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USA
6th November 2026
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THE HOT STORY

Higher standard deductions and tax credits announced for 2027

The IRS has announced inflation adjustments to nearly 70 federal tax provisions for the 2027 tax year, generally affecting returns filed in 2028. The standard deduction will increase to $33,200 for married couples filing jointly, $16,600 for single filers, and $24,925 for heads of household. The maximum child tax credit will rise to $2,300, including a refundable portion of up to $1,800. Income tax bracket thresholds will also increase, with the highest 37% rate applying to taxable income above $661,375 for individuals and $793,650 for married couples filing jointly. Additional changes include raising the estate tax exemption to $15.48m, the annual gift tax exclusion to $20,000, and the maximum earned income tax credit for families with three or more qualifying children to $8,496. Personal exemptions will remain at zero.

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TAX

Senate Finance Democrats outline agenda for 120th Congress

Sen. Ron Wyden (D-OR) has outlined an ambitious agenda for the Senate Finance Committee following Democrats’ victories in the midterm elections, which secured majorities in both chambers of Congress. Mr. Wyden, who is expected to chair the committee in the 120th Congress, has pledged to prioritize affordability and corporate accountability, including raising taxes on billionaires and corporations, challenging corporate influence over healthcare, and restoring congressional authority over tariff policy. He has also promised increased scrutiny of banks, health insurers, and pharmaceutical companies, accusing them of contributing to financial hardship for American families. The proposals signal a shift toward tougher oversight of major businesses and a direct challenge to President Donald Trump’s economic and healthcare policies.

IRS reports record $5.6tn in tax collections

The IRS has reported record tax collections of $5.6tn for fiscal year 2026, an increase of nearly 5% from 2025, alongside larger taxpayer refunds and expanded digital services. According to the agency, the average federal income tax rate declined 4% to 12.6% for tax year 2025, while the total value of refunds claimed increased 17%, and the average refund rose 11% during the 2026 filing season. Approximately 90% of electronic filers received refunds within 21 days. The IRS also reported a 34% increase in individual online accounts to 37.6m users, with digital payments rising 57% to more than $133.6bn. Meanwhile, enhanced fraud prevention measures protected approximately $38bn in tax revenue from identity theft-related refund fraud. The agency also highlighted the establishment of nearly 70m tax-advantaged Trump Accounts for children, including approximately 27m receiving contributions.

IRS faces data center dilemma

The IRS is facing growing concerns about its ability to enforce wage and apprenticeship requirements tied to substantial federal tax incentives for clean-energy investments supporting data centers, following significant budget and staffing reductions. In a Bloomberg Tax commentary, former IRS Commissioner Danny Werfel warned that the agency has lost approximately 25% of its workforce, including 26% of its revenue agents, potentially undermining oversight of complex tax credit eligibility rules. Under the Clean Electricity Investment Credit, qualifying investments can receive a 6% federal tax credit, increasing to 30% when prevailing-wage and apprenticeship requirements are satisfied. For a $1bn qualifying investment, this represents a potential increase in tax benefits from $60m to $300m. The IRS is expected to begin examining compliance with these requirements during audits of 2024 tax returns, according to the Government Accountability Office.

Chicago voters back millionaire tax proposals to fund education and property tax relief

Chicago voters have overwhelmingly supported proposals to increase taxes on wealthy residents, with approximately 80% backing two nonbinding ballot measures aimed at generating additional funding for education and property tax relief. One proposal would introduce a 3% surcharge on millionaires, while another calls for higher taxes on wealthy individuals to support schools. Mayor Brandon Johnson has cited the results as evidence of public support for taxing high-income residents and large corporations to finance essential services. A separate referendum proposing taxes on businesses with more than 500 employees received 88% support in participating precincts. However, some City Council members have warned that higher taxes could discourage investment and job creation, advocating spending reductions instead. The measures remain advisory and would require further legislative action before implementation.

Florida property tax cuts offer homeowner relief but threaten local government budgets

Florida voters have approved a sweeping property tax reduction, with 62% supporting a constitutional amendment that will increase the exemption on primary residences from $50,000 to $250,000 by 2028. The measure, backed by outgoing Gov. Ron DeSantis, takes effect January 1st and aims to ease financial pressures on homeowners facing rising housing, insurance, and living costs. However, local governments face significant revenue losses that could force reductions in police funding, infrastructure spending, and other essential services, particularly in rural communities. Mr. DeSantis has proposed state grants to help municipalities maintain core services, while local officials are considering higher fees and alternative revenue sources. The amendment could also attract new residents, although newcomers must wait five years to qualify for the expanded exemption. S&P Global Ratings has warned that reduced property tax revenues could weaken municipal credit ratings over time, particularly among financially vulnerable local governments.

INDUSTRY

Accounting’s audit independence rules offer blueprint for stronger AI verification

The accounting profession’s established audit independence rules could provide a valuable framework for strengthening artificial intelligence (AI) oversight, according to an Accounting Today commentary by Jim Germer. Following the Enron scandal, the Sarbanes-Oxley Act introduced safeguards against conflicts of interest, including mandatory audit partner rotation after five years and a one-year cooling-off period for certain auditor-to-client employment relationships. Germer argues that AI governance faces similar challenges in ensuring independent verification, alongside the additional risk of fabricated AI-generated evidence. Although the EU AI Act and proposed U.S. FRONTIER Act include provisions for independent oversight, neither mandates comparable rotation or cooling-off requirements. The article emphasizes that effective AI verification must combine enforceable independence safeguards, reliable evidence authentication, and rigorous testing to ensure accountability and prevent conflicts of interest.

ECONOMY

Labor productivity rises at fastest pace in a year

U.S. labor productivity has increased at its fastest pace in a year, rising at an annualized rate of 3.6% in the third quarter of 2026, compared with an upwardly revised 2.1% in the previous quarter, according to the Bureau of Labor Statistics. The improvement reflects strong business investment in artificial intelligence, software, and equipment, helping companies increase output while limiting labor costs. Unit labor costs declined 0.7%, marking their first decrease since the second quarter of 2025, while nonfarm business output expanded at an annualized rate of 3.7%, the strongest growth in a year. Hours worked increased just 0.1%, and inflation-adjusted hourly compensation rose 1.1%. Federal Reserve officials have highlighted productivity growth as a potential factor in easing inflationary pressures, although chair Kevin Warsh cautioned that the benefits of AI-driven efficiency improvements may emerge gradually. Despite stronger productivity, labor's share of national income fell to 53%, its lowest level in records dating back to 1947, highlighting a widening gap between output growth and workers' share of economic gains.

Weekly jobless claims fall to 57-year low

U.S. initial unemployment claims have fallen to their lowest level in 57 years, declining by 6,000 to a seasonally adjusted 189,000 in the seven days to October 31st, according to the Labor Department. The figure was below economists' expectations of 197,000, according to the Wall Street Journal, and matched the lowest reading since 1969, highlighting continued labor market resilience despite uncertainty surrounding the U.S.-Israeli conflict with Iran. The four-week moving average dipped to 194,750, while continuing claims, reported with a one-week lag, rose by 23,000 to 1.718m.

SMALL BUSINESS

How small CPA firms can strengthen marketing and brand credibility

Small accounting firms often find marketing squeezed between client work and deadlines. Partners and managers face challenges such as inconsistent visuals and awkward copy, leading to a brand image that lacks trust. As one source notes, “Budget-friendly branding and affordable content creation can still communicate the same confidence as larger firms.” To enhance their marketing, firms should focus on budget-friendly strategies, utilise accessible tools for DIY content, and maintain consistent branding across channels. AI image optimisation tools can improve the quality of marketing visuals without the need for a design team. By leveraging affordable marketing tools, firms can create cohesive branding without overspending. A simple rule is to DIY repeatable tasks while outsourcing high-stakes projects to ensure quality. This approach allows small firms to build a stronger CPA brand without sacrificing client work.

LEGISLATION

Treasury designates 6,576 Opportunity Zones to boost economically distressed areas

The Treasury and the IRS have announced 6,576 new Opportunity Zones nationwide, including 2,594 rural communities eligible for enhanced tax incentives, to encourage private investment and economic development. The designations, covering all 50 states, U.S. territories, and Washington, D.C., will take effect January 1st, and remain in place for 10 years. Established under the 2017 tax law and subsequently made permanent through President Donald Trump's Working Families Tax Cuts, the Opportunity Zones program offers preferential tax treatment for qualifying investments in economically distressed areas. According to the Treasury, the initiative has attracted more than $110bn in private-sector investment since its introduction. The new designations, selected from 25,332 eligible census tracts, aim to stimulate job creation, attract capital, and support economic growth in underserved communities. The Treasury has also published a comprehensive list and map of the designated zones, alongside poverty-rate and median-family-income data.

TECHNOLOGY

Accounting firms urged to modernize technology, security, and workflows ahead of 2027

As the holiday season approaches, accounting firms must prepare for the 2027 tax season to gain a competitive edge. Dr. Sangeeta Chhabra, co-founder of Ace Cloud Hosting, emphasises the importance of reviewing data collection methods and transitioning to the IRS's new Information Returns Intake System (IRIS) before the deadline of November 19. Firms should also audit their security measures against evolving cyber threats and update their Written Information Security Plan (WISP). Additionally, assessing current technology and workflows can help identify bottlenecks and improve efficiency. Chhabra advises that firms should consider shifting towards client advisory services, which currently account for 61% of revenue, and ensure their teams are adequately trained for these changes. By addressing these areas before the holidays, firms can set themselves up for a successful and profitable 2027.
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