The Big Beautiful Bill, Electric Vehicle Adoption, and Nippon Steel
Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving them time and money. As of November 1, 2024, Probity began operating as a division of MS Consultants. Read more about the exciting news here.
Tax Policy/News:
June 24: IRS Criminal Investigation reduced tax preparer probes
A new report from the Treasury Inspector General for Tax Administration (TIGTA) reveals that while the IRS Criminal Investigation (CI) unit saw significant budget and staffing increases from fiscal years 2019 to 2023, its focus on tax preparer-related investigations has declined.
CI’s budget rose by 35%, from $578 million to $779 million, and staffing levels grew accordingly, enabling more investigations overall. However, the share of investigations targeting tax law violations dropped from 60% in FY 2019 to 53% in FY 2023, as general fraud cases—particularly those tied to pandemic relief—rose by 32%.
Despite the influx of resources, sentencing rates under the Questionable Refund Program (QRP) and Return Preparer Program (RPP) fell by 68% and 13%, respectively. CI attributed this to a strategic shift toward more complex, higher-impact cases rather than high-volume, lower-impact ones.
Although the Inflation Reduction Act initially allocated $79.4 billion to the IRS, that figure was later reduced to $37.6 billion, with CI using a portion for technology and labor investments. As of March 2025, CI staffing has remained largely unaffected by broader federal cost-cutting measures.
June 23: Long sworn in as the 51st IRS Commissioner
Billy Long was officially sworn in as the 51st Commissioner of the Internal Revenue Service on June 16, following his Senate confirmation on June 12.
In a message to IRS employees, Long emphasized his commitment to creating a more taxpayer-friendly agency by initiating a cultural transformation within the IRS.
He outlined plans to engage employees in shaping this new culture during his first 90 days, aiming to improve both staff and taxpayer experiences. Long brings a diverse background to the role, having served as a U.S. Representative for Missouri’s 7th Congressional District from 2011 to 2023.
Prior to his political career, he worked for over three decades as a real estate broker and auctioneer, earning induction into the National Auctioneers’ Association Hall of Fame. He also hosted a radio talk show from 1999 to 2006. Long’s term as IRS Commissioner will run through November 12, 2027.
June 22: Senate GOP slashes megabill’s tax costs with new accounting method
Senate Republicans have significantly reduced the projected cost of their sweeping tax legislation by employing a novel accounting method known as the “current policy baseline.”
This approach, used for the first time, assumes that expiring tax cuts—such as those from the 2017 Trump tax law—will be extended, thereby excluding their renewal costs from the bill’s official price tag. As a result, the Joint Committee on Taxation (JCT) now estimates the Senate bill’s cost at $441 billion, a dramatic reduction from the $3.8 trillion estimate for the House-passed version calculated under traditional scoring methods.
Senate Finance Chair Mike Crapo defended the approach, arguing it reflects the reality that Congress intends to prevent tax increases. Critics, including Senate Democrats, contend the method obscures the bill’s true fiscal impact and violates budget rules. Under the new baseline, the cost of extending individual tax rate cuts drops from $2.2 trillion to $83 billion, and the expanded Child Tax Credit falls from $800 billion to $124 billion.
The Senate bill also scales back Trump’s proposed tax relief for tips and overtime and includes a permanent business deduction at a cost of just $6 billion. The legality of this accounting method under reconciliation rules is expected to be reviewed by the Senate Parliamentarian, while House fiscal conservatives may demand equivalent spending cuts if the bill’s true cost exceeds $4 trillion.
June 20: How Senate Republicans want to change the tax breaks in Trump’s big bill
As Senate Republicans work to finalize their version of President Trump’s sweeping tax and spending legislation, key differences with the House version are emerging, particularly around tax breaks and fiscal priorities.
While both chambers align on major provisions like deductions for tips, overtime, and auto loan interest, the Senate proposes more limited versions—capping tip deductions at $25,000 and overtime at $12,500 per taxpayer. The Senate also offers a smaller but permanent increase to the child tax credit, raising it to $2,200 and indexing it for inflation starting in 2026, compared to the House’s temporary $2,500 boost through 2028.
A major point of contention is the state and local tax (SALT) deduction cap: the House raises it to $40,000 for households under $500,000 in income, while the Senate maintains the current $10,000 cap. On Medicaid, the Senate proposes gradually lowering the provider tax cap to 3.5% by 2031, a move criticized by some Republicans for its potential impact on rural hospitals.
Business tax breaks also diverge, with the House offering five-year deductions for equipment and R&D, while the Senate makes them permanent. Clean energy tax credits are slated for a slower phaseout in the Senate version, and unlike the House, the Senate excludes new annual fees for EV and hybrid owners. These differences set the stage for intense negotiations as Republicans aim to deliver a unified bill to President Trump by July 4.
Economic News/Policy:
June 24: Fed Chair Jerome Powell says tariff uncertainty warrants caution on rate cuts
Federal Reserve Chair Jerome Powell told Congress on Tuesday that uncertainty surrounding President Trump’s evolving tariff policies is a key reason the central bank is holding off on cutting interest rates.
Speaking before the House Financial Services Committee, Powell emphasized that while inflation from tariffs is expected to rise, the extent of its impact on consumers remains unclear. “We really don't know how much of that's going to be passed through to the consumers,” Powell said, reinforcing the Fed’s cautious stance.
Despite political pressure from President Trump, who has publicly criticized Powell and urged faster rate cuts, the Fed left rates unchanged last week and signaled only two potential cuts later this year. Powell cited strong employment, wage growth, and steady economic performance as reasons for restraint, contrasting the Fed’s approach with more aggressive rate cuts by European central banks.
He also noted that businesses may still be working through pre-tariff inventories, with clearer inflation data expected over the summer. Internally, some Fed governors have expressed openness to earlier cuts, but Powell maintained that inflation forecasts justify a wait-and-see approach. The Fed is also monitoring the broader effects of Trump’s policies on taxes, immigration, and regulation, which could have mixed implications for economic growth and labor supply.
June 18: US Steel, once America’s biggest company, is now under foreign ownership
Nippon Steel has completed its acquisition of US Steel, purchasing the iconic American steelmaker for $14.1 billion, or $55 per share. While the company will retain its name and Pittsburgh headquarters, the deal marks a significant shift as US Steel, once the world’s most valuable company, becomes a wholly owned subsidiary of a Japanese corporation.
Despite initial opposition from both former President Joe Biden and then-candidate Donald Trump, the deal was ultimately approved under Trump’s administration after Nippon agreed to additional investments and concessions. These include $11 billion in facility investments through 2028 and provisions granting the U.S. government, and specifically the president, veto power over key operational decisions such as plant closures and staffing reductions.
Trump emphasized that the deal would preserve jobs and production, promising no layoffs or outsourcing and full-capacity operation of blast furnaces for at least a decade. However, the United Steelworkers union remains opposed, questioning the enforceability of these promises and criticizing the deal as a façade that undermines American industrial identity. Once a symbol of U.S. economic strength, US Steel now employs just 14,000 workers domestically, a stark contrast to its historic prominence.
June 18: Fed predicts higher inflation, slower growth for US economy
The Federal Reserve has revised its 2025 economic outlook, projecting slower growth and higher inflation due to evolving U.S. trade policies and rising geopolitical tensions.
GDP growth is now expected to reach just 1.4%, down from the 1.8% forecast in March and significantly lower than the 2.8% growth seen in 2024. Unemployment is anticipated to rise to 4.5%, slightly above the previous 4.4% estimate and the current 4.2% rate.
Inflation, measured by the personal consumption expenditures (PCE) price index, is forecast to climb to 3%, up from the earlier 2.7% projection, signaling a notable increase from the current 2.1%. While tariff-related price hikes have not yet appeared prominently in the data, economists expect them to emerge over the summer as inventories clear.
Apparel prices have dropped about 1% year-over-year, suggesting businesses are absorbing tariff costs to maintain steady margins. The Fed also confirmed it will continue reducing its holdings of Treasuries and mortgage-backed securities, a process ongoing since 2023. Meanwhile, the U.S. M2 money supply has reached a record $21.8 trillion, indicating persistent liquidity in the financial system.
Energy and Environmental Policy/News:
June 20: Clean energy winners and losers in the Senate’s ‘Big, Beautiful Bill’
The Senate’s version of the “Big, Beautiful Bill” introduces a mixed outlook for clean energy, offering extended support for some technologies while phasing out others. Unlike the House’s more aggressive rollback, the Senate proposes a gradual phaseout of solar and wind tax credits through 2027, with limited exceptions for large-scale projects on federal land.
Utility-scale battery storage receives a notable boost, with production and investment tax credits extended through 2036, though with declining value over time. Geothermal, hydropower, and nuclear energy also benefit from extended eligibility for 45Y production tax credits until 2036, aligning them with advanced nuclear and battery storage in long-term support.
However, several consumer-facing incentives face steep cuts. The $7,500 tax credit for new electric vehicles would end six months after the bill’s enactment, and the $4,000 credit for used EVs would expire in just three months. Tax credits for rooftop solar installations and rebates for energy-efficient home appliances, including electric heat pumps, would also be phased out within 180 days.
The bill further limits the green hydrogen production credit to projects that begin construction in 2025, effectively ending support for the struggling sector thereafter. While the Senate’s proposal softens some of the House’s harsher provisions, many consumer-focused clean energy incentives remain at risk, with final outcomes hinging on reconciliation negotiations and the bill’s passage before the July 4 deadline.
June 18: US electric vehicle sales are slowing amid policy shifts: BNEF
Electric vehicle (EV) adoption in the United States is slowing significantly due to recent policy changes, according to BloombergNEF’s 2025 Electric Vehicles Outlook. The firm has reduced its forecast for cumulative U.S. passenger EV sales through 2030 by 14 million units, now expecting 4.1 million annual sales by the end of the decade—down from a previously projected 48% market share to just 27%.
Key factors behind this shift include the rollback of national fuel economy targets, threats to provisions in the Inflation Reduction Act, and potential revocation of California’s authority to set its own air quality standards. While global EV sales continue to grow, especially in Asia and Latin America, the U.S. policy environment is dampening domestic momentum.
This slowdown is also impacting the battery industry, with BNEF cutting its global battery demand outlook by 8% through 2035, largely due to a 42% drop in expected U.S. EV battery demand. The resulting overcapacity is pushing battery costs down and intensifying competition, particularly in China, where average battery plant utilization has fallen below 50%. Despite these headwinds, long-term demand for battery metals remains strong as EV adoption continues across other global markets.
Technology:
June 22: Moratorium on state AI regulation clears Senate hurdle
A controversial provision to block state-level AI regulations for the next decade has cleared a key procedural hurdle in the U.S. Senate, advancing as part of Republicans’ broader “One Big, Beautiful Bill.”
The measure, rewritten by Senate Commerce Chair Ted Cruz to comply with budgetary rules, would withhold federal broadband funding from states that attempt to enforce their own AI laws. The Senate parliamentarian ruled that the provision does not violate the Byrd rule, allowing it to proceed under reconciliation and pass with a simple majority.
However, internal GOP divisions remain. Senators like Marsha Blackburn have voiced opposition, citing concerns over states’ rights, while House Representative Marjorie Taylor Greene has called for the provision’s removal. Despite this, House Speaker Mike Johnson defended the moratorium, emphasizing national security risks posed by a fragmented regulatory landscape.
Critics, including advocacy group Americans for Responsible Innovation, warn that the broadly worded proposal could eliminate a wide range of state-level protections without offering federal alternatives. Meanwhile, states such as California, New York, and Utah continue to pursue their own AI legislation, underscoring the ongoing tension between federal and state authority in emerging technology governance.
June 19: ChatGPT use linked to cognitive decline: MIT research
A new study from MIT’s Media Lab suggests that prolonged use of ChatGPT may impair critical thinking and cognitive function, particularly among younger users.
Researchers divided participants into three groups—those using ChatGPT, Google Search, and no digital tools (“brain-only”)—and tasked them with writing SAT-style essays over several months. Brain activity was monitored using electroencephalography (EEG), revealing that the ChatGPT group exhibited the lowest levels of neural engagement and consistently underperformed across neural, linguistic, and behavioral metrics.
Initially, participants used ChatGPT for structural guidance, but by the end of the study, many were copying and pasting entire essays. In contrast, the “brain-only” group demonstrated the strongest and most widespread brain activity. Lead researcher Nataliya Kosmyna expressed concern about the implications for developing minds, warning against early educational integration of AI tools.
Despite these findings, AI use in education is expanding, with President Trump recently signing an executive order to incorporate AI into classrooms as part of workforce development efforts. The study raises critical questions about balancing innovation with cognitive development in the age of AI.
For Fun:
June 22: First images from world’s largest digital camera leave astronomers in awe
The Vera C. Rubin Observatory in Chile has released its first images, showcasing the extraordinary capabilities of its 3,200-megapixel digital camera—the largest ever built.
Captured during a trial phase that began in April, the images include a stunning composite of the Trifid and Lagoon Nebulae, created from 678 monochromatic exposures taken over seven hours using four different filters. The observatory, located atop Cerro Pachón in the Andes, is a $810 million U.S.-led project designed to map the entire southern sky every three to four nights.
While telescopes like Hubble and James Webb offer higher resolution for narrow fields, the Rubin Observatory’s wide field of view allows for rapid, large-scale sky surveys. The initial images, though primarily aesthetic, demonstrate the camera’s ability to scan vast regions with high sensitivity and speed.
Astronomers and engineers involved in the project expressed awe and pride, emphasizing both the scientific potential and the visual beauty of the cosmos. The observatory’s full scientific mission is now set to begin, marking a new era in astronomical observation.
June 18: These moths use the stars to navigate on an epic migration
Bogong moths (Agrotis infusa) have been discovered to use the stars for navigation during their long-distance seasonal migrations, making them the first known invertebrates to do so.
Each spring, billions of these moths travel hundreds of kilometers from southeastern Australia and parts of New Zealand to the Australian Alps, guided solely by the austral night sky. A study published in Nature on June 18 revealed that the moths can orient themselves using celestial cues alone, even in the absence of magnetic fields.
Researchers tested this by placing wild moths in a flight simulator that projected the night sky and manipulated magnetic fields. The moths successfully navigated in the correct seasonal direction using only starlight, and also when only magnetic cues were available. The study identified unique visual neurons in the moths’ brains that respond to features of the sky, including the Milky Way, suggesting an internal celestial compass.
This dual navigation system allows them to adapt to cloudy skies or magnetic disturbances. The findings highlight the remarkable capabilities of even the smallest nervous systems and open new avenues for understanding neural mechanisms of navigation in insects.