IRS Issues Final Regulations for Card-Based Tax Payments
The IRS and Treasury Department have issued final regulations allowing the IRS to directly accept federal tax payments by credit or debit card, implementing provisions of the Taxpayer First Act. These regulations eliminate the need to route taxpayers through third-party payment processors, with the goal of simplifying the payment process, reducing the costs associated with processing paper checks, and encouraging timely tax payments. Under the new rules, the IRS may contract directly for card payment services and pay the associated transaction fees, provided those costs are fully recovered through a reimbursement fee charged to the taxpayer. Taxpayers should be aware that the reimbursement fee is separate from the tax payment itself and is not considered a tax. Consequently, the fee is not eligible for a refund or credit under Internal Revenue Code Section 6402. The final regulations apply to tax payments and reimbursement fees made on or after October 19, 2026.
Musk’s Proposed SpaceX Stock Giveaway Highlights Potential Tax Benefits & Risks
Elon Musk’s proposed donation of one share of SpaceX stock to each of approximately 73 million American children next year could be valued at roughly $10.7 billion, based on the current stock price. While the initiative is intended to expand investment opportunities for children, it could also generate significant tax savings for Musk. Donating the appreciated SpaceX shares rather than selling them could help Musk avoid an estimated $2.6 billion in federal capital gains taxes.
This strategy reflects a broader trend among wealthy individuals and technology companies using stock donations and charitable structures to distribute wealth while potentially reducing their tax liabilities. A recent example is Michael & Susan Dell’s $6.25 billion pledge donation earlier this year to eligible children to fund their Trump accounts. Although these arrangements may provide meaningful benefits, the extent of the tax advantages depends on the structure of the donation and the applicable tax rules. For recipients, the benefits may come with important limitations. Shares contributed to Trump Accounts would generally be subject to a five-year holding requirement before they could be sold, and account holders may have limited control over the investments they receive. The proposal also raises questions about investment risk and administrative requirements.
Social Security Administration Announces 3.6% Benefit Increase for 2027
The Social Security Administration (SSA) has announced a 3.6% cost-of-living adjustment (COLA) for 2027, increasing average monthly retirement benefits by approximately $75. Nearly 72 million Social Security beneficiaries are expected to receive higher payments beginning in January 2027, while approximately 7.3 million Supplemental Security Income (SSI) recipients will see their increased benefits beginning December 31, 2026. The annual adjustment is calculated using changes in the Consumer Price Index to help account for inflation and rising living costs. Beneficiaries can access their COLA notices online beginning in late November by establishing a personal My Social Security account and selecting paperless delivery by November 18, 2026. Those who do not opt for electronic delivery will generally receive notices by mail in December.
IRS Waives Dyed Diesel Fuel Excise Tax Penalties Through Year-End
The IRS has announced temporary federal tax relief allowing dyed diesel fuel to be sold for or used in highway vehicles without penalties through December 31, 2026. Authorized in response to the President’s October 5, 2026, Executive Order, the relief applies retroactively to October 1, 2026. Under normal rules, dyed diesel fuel is generally exempt from federal excise tax because it is intended for off-highway uses, such as farming. During the relief period, the IRS has suspended standard collection and enforcement procedures, including federal on-road inspections related to this use. Sellers are also not required to document the fuel’s ultimate use, and taxpayers are not required to maintain records to substantiate eligibility for the penalty relief.
The waiver specifically covers penalties for failing to make required semi-monthly federal excise tax deposits or maintain adequate records. However, the relief applies only to federal tax requirements and does not change applicable state tax obligations. The IRS has indicated that additional guidance is forthcoming regarding potential payment postponements.
IRS Begins Issuing Automatic Refunds for Adoption Tax Credit Carryforwards
The IRS has begun issuing automatic refunds to more than 50,000 taxpayers following Treasury Department guidance clarifying changes under the Working Families Tax Cuts. For tax year 2025 only, taxpayers may be able to use adoption tax credit carryforwards from 2020 through 2024 to increase the refundable portion of their 2025 adoption tax credit, up to $5,000 per qualifying child. This change may provide additional tax relief to eligible families who previously carried forward unused adoption credits and could not fully benefit from them in prior years.
Taxpayers who filed their 2025 federal income tax returns before April 15, 2026, generally do not need to file amended returns to receive the adjustment. The IRS is reviewing eligible accounts and will issue notices within 30 days of each adjustment, explaining the refund amount or whether the funds were applied to outstanding tax or other qualifying liabilities. Returns filed under extension, as well as accounts affected by freezes or identity theft concerns, are expected to be reviewed later in 2026.
