Form 1040, Line 32b. If the answer is no, the taxpayer enters the federal public benefit from Line 6 on Schedule 3-A, Line 8, and Form 1040, Line 32b.

The proposed regulations identify potential criminal consequences for willfully providing incorrect or untrue information, including a felony under §7206 that may carry a fine of up to $100,000 and imprisonment for up to three years.

For tax professionals, this means qualifying for one of the four underlying credits may not complete the analysis. If the Schedule 3-A calculation produces a federal public benefit and the taxpayer wants to receive it, the return must clear the additional eligibility checkpoint in Part II.

Why Form 1040, Line 32b?

The amount reported on Line 32b represents the federal public benefit calculated on Schedule 3-A that the taxpayer will not receive. There are two primary ways an amount can reach Line 32b under the draft schedule.

First, a taxpayer may have a federal public benefit on Schedule 3-A, Line 6, but answer no when asked whether they want to receive it. In that case, Line 6 amount is carried to Form 1040, Line 32b.

Second, the taxpayer may answer yes to receiving the benefit but answer no to the Part II question asking whether the taxpayer or spouse is a U.S. citizen, U.S. national or qualified alien. In that situation, Line 6 amount is again reported on Form 1040, Line 32b.

Taxpayers who meet the Part II eligibility requirement enter zero on Line 32b.

Client intake and documentation could become critical

The new refund checkpoint may also require tax practices to revisit their client intake and documentation procedures.

Consider a client who qualifies for the American opportunity tax credit. The preparer must still determine qualified education expenses, income limitations and other requirements for claiming the credit.

If the Schedule 3-A calculation produces a federal public benefit, however, the preparer may also need information to accurately answer the eligibility question in Part II.

The same additional review could arise for clients claiming the EIC, ACTC or refundable adoption credit.

Part II presents a yes-or-no question, but determining whether an individual is a U.S. citizen, U.S. national or qualified alien may require additional information. Remember to avoid making assumptions about a client's status based on appearance, country of origin, possession of a Social Security number or treatment on a prior-year return.

Prepare for another layer of refund review

Draft Schedule 3-A signals that preparing certain refundable credits could involve more than determining whether a taxpayer qualifies for the credit itself. Tax pros may also need to calculate whether the credit produces a federal public benefit and determine whether the taxpayer can receive that amount.

Understanding the relationship between Schedule 3-A and Form 1040, Line 32b, will be particularly important. The new line shows how the Schedule 3-A eligibility determination can ultimately affect the client's refund.

The proposed regulations are not final and would apply to tax years ending on or after the date final regulations are published in the Federal Register. Forms and instructions also remain subject to approval, and changes could occur before the 2026 version becomes final.

In LaBorde v. Commissioner, T.C. Memo. 2026-74, the taxpayer faced trust fund recovery penalties under §6672. During the collection due process (CDP) proceeding, questions arose about whether levy notices had been sent to the taxpayer's last known address. The Appeals determination stated that applicable legal and procedural requirements had been verified. However, the administrative record didn’t adequately establish the basis for that conclusion. The Tax Court sustained the lien determination but remanded the levy determinations to Appeals because the court could not determine how the Appeals officer verified that the requirements were satisfied.

The decision reinforces the importance of reviewing the administrative record rather than relying solely on statements in an Appeals determination. When a legitimate question involves notices, addresses or other collection procedures, examine the supporting record carefully.

A Centralized Authorization File (CAF) number is critical for tax professionals who represent clients before the IRS. However, IRS security measures can temporarily affect a practitioner's ability to represent clients and access taxpayer information when a CAF number is placed under review. During the review, activity associated with that CAF number is suspended.

The IRS may place a practitioner's CAF number in pending review when it identifies potential harmful activity and needs to determine whether the number has been compromised. Once a preliminary determination is made that a CAF number is placed in review, the practitioner will receive a letter by mail from the IRS, generally from IRS Criminal Investigation (CI), letting them know their CAF is under review.

To help expedite the review process:

• The individuals who receive these letters are asked to verify their identities by sending to the IRS a notarized document with certain informational items included.
• The notarized document should be returned using the email box designated in the letter within 30 days from the date of the letter.
• With the return of the notarized document, verification of client listings occurs, and, if needed, the issuance of a new CAF number.

If a practitioner receives an IRS notice about a CAF review, responding promptly is important. The IRS will not process forms or requests tied to the number, including transcript requests. The length of the review can depend on how quickly the IRS receives the requested information. Tax pros should access their Tax Pro Account and periodically review their authorizations to identify any taxpayers who they have not authorized. If the tax pro suspects their CAF number has unauthorized use, they should contact their local IRS stakeholder liaison 📌 to remedy the issue.

The IRS and Treasury have finalized regulations for the qualified passenger vehicle loan interest deduction, 📌 providing additional guidance on which vehicles, loans and interest expenses may qualify. Several changes from the proposed regulations could affect how tax pros determine a client's deduction.

Key changes in the final regulations include:

First-lien rules are clearer. A first lien is defined as the first voluntary security interest recorded against the vehicle. Certain involuntary liens that later receive priority do not prevent qualification. Short-term recording or processing delays may also be accommodated, as well as a lien that has been removed from the vehicle due to repossession or insurance payout; however, the taxpayer is still liable for the loan.

Definitions for certain vehicle types are broader. The final rules broaden definitions for SUVs, pickup trucks and motorcycles by removing certain weight restrictions referenced in the proposed regulations. The separate statutory requirement that an applicable passenger vehicle have a gross vehicle weight rating below 14,000 pounds remains.

Qualifying car loan interest is better defined. Qualified interest can include points, deferred or capitalized interest and certain financing-related charges. Prepayment penalties, late-payment charges and similar fees may also qualify when treated as interest for federal tax purposes and properly reported.

Financed purchase costs receive clarification. The final regulations add rules addressing items or amounts customarily financed as part of a vehicle purchase and directly related to that purchase.

The IRS has reported 📌 that approximately 14,900 remaining Employee Retention Credit (ERC) claims in various stages as of the week ending August 29, 2026, amid ongoing reviews of eligibility and potential improper claims.

The remaining claims include;

• Under review (1,650)
• Pending payment or disallowance (2,950)
• Under audit (3,600)
• Awaiting review of disallowance responses (5,300) and
• With the IRS Independent Office of Appeals (1,400).

The ERC is a refundable tax credit for eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The requirements are different depending on the time period for which you claim the credit. The ERC is not available to individuals.

The credit generally applies to qualified wages to some or all employees after March 12, 2020, and before Jan. 1, 2022, though eligibility and credit amounts vary depending on when the business impacts occurred.

Eligibility generally depends on businesses and tax-exempt organizations that were suspended by a government order due to the COVID-19 pandemic during 2020 or the first three calendar quarters of 2021 or experienced the required decline in gross receipts during 2020 or the first three calendar quarters of 2021, or qualified as a recovery startup business for the third or fourth quarters of 2021.

Improper claims, employer options

The IRS said it remains concerned about a large number of improper ERC claims and is closely reviewing returns claiming the credit. The agency asked taxpayers to review their claims and promptly resolve incorrect ones.

The IRS also continues to warn employers to be wary of ERC advertisements that advise them to "apply" for money by claiming the ERC when they may not qualify. As a reminder, anyone who incorrectly claims the credit has to pay it back and may owe penalties and interest. Notably, the only way to claim the ERC is on a federal employment tax return.

Employers that submitted an ineligible claim can avoid future issues such as audits, repayment, penalties and interest by withdrawing 📌 an ERC claim. You can use this program if the ERC has not been paid yet, or if you already received a check for ERC but have not cashed or deposited it.

If the IRS disallows a claim through Letter 105-C, Disallowance of the Employee Retention Credit, the employer may request an administrative appeal, seek review by the IRS Independent Office of Appeals, or file suit.

Employers claiming or correcting the ERC through an adjusted employment tax return should use the applicable form and instructions for their filing type and tax period, such as Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, for quarterly filers.

Importantly, if an employer files Form 941-X to claim the Employee Retention Credit, the employer must reduce its deduction for wages by the amount of the credit for that same tax period, and the employer may need to amend its income tax return (for example, Forms 1040, 1065, 1120, etc.) to reflect that reduced deduction.

Employers should also ensure claims comply with program limitations. Employers cannot claim the ERC on wages that were reported as payroll costs for Paycheck Protection Program loan forgiveness. Qualified wages for purposes of the ERC do not include payroll costs in connection with shuttered venue operators grants or restaurant revitalization grants.

The IRS has released updated frequently asked questions 📌 (FAQs) on the business interest expense limitation under  § 163(j), superseding 2025 guidance, removing obsolete pandemic era rules, and adding details from recent legislation. (Fact Sheet 2026-14, 8/19/2026)

Questions and answers about the limitation on the deduction for business interest expense | Internal Revenue Service

Direct Pay 📌 is available on IRS.gov and allows taxpayers to make one-time payments from their bank account without signing in or paying fees. Taxpayers answer a few basic questions to verify their identity, and no registration is required. For individual payments, Direct Pay uses information from a prior-year tax return selected by the taxpayer. For business payments, Direct Pay verifies the business name and employer identification number (EIN) against IRS records.

Taxpayers can use Direct Pay for individual tax payments, including balance due payments, estimated tax payments, amended return payments, extension payments, and other federal income tax payments. If taxpayers are married and file jointly, they must enter information for the spouse whose name is listed first on the tax return when they make their payment. Business taxpayers can use Direct Pay to make balance due payments, federal tax deposits, and other federal tax payments.

With Direct Pay, taxpayers can quickly handle many common payment tasks online and choose the payment date that works best for them. Direct Pay allows taxpayers to:

• Make a same-day payment or schedule a payment up to 365 days in advance.
• Receive a confirmation number and the option for email confirmation.
• Change or cancel a scheduled payment up to two business days before the payment date.
• Pay directly from a U.S. financial institution using bank routing and account numbers' 

Direct Pay cannot be used to receive tax refunds by direct deposit. Taxpayers who have never filed a tax return, or who have not filed in more than six years, may need to use another payment option.

Each Direct Pay payment must be less than $10 million. Taxpayers who need to make payment of $10 million or more can use a same-day wire or the Electronic Federal Tax Payment System (EFTPS 📌), if they are already enrolled.

To make a payment, taxpayers can visit Direct Pay with bank account and select “Pay individual tax” or “Pay business tax.”

In CCA 202634014, 📌 released Aug. 21, 2026, the IRS Office of Chief Counsel advised that an initial partnership return containing ownership information but reporting zeros throughout is likely invalid. Applying the test established in Beard v. Commissioner, 82 T.C. 766, the Chief Counsel determined that the return did not contain sufficient data to allow the calculation of tax.

Although the Beard test does not apply perfectly to partnership returns, courts and IRS guidance have used it to evaluate partnership returns on several occasions. The analysis also distinguishes partnership returns from all-zero individual returns. Courts have traditionally found all-zero Forms 1040 invalid, often in tax-protester cases.

However, a zero return may be valid when there is reason to believe the zeros accurately reflect the taxpayer's actual activity. In this case, the IRS found no indication that the partnership's all-zero return accurately reflected its business activity.

The key takeaway is that filing a Form 1065 does not necessarily make it a valid return. When preparing a zero-dollar partnership return, consider whether the information reported accurately reflects the partnership's activity and provides sufficient data.

The most recent IRS renewal cycle runs from Oct. 1, 2026, through Jan. 31, 2027, for EAs whose Social Security numbers end in 7, 8, 9, or no SSN. EAs must renew their enrollment every three years based on the last digit of their Social Security number. Current enrollment will expire on March 31, 2027 if renewal is not complete.

Renewal requires Form 8554, Application for Renewal of Enrollment to Practice Before the Internal Revenue Service, which can be submitted electronically through Pay.gov or on paper.

Continuing education is also essential for maintaining status. EAs must complete 72 hours during each three-year enrollment cycle, including six hours of ethics. At least 16 hours must be completed each year, including two hours of ethics.

Affected EAs should confirm their enrollment is current and make sure their contact information is accurate. Staying current with renewal and continuing education requirements helps protect your ability to represent taxpayers before the IRS.

On July 24, 2026, IRS sent out a newsletter advising the IVES user fee increase would be temporarily paused pending further review.

After completion of the review, IRS has determined to maintain the current fee structure through September 30, 2027. The current IVES user fees for transcript requests received in the legacy fax channel will remain $4.00 per transcript. User fees for transcript requests received in the legacy in the Taxpayer First Act (TFA) portals, WebUI and Application-to-Application (A2A), will continue to be waived. 

Stakeholders have asked for clarification regarding whether plan amendments implementing SECURE and SECURE 2.0 provisions must be adopted by:

• the deadlines set forth in Notice 2 (generally, December 31, 2026), or
• the deadlines set forth in an applicable Required 2024 Amendments List (RA List).

The answer depends on whether the plan amendment relates to a required amendment or a discretionary amendment.

Required Amendments

As explained in Notice 2025 60 (the 2025 RA List), remedial amendment periods for required amendments are governed by § 5.03(1)(b), 5.03(2)(b), and 6.01 of Rev. Proc. 2022 40 . In general, this means that the remedial amendment period for a required amendment is the last day of the second calendar year following the calendar year in which the amendment is adopted or effective, whichever is later.

Further, § 6.01 of Rev. Proc. 2022-40 provides that the plan amendment deadline for a disqualifying provision is the date on which the remedial amendment period with respect to the disqualifying provision expires.

As further explained in the 2025 RA List, § 7 of Rev. Proc. 2022-40 provides that the Treasury Department and the IRS will publish an annual RA List, and § 5.03(1)(c) of Rev. Proc. 2022-40 provides that the remedial amendment period for a disqualifying provision that arises as a result of a change in qualification requirements generally expires on the last day of the second calendar year that begins after the issuance of the RA List on which the change in qualification requirements appears.

The 2025 RA List also explains that changes in requirements that cannot reasonably be reflected in plan language without guidance and with respect to which the Treasury Department and the IRS expect to issue guidance will not be listed on an RA List until that guidance is issued and applicable.

Treasury and the IRS expect to issue final regulations with respect to the following required SECURE and SECURE 2.0 provisions:

1. automatic enrollment requirements imposed by § 101 of SECURE 2.0
2. long-term part-time requirements imposed by § 125 of SECURE and § 112 of SECURE 2.0, and
3. required minimum distribution requirements imposed by SECURE and SECURE 2.0 provisions that have not already appeared on an RA List.

Each of these SECURE and SECURE 2.0 provisions will be included on a future RA List after a final regulation relating to the particular provision generally becomes applicable, and, accordingly, the deadline for the adoption of each of these required amendments will be the end of the second plan year after the particular SECURE or SECURE 2.0 provision is listed on an RA List.

With respect to these SECURE and SECURE 2.0 provisions, final regulations are not expected to be applicable earlier than the plan year that begins six months after issuance of the final regulations. In addition, as a general matter, it is reasonable for stakeholders to assume that a change in qualification requirements that is not listed on the RA List for the year the change first applies will be listed on a future RA List.

A statutory provision that permits, but does not require, a plan feature will not appear on an RA List. Instead, as explained in the 2025 RA List, the plan amendment deadlines for discretionary amendments are governed by §§ 5.03(1)(b), 5.03(2)(b), and 6.02 of Rev. Proc. 2022-40. In general, this means that the deadline for discretionary amendments is the last day of the plan year in which the discretionary provisions are operationally put into effect under the plan. Notice 2024-2 extends the deadline for SECURE and SECURE 2.0 discretionary amendments until December 31, 2026 (with later deadlines for applicable collectively bargained plans, governmental plans, and § 403(b) plans maintained by a public school).

Although SECURE and SECURE 2.0 provisions permitting discretionary plan provisions will never appear on an RA List, guidance with respect to discretionary plan provisions previously adopted will appear on an RA List (in Part C) for the year those changes are applicable. Accordingly, for a plan that includes those discretionary plan provisions, a plan amendment implementing the guidance will need to be adopted by the end of the second plan year after the guidance is listed on the RA List.

The Internal Revenue Service has issued guidance that provides an extension of tax relief for farmers and ranchers in most states and other regions who sold or exchanged livestock because of drought conditions. Under the guidance, those affected may take more time to replace their livestock and defer tax on any gains from the forced sales or exchanges.

Notice 2026-54 📌 lists the specified areas, by county or other jurisdiction, that qualify for federal assistance. The list includes 49 states, the District of Columbia, Puerto Rico, and other areas that reported exceptional, extreme or severe drought during the 12-month period ending on August 31, 2026.

The tax relief generally applies to capital gains realized by eligible farmers and ranchers from sales or exchanges of livestock held for draft, dairy or breeding purposes. Sales of other livestock - such as those raised for slaughter or held for sporting purposes – and sales of poultry do not qualify.

Eligible farmers and ranchers must show that drought prompted sales or exchanges, and that the area received a federal drought designation. Generally, livestock must be replaced within a four-year period, instead of the usual two-year period. The IRS is authorized to further extend this replacement period if the drought persists.

The replacement period extension announced in the notice gives eligible farmers and ranchers until the end of their first tax year after the first drought-free year after the four-year replacement period to replace the sold or exchanged livestock. As a result, eligible farmers and ranchers whose drought-sale replacement period was scheduled to expire at the end of 2026 will have until the end of their next tax year to replace the sold or exchanged livestock.

The IRS provides this extension to eligible farmers and ranchers if the applicable region is listed as suffering exceptional, extreme or severe drought conditions during any week between September 1, 2025, and August 31, 2026. This determination is made by the National Drought Mitigation Center.

Details and an example of how this provision works can be found in Notice 2006-82, 📌 available on IRS.gov.

The 2026 General Instructions for Forms W-2 and W-3, 📌 under Specific Instructions for Form W-2, Box 10–Dependent care benefits, states that the dependent care benefits exclusion is $5,000. P.L. 119-21, § 70404, increased the maximum amount of the exclusion to $7,500 beginning in 2026. All amounts paid or incurred (regardless of any employee forfeitures), including those in excess of the $7,500 exclusion, are reported in Box 10.

Personal casualty losses

In general, taxpayers can deduct personal casualty losses arising from federally declared disasters only if the losses exceed 10% of the taxpayer’s adjusted gross income (AGI).

However, for disasters between December 28, 2019, and July 4, 2025, taxpayers can deduct personal casualty losses without the limitation described above.

The expiration of this special rule for disasters after July 4, 2025, means fewer disaster victims are currently eligible for a deduction when they suffer disaster-related losses.

Wildfire relief payments

The Federal Disaster Tax Relief Act of 2023 made qualified wildfire relief payments excludable from taxable income, but only if the wildfire disaster declaration occurred after December 31, 2014, and the payment was received on or before December 31, 2025.

In practice, wildfire relief payments often take years to process, meaning many victims have not yet received payments that were intended to be tax-free.

H.R. 5366, Doug LaMalfa Federal Disaster Tax Relief Certainty Act:

• Extends the more generous treatment of personal casualty losses to disasters prior to January 1, 2027.
• Excludes wildfire relief payments from taxable income regardless of when they are received, so long as the wildfire disaster declaration occurs after December 31, 2014, and before January 1, 2027.

The new law was signed by the President on September 11, 2026.

REV. RUL. 2026-19 TABLE 1

Applicable Federal Rates (AFR) for October 2026

REV. RUL. 2026-19 TABLE 2

Adjusted AFR for October 2026

REV. RUL. 2026-19 TABLE 3

Rates Under Section 382 for October 2026

REV. RUL. 2026-19 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for October 2026

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%.

REV. RUL. 2026-19 TABLE 5

Rate Under Section 7520 for October 2026