Posted on

What to Expect from U.S. Tax Policy in 2026

4 min read

What to Expect from U.S. Tax Policy in 2026After a whirlwind 2025 that produced what may be the largest tax bill in American history, the coming year looks dramatically different. Tax policy experts are predicting a legislative standstill, a turbulent tax filing season, and lingering questions about how new provisions will work when put into practice.

A Year of Legislative Gridlock

The forecast for 2026 tax legislation is bleak. With Republicans clinging to an impossibly thin House majority of just 218 or 219 seats following recent resignations, passing any significant bills will be extraordinarily difficult. Every single Republican vote would be needed to advance legislation through reconciliation, and as 2025 demonstrated, keeping the caucus unified is no small feat.

While there has been discussion about a potential second reconciliation bill, most observers view this as wishful thinking. If such a bill were to materialize, it would likely focus on technical corrections to lingering Tax Cuts and Jobs Act issues and problems that emerged from the One Big Beautiful Bill Act. One notable concern involves accelerated research credits that did not deliver the benefits lawmakers intended because of unexpected interactions with the corporate alternative minimum tax.

The more pressing concern will simply be keeping the government running. A January deadline looms to avoid another shutdown and, given the contentious relationship between House Republicans and Democrats throughout 2025, even basic funding bills face uncertain prospects. With midterm elections consuming attention in the second half of the year, legislative bandwidth for tax policy will be virtually nonexistent.

A Rough Road Ahead for Taxpayers

The 2026 tax filing season is shaping up to be challenging. The IRS has experienced unprecedented upheaval, losing somewhere between 20 percent and 25 percent of its workforce through a combination of voluntary resignations and reductions in force. Many of these departures came from enforcement divisions, though customer service will also feel the impact.

Leadership instability has compounded these problems. The agency cycled through roughly seven commissioners or acting commissioners in 2025 alone. Former Congressman Billy Long was confirmed as commissioner but lasted less than two months before departing under unclear circumstances. The Treasury Secretary has since taken direct oversight of the agency, and an IRS CEO position was created for the first time in the agency’s history. No new commissioner nominee has been put forward, and there is currently no Senate-confirmed chief counsel either.

For taxpayers who need more than basic return processing, this means longer wait times, fewer answered phone calls, and potential delays. Those filing straightforward W-2 returns seeking refunds will likely fare better than individuals or businesses with complicated situations requiring IRS assistance. Audit rates will decline intentionally, as the current administration has committed to scaling back the enforcement emphasis of the Biden years.

The Justice Department’s Tax Division also has been gutted, losing many qualified litigators who previously maintained an exceptional track record against large taxpayers in court. This erosion of enforcement capability may not immediately move voluntary compliance numbers, but continued cuts will eventually catch up with the system.

Unresolved International Questions

The relationship between U.S. tax policy and the global minimum tax framework under Pillar 2 remains unsettled. Republicans declined to include a retaliatory tax provision known as section 899 in last year’s legislation based on an agreement with G20 nations. If that agreement unravels, there may be pressure to revisit retaliatory measures, though passing such legislation with current House margins seems unlikely.

American companies operating internationally could face pressure in foreign jurisdictions if the United States fails to align with Pillar 2 requirements. While many in Washington believe the international minimum tax framework will collapse, the reality on the ground suggests otherwise, and this disconnect might force future legislative action.

Conclusion

The bottom line for 2026: expect a holding pattern on major tax legislation and brace for a difficult filing season as an understaffed and unsettled IRS works to implement last year’s massive changes.

Posted on

Accounting Considerations for Senior Debt

3 min read

What is Senior DebtAlso known as a Senior Note, Senior Debt consists of a company’s outstanding loans collateralized by the business’ assets. As the name implies, Senior Debt holders are the first claimants of the business’ cash flows and/or liquidated assets if that business defaults on its debt and files for bankruptcy. Subordinated or junior debt in the form of Preferred and Common Equity shares has claims to any subsequent assets – but only after Senior Debt holders are made whole. 

Originating via financial institutions, revolving credit facilities, and Senior Term Debt are the primary ways companies obtain financing. Whether the debt is funded by another business, an individual backer, or a traditional bank lender, if the borrowing company files for bankruptcy and liquidates its assets, Senior Bondholders are first in line for available repayment.

Senior Debt Characteristics and Structure

Much like any type of borrowed money, each tier has different interest rates and amortization schedules, including Senior Debt. Senior Debt issuers put terms in the debenture restricting companies from issuing additional, lower-tier debt. Debt issuers often require borrowers to maintain specific credit profiles, which are determined by financing ratios such as interest service coverage and debt service coverage.

Other stipulations may include requiring the borrower to maintain or refrain from business activities beyond their essential commercial functions. If the stipulations are flouted, the lender may retract, modify the borrowing terms, or mandate immediate payment of accrued interest and principal. It’s important to note that since Senior Debt has more restrictive terms, interest rates are generally lower compared to unsecured/less senior debt.

When it comes to unsecured debt, primarily junior or subordinated debt, although it’s not collateralized, the terms stipulate that the lender(s) have a claim to the company’s assets in case of bankruptcy/liquidation and are next in line to get paid off from the assets of the company, minus any pledged assets for secured debt debtholders.

Accounting Considerations

The first step to account for Senior Debt is to break it up into short-term and long-term debt (within 12 months and longer than 12 months). For example, long-term debt, which turns into long-term liabilities from short-term obligations, like accounts payable, is recorded on the company’s balance sheet. This generally happens when the short-term obligations are re-classified into a lengthier note.

If a business obtains a $10 million bank loan, secured by their machinery and other assets, for a new product line, with a 7 percent interest rate for 15 years, along with the business assets, liabilities and shareholders’ equity, the long-term portion would be reported on the company’s balance sheet. It would be recorded as a liability on the balance sheet, where any other long-term debt and bonds issued or borrowed by the company.

The income statement would document its loan interest. It’s calculated by taking the principal multiplied by the interest rate.  Once the interest is determined, it’s classified as an expense on the income statement, lowering the company’s net income and profits. As the loan’s principal is paid over the 15-year loan life, a set amount of the loan principal is repaid each year.

Conclusion

Senior Debt can be an effective way to obtain funding, but businesses must understand how funding agreements work and how to properly account for them.

 

Posted on

What Families Need to Know About the New Trump Accounts

4 min read

What are Trump Accounts?American parents now have access to a completely new savings tool designed to give children a financial foundation for the future. Established through The One Big Beautiful Bill Act, these accounts carry the name of the current president and come with a unique set of rules that the IRS has just begun to clarify.

Who Can Open One?

Any minor holding a Social Security number who has not yet turned 18 by Dec. 31 of the current year meets the eligibility criteria. Getting started requires an authorized adult, typically a parent or legal guardian, to submit an application to the Treasury Department. Once processed, the government establishes the child’s account.

Free Money for Newborns

Families welcoming babies during a specific four-year window stand to benefit the most. American citizens born anytime from the start of 2025 through the end of 2028 qualify for a $1,000 federal deposit through a pilot initiative. This starter contribution sits outside all annual limits, meaning it will not reduce how much others can add later.

Billionaire Backing Adds More

Tech titan Michael Dell and his wife, Susan, have pledged $6.25 billion to boost these accounts further. Their generosity will provide an extra $250 to the first 25 million children meeting specific requirements. Kids must be no older than 10 and reside in areas where the median household income is under $150,000. Dell, who runs Dell Technologies as chairman and CEO, ranks 10th among America’s wealthiest individuals with a fortune estimated at $148.9 billion.

How Much Can Be Contributed Each Year?

The law caps annual contributions at $5,000, though this figure will rise with inflation over time. Grandparents, aunts, uncles, family friends, and parents can all put money in, but every dollar from these sources counts toward that yearly ceiling. Exceed the limit, and you will need to pull the excess back out.

Workplace benefits offer another channel. Companies can deposit as much as $2,500 annually into accounts belonging to workers or their children. While this money does apply toward the $5,000 threshold, employees will not owe taxes on these contributions.

Charitable organizations and government bodies at various levels have permission to fund these accounts through something called qualified general contributions. Unlike personal or employer deposits, this category of funding exists completely outside the annual cap.

Keep in mind that money coming from family members or friends provides no tax break. These contributions use after-tax dollars. Also worth noting: the earliest anyone can start funding these accounts is Independence Day 2026.

Strict Rules Govern Investments

Congress placed tight restrictions on where this money can go. Only mutual funds and ETFs tracking American stock market indexes qualify. These funds cannot employ any leverage strategies, and their annual expense ratios must not exceed one-tenth of one percent.

Accessing the Funds

Until reaching adulthood, account holders face severe limits on touching their money. The rules permit withdrawals only in narrow circumstances: transferring everything to a different Trump Account, correcting over-contributions, or closing the account following the child’s death.

Everything changes at 18. From that birthday forward, the account essentially transforms into something resembling a traditional IRA with comparable guidelines around distributions and taxation.

Filing Requirements

Establishing one of these accounts means completing Form 4547, which the IRS titled Trump Account Election. This document accompanies your annual 1040 filing and handles both account setup and pilot program enrollment. The form number itself contains a nod to history, combining 45 and 47 to reflect Trump’s elections as both the 45th and 47th commander in chief.

Conclusion and Official Resources

This new savings tool gives families an innovative avenue to save. Taxpayers seeking detailed information can review Notice 2025-68, which the IRS published to address questions about account creation, investment options, contribution types, distribution rules, and reporting obligations. Full regulations remain in development, with proposed rules expected before final versions emerge following public input. The government maintains a dedicated portal at trumpaccounts.gov for ongoing updates.

Posted on

Defining An Activity Cost Driver

3 min read

Defining An Activity Cost Driver, What is An Activity Cost DriverAn activity cost driver is anything that causes a company’s variable costs to either reduce or grow. Since measuring an activity cost driver is a way to streamline the administration of managing production costs, it’s an integral part of activity-based costing.

Examples of activity-cost drivers are warehouse expenses, modifying engineering designs, and retooling, setup, and maintenance costs for machining needs. This can include higher warehouse expenses due to increased rents or leases, which add to the final amount of the product or service’s sales price. Machining costs include initial setups for initial production and ongoing maintenance costs for continued runs. If production needs to be re-engineered to different production parameters, those professional revision costs need to be added to the ultimate product or service cost calculations.

These cost drivers are used as a starting point to project the business’ operational and profitability goals through the use of activity-based costing (ABC), a type of managerial accounting.

ABC accounting is a way to determine the expenses of each output by looking at the inputs used during the company’s operations, be it power for the machinery, Information Technology (IT) needs, or labor.

It’s important to know that one variable expense can impact multiple single activity cost drivers. For example, wage costs and machining expenses can be identified as activity cost drivers in connection with production. The first step is looking at how ABC accounting can determine indirect costs.

Activity-Based Costing Illustration

A business wants to look at how its production space and its lease or real estate and property tax costs are attributable to individual widgets or services, based on the percentage dedicated to the respective product or service. If it’s not allocated properly, determining sales prices and profitability can be negatively impacted.

If a company has two product lines with the same retail prices and production quotas, with direct costs of $700 and $250, it’s important to see how the production area for each product impacts the company’s overall operations. If the first item uses 40 percent of the production area and the second item uses 60 percent of the production area, and the rent is $1,500, the rent needs to be factored in. The first item would see an additional cost of $600 plus the original $700, or a total of $1,300. The second item’s cost would be $900 for the rent and $250 for the item, or a total of $1,150. While the initial direct cost for the first item seems higher than the second item, when factoring in all costs, this time it’s still true – but that’s not always the case.

Once this has been established, and then a company receives a new order, the following illustrates how measuring an activity cost driver, such as performing maintenance on machines after a production run, will cost the company to have it ready for their next order. If it costs a company $200 for machine maintenance and it produces 1,000 widgets, a $0.20/widget cost would be factored into margins and retail pricing.

While this provides an overview of how activity cost drivers work, it is part of a comprehensive approach to how businesses measure their margins and ultimately profitability. 

Posted on

What Frictionless WebAR Means for Creators, Brands and Small Businesses

4 min read

What Frictionless WebAR MeansThe way people interact with the web is changing fast. Attention spans are shorter, app fatigue is real, and users no longer want to download, sign up, or navigate complex interfaces just to engage with content. New technologies like frictionless web-based augmented reality (WebAR) are emerging as powerful solutions.

This shift opens great opportunities for creators, brands, and small businesses.

What is Frictionless WebAR?

Every extra step between a user and an experience reduces engagement. Downloading apps, dealing with permissions, updates, and onboarding screens all create friction. However, frictionless WebAR is delivered directly through a web browser. It uses web standards like WebXR and WebGL to deliver digital content without downloads or installations. With a shift in how value is created, communicated, and converted, it is possible to have interactive storytelling, experiential funnels, immersive education, and hyper-local marketing. All this is without the costs and complexity involved in traditional AR.

Transitioning from the attention economy to the experience economy has been driven by content overload from content, ads, and interfaces competing for clicks. As a result:

  • Users avoid downloading new apps
  • Click-through rates are declining
  • Trust is harder to build through a flat screen alone
  • Static content struggles to hold attention

Frictionless WebAR addresses these barriers.

Users can easily scan a QR code or tap a link and instantly see a product, explore a story in 3D form, or interact with information visually.

From a business perspective, the value lies in zero-friction entry, instant immersion, and seamless connection between physical and digital worlds. This is because WebAR does not require large development teams or app store approvals. It is lightweight, fast, and accessible. This makes it viable not only for big brands but also for solo creators and small businesses.

From Passive Content to Active Experiences

With most digital content, users scroll, read, watch, and move on. Frictionless WebAR is built to turn audiences into participants. Instead of reading about a product, users can see it in a 3D model. Instead of watching a story, they can step inside it. When audiences interact with something in their own environment:

  • Engagement time increases
  • Emotional connections deepen
  • Information is remembered longer
  • Purchase confidence improves

Practical Opportunities for Creators

For filmmakers, artists, game developers, and content creators, frictionless WebAR transforms static content into dynamic, interactive narratives. For instance, scanning a QR code in a physical comic book brings a character to life. This deepens immersion and extends the narrative beyond the printed book. Other examples include AR-enhanced portfolios that showcase work in 3D, behind-the-scenes experiences tied to a QR code, and interactive course previews.

Creators can also monetize WebAR by offering premium AR experiences, bundling AR with digital products, launching interactive experiences for sponsors, and enhancing membership or community access. This makes WebAR part of a creator’s intellectual property and not just a marketing tool.

Practical Opportunities for Brands

Brands leverage WebAR for immersive marketing. Experiential funnels leverage WebAR, allowing brands to engage customers in ways traditional advertising cannot. A good example is a brand launching a new shoe, and customers can scan a QR code on a poster and “try on” the virtual sneakers to see how they look in real time. Luxury brands can offer “virtual showroom” experiences with interactions that deepen the emotional connection.

The low-barrier interaction means higher engagement rates as potential customers are more likely to participate in an experience that doesn’t demand an app download or login.

Practical Opportunities for Small Businesses

Small businesses often struggle to compete with larger brands online. However, now they can access cost-effective WebAR without native app development. This equalizer offers sophisticated marketing and customer engagement tools without the need for a massive budget or IT team. This saves on resources and enables quick campaigns like seasonal promotions.

Since WebAR works through web browsers, a business can gain detailed analytics, such as user behavior. For instance, getting detailed data on dwell time or how long people engage in the experience can indicate how compelling the content is. Spatial analytics, on the other hand, measure how much time users spend on specific scenes, helping make necessary tweaks to optimize user experience. The data collected helps better understand customers and how they engage with content.

Conclusion

Frictionless WebAR represents a fundamental change in how value is delivered online. For creators, brands, and small businesses, it offers a way to stand out by inviting people into meaningful experiences.

In a crowded digital space, ease of access is a competitive advantage.