taxes

In the U.S., virtually all of the income you earn is subject to federal income tax. There are specific rules you need to follow regarding how much you pay, as well as the deductions that you are allowed to claim.

The IRS recently announced some changes to the tax rules for 2026, and those changes could affect how much you end up paying. Since these changes are for the 2026 tax year, they will be in effect for income you earn starting in January of 2026 and will affect the tax return that you file in April of 2027.

Here’s what you need to know about two of the big changes that will impact your finances in the 2026 tax filing year.

1. Tax brackets are changing

The first change that is taking place relates to the tax brackets. As the tables below show, the income ranges within each tax bracket are changing.

Tax brackets exist in the U.S. because we have a progressive income tax system. You do not pay the same tax rate on all of the income that you earn. Tax brackets set the rates that you will pay at different income ranges.

For example, everyone — no matter how much they earn — pays 10% on the first $11,925 in earnings they have in 2025. And in 2026, everyone will have a little more of their income taxed at that ultra-low tax rate since they won’t move up to the 12% bracket unless they have earned more than $12,400.

With these changes to the tax brackets, the taxes that most people pay should decline because they can now earn more income before moving up to the next tax bracket and paying a higher rate.

2. The standard deduction is changing

There’s another big change coming for the 2026 tax filing year. As the table below shows, this change is to the standard deduction.

Image source: The Motley Fool.

The majority of tax filers claim the standard deduction, which means they can subtract this set amount from their taxable income when determining how much they owe.

For example, if you make $45,000 a year, you are not taxed on $45,000. You can subtract the amount of the standard deduction from this amount. If you are a single filer or married filing separately, this would mean you could subtract $15,750 in 2025 and $16,100 in 2026. So, you would be taxed on $29,250 in income in the 2025 tax year and on $28,900 in 2026.

Not everyone claims the standard deduction because some people opt to itemize deductions on their return. Itemizing means claiming deductions for specific things like mortgage interest and charitable contributions.

It only makes sense to itemize if the value of your itemized deductions adds up to more than the standard deduction — which is not the case for most people. And, as the standard deduction increases, itemizing makes sense for fewer and fewer people.

How will these changes affect your taxes in 2026?

With a higher standard deduction and income thresholds to move into higher tax brackets increasing, your tax bill should go down in 2026.

You will pay tax on less income due to being able to deduct 2.22% more money, and more of your income will be taxed at lower rates since it takes more income to move up to a higher bracket.

This makes sense, since tax brackets increase each year because of inflation. Each dollar you earn buys less every year as prices rise, so if the tax brackets never changed, taxpayers would be pushed into higher brackets without a real increase in earning power.

Other tax changes will take effect in 2026, thanks to the Big Beautiful Bill, including an added deduction for seniors. All of this means that many people should expect their federal income tax bill to look very different for the 2026 tax year.

THE chancellor could raise tens of billions from tax reforms that don’t hit “working people”, leading economists have said.

Rachel Reeves is under pressure to fill an estimated £50billion black hole in the public finances ahead of November’s autumn statement. 

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Westminster is awash with rumours that Labour could extend the freeze on income tax thresholds.

However, critics say this would mean breaking Labour’s manifesto pledge not to increase taxes on “working people”.

But in a new report, the Institute for Fiscal Studies (IFS) urged the Chancellor to resist “half-baked” solutions like “simply hiking rates”. 

The IFS Green Budget Chapter report instead urges the chancellor to reform the “unfair” and “inefficient” tax system.

End capital gains tax relief on death

Reeves could scrap capital gains tax relief on death, the report said.

When you sell certain assets – like houses, land or other valuable items – you have to pay a tax on the profit you made on it.

However, there are some important exceptions.

For example, if someone dies and you inherit their asset, you don’t have to pay capital gains tax they would have paid.

But the IFS said Reeves should consider scrapping the relief, raising £2.3billion in 2029-30.

However, families could oppose the measure given Labour is already skimming more revenue off inherited wealth.

The inheritance tax threshold has been frozen at £325,000 since 2009.

And last year, Reeves announced she would extend the freeze until 2030.

Hit taxpayers with a ‘one-off’ wealth tax

Economists and politicians are often divided over whether a wealth tax would work.

Supporters argue that the UK’s richest 1% are wealthier than the bottom 70% – and that a wealth tax would reduce this inequality.

But critics say it would be an administrative nightmare and lead millionaires to leave the country, taking their businesses and tax revenues with them.

But if Labour does reach for wealth in the budget – it should opt for a “one-off” wealth tax, the IFS said.

The think tank argues this is a better option than a recurring wealth tax.

It would work by the government calculating how much people’s total assets are worth and taxing them over a certain threshold.

“An unexpected and credibly one-off assessment of existing wealth could in principle be an economically efficient way to raise revenue,” the IFS wrote.

However, a wealth tax that happened on a regular basis would have “serious drawbacks,” the think tank warned.

Valuing everyone’s wealth every year would be “extremely difficult,” it said.

Moreover, a regular tax could deter the highest tax payers from residing in the UK long-term, potentially hitting overall tax revenues.

But the IFS said that even a “one-off” levy could spell trouble if people don’t trust the government not to come back for more.

The report said: “The potential efficiency of such a tax could be
undermined, however, if announcing a one-off tax created expectations of, or uncertainty about, other future taxes.”

Double the council tax rates paid by highest value homes

A new council tax surcharge could raise up to £4.4billion.

Council tax is a local tax on residential properties in the UK, with homes assigned to Bands A to H based on their value.

Bands G and H generally include the highest value homes.

The IFS said doubling the council tax paid by these households could mean a £4.4billion boost.

However, critics already say the council tax system is “unfair and arbitrary”.

As reported by The Sun, families living in modest homes sometimes pay more than those in multi-million-pound mansions.

The root of the problem is simple – council tax bills are not based on what your home is worth today.

Instead, it’s based on its value way back in 1991, when homes were categorised into bands ranging from A to H. 

Decades of uneven house price growth mean this once-simple system is now riddled with inequalities.

Moreover, councils set their own tax rates – leading to a “postcode lottery”.

The average Band D council tax in England is £2,280, but councils set their own rates.

For example, in Wandsworth, people pay just £990, while in Nottingham, they pay £2,656.

This means that millions of homeowners pay much less compared to their property’s value than those in poorer areas, according to PropertyData.

Another potential problem is that the extra cash would go to local authorities rather than central government.

Local authorities use council tax to pay for local services like schools, bin collections and libraries.

So to make sure it reaps the benefits of the change, Downing Street could reduce the grants being paid to councils, the IFS said.

The UK government gives councils more than £69billion in funding – a 6.8% increase in cash terms compared to 2024-25.

But councils would likely still fight back against any funding downgrade – with sticky 3.8% inflation already eating into their grants.

Rejig inheritance tax

The IFS admits that changes to inheritance tax could ‘provoke’ strong reactions.

But its report said that the £9billion said annually is ‘modest’ – although high by historical standards.

Reforming death duties to abolish the additional £175,000 tax-free allowance could raise around £6billion, the economists wrote.

“One obvious option would be to increase the rate of inheritance tax from its current 40%,” the economists wrote.

They said an increase of just 1% would raise £0.3billion in 2029–30.

The government could also reduce the threshold at which the tax begins to be paid.

Currently, people can pass on up to £325,000 of wealth tax-free.

Then there’s an additional £175,000 tax-free allowance that can be used only when passing on a primary residence to a direct descendant.

Abolishing the second of these allowances, for example, could raise around £6billion in 2029–30, the IFS said.

Crack down on businesses underpaying their taxes

The think tank has urged Labour to tackle tax non-compliance.

Corporation tax, a tax on company profits, has become increasingly important to the Treasury’s coffers in recent years.

Over the course of the 2010s, revenue averaged 2.4% of national income, rising to 3.3% in 2025–26.

But corporation tax dodging meant 15.8% of liabilities went unpaid in 2023-24, up from just 8.8% in 2017-18.

Small businesses are mainly to blame, the IFS said, admitting that claiming the prize of missing corporation tax “would not be straightforward in practice”.

The think tank added: “More work is needed to understand why so many small companies are submitting incorrect tax returns.

“It is likely that tackling the gap would require targeted
compliance activities from HMRC, such as auditing small businesses.”

The IFS also said “more revenue could be raised from corporation tax”.

However, it did warn that, while a 1% increase would raise £4.1billion, there could be adverse consequences.

The authors wrote that investment in the UK could become “less attractive” and reduce future tax yields.

However, critics may argue that any tax hike hitting members of the public – even if targeting inheritance or council tax – will still feel like a broken promise.

What must the chancellor avoid doing?

The personal tax allowance has been frozen at £12,570 since April 2021.

Prime Minister Rishi Sunak announced the freeze would remain until April 2026 and Labour extended it until April 2028.

Extending the freeze on personal tax thresholds including national insurance contributions would raise around £10.4billion a year from 2029-30.

But IFS economists say Reeves must not do this – and instead lift the threshold amid rising inflation.

Extending the freeze would be a breach of Labour’s manifesto pledge not to increase taxes for “working people” which includes income tax, national insurance and VAT, the IFS said.

The report’s authors also said restricting income tax relief on pension contributions would raise large sums but should be avoided.

Currently, when you put money into a pension, the income tax you’ve already paid on that money is essentially returned via a government top-up.

The IFS said restricting relief would be “unfair” to penalise pensions again when pension income is already taxed.

The Chancellor should also resist the temptation to up stamp duties, the IFS said.

The think tank fears it would cause people to avoid selling their homes when they want to – hitting the jobs market and holding back growth.

“Changing rates and thresholds is all very well, but unless the Chancellor is willing to pursue genuine reform it will be taxpayers that shoulder the cost of her neglect,” the report, which forms a chapter in the IFS’s wider budget assessment for 2025, said.

Isaac Delestre, a senior research economist at the think tank and an author of the chapter, said Ms Reeves would have “fallen short” if she reaches for quick revenue without wider reform.

“Almost any package of tax rises is likely to weigh on growth, but by tackling some of the inefficiency and unfairness in our existing tax system, the Chancellor could limit the economic damage,” he said.

Analysts say the cuts in the Goods and Services Tax is aimed at boosting demand in the wake of 50 percent tariffs on Indian goods.

India has announced tax cuts on hundreds of consumer items ranging from soaps to small cars to spur domestic demand in the face of economic headwinds from punishing tariffs imposed by US President Donald Trump.

The measures come as the 50 percent US tariffs took effect last month, raising fears of an economic slowdown.

The Goods and Services Tax (GST) has been overhauled to simplify India’s complex four-tier system into two slabs and cut levies across sectors, in some cases by more than half, announced Finance Minister Nirmala Sitharaman.

Sitharaman said a panel, which looked into the GST reforms, approved cuts in consumer items such as toothpaste and shampoo to 5 percent from 18 percent, and on small cars, air conditioners, and televisions to 18 percent from 28 percent.

The panel, which is headed by Sitharaman, approved the two-rate structure of 5 percent and 18 percent, instead of the four rates currently.

The new tax regime makes insurance premiums, including life and health coverage, tax-free.

The finance minister insisted the GST cuts were not linked to the “tariff turmoil”, saying they were part of long-planned reforms.

Federal and state governments are estimated to lose 480 billion Indian rupees ($5.49bn) due to the cuts that will be implemented from September 22, the first day of the Hindu festival of Navratri.

40 percent tax on ‘super luxury and ‘sin’ goods

Coupled with cuts in personal tax unveiled in February, the GST reductions are expected to boost consumption in the South Asian nation, whose economy grew at an unexpectedly higher pace of 7.8 percent in the quarter to June.

“The consumption boost in lieu of the GST rate rationalisation will more than neutralise any possible revenue impact,” said Soumya Kanti Ghosh, chief economist at SBI.

“The impact on fiscal deficit will be almost insignificant or even positive.”

The panel approved a tax of 40 percent on “super luxury” and “sin” goods such as cigarettes, cars with engine capacity exceeding 1,500 cubic centimetres (91.5cu inches), and carbonated beverages, the minister said.

The move is expected to boost sales of fast-moving consumer goods firms such as Hindustan Unilever and Godrej Industries, and consumer electronics companies such as Samsung Electronics, LG Electronics, and Sony.

Carmakers such as Maruti, Toyota Motor, and Suzuki Motor are expected to be big winners. The rush to cut the tax was triggered by Prime Minister Narendra Modi’s call for greater self-reliance in India, pledging last month to lower the GST by October to counter the US tariffs of up to 50 percent.

After the tax cuts announced on Wednesday, Modi said, “The wide-ranging reforms will improve lives of our citizens and ensure ease of doing business for all, especially small traders and businesses.”

HOUSEHOLDS across the country are being warned to brace for a financial squeeze as the cost of government borrowing skyrockets to levels not seen since 1998.

This now directly threatens to push up mortgage rates and could usher in a new wave of tax hikes.

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The pound has tumbled in response to the growing unease, highlighting investor concern over the UK’s economic stability. 

At the heart of the issue are government bonds, known as “gilts,” which the government issues to borrow money.

These bonds offer investors a return, referred to as the “yield.”

In recent weeks, gilt yields have been rising rapidly, making it more expensive for the government to borrow.

This morning, yields soared further, with 30-year gilts reaching 5.72% – the highest level in nearly 30 years – while 10-year gilts climbed to 4.85%.

This spike signals that investors are nervous.

They are demanding a higher return to lend to the UK, worried about stubborn inflation and a gaping £51billion hole in the nation’s finances.

The rise in government borrowing costs is putting serious pressure on household budgets in two key ways

Firstly, it’s driving up mortgage rates.

The link between government gilt yields and mortgage rates is direct and unavoidable.

Lenders use “swap rates,” which closely track gilt yields, to set the prices of fixed-rate mortgage deals.

As these rates climb, fixed mortgages become more expensive.

Since August 1, two-year swaps have risen from 3.56% to 3.74%, while five-year swaps have gone from 3.63% to 3.83%.

Major lenders like Barclays have already started increasing rates, and even a small rise can add significantly to monthly payments on a typical £200,000 mortgage.

With swap rates continuing to rise in recent weeks, experts warn that mortgage rates are likely to increase further.

Separately, Chancellor Rachel Reeves faces a difficult challenge in her Autumn Budget, scheduled for November.

Higher borrowing costs are eating into public funds, and many economists believe tax increases will be necessary to fill the financial gap.

Although the government has promised not to raise income tax, national insurance, or VAT for “working people,” other tax measures are reportedly being considered.

One proposal is applying National Insurance to rental income, which critics fear could result in landlords passing on the cost to tenants through higher rents.

Another idea being debated is replacing stamp duty with an annual property tax, which could affect homeowners.

There are also rumours of reducing pension tax relief or cutting the tax-free lump sum, moves that could generate billions but might hurt savers.

Plus, there’s speculation about lowering the VAT threshold, which would bring more small businesses into the tax system.

This could increase their costs and potentially lead to higher prices for consumers.

Reeves is expected to make economic growth the centrepiece of her next Budget, warning that Britain’s economy is “stuck” and in need of bold solutions.

What can you do about it?

None of the proposed changes have been confirmed yet, and the government hasn’t ruled them out either.

However, any new measures won’t take effect until after the Budget in November.

It’s important not to make rash decisions based on speculation.

If changes are announced, you’ll have time to act and protect your finances before they come into effect.

For instance, if stamp duty is replaced by an annual property tax from a certain date, you could move house before the deadline to avoid the extra cost.

Similarly, if the government introduces capital gains tax on high-value properties, you might consider downsizing to a smaller home before the change is implemented.

 Rob Morgan, chief analyst at Charles Stanley, said: “Taking pre-emptive action can outright backfire.

“Last year some people were concerned about restrictions around taking tax free cash from pension and took withdrawals they wouldn’t have otherwise made.

“This removed the money from a tax-efficient environment and potentially stored up tax issues that will come back to haunt them.

“Instead, it’s best to wait to see what happens, consider the consequences, and take advice as required before acting.”

Most of the proposed measures are likely to affect only the very wealthy, so you may not be impacted at all.

If you’re concerned, there are steps you can take to prepare and safeguard your finances.

Check your financial health

If you are worried about your finances then you should speak to a financial adviser.

They will be able to offer you advice about your situation and explain if any of the measures will affect you.

You can find one using unbiased.co.uk – but remember, you will pay a fee.

It’s good practice to sit down and take stock of your finances every six months and work out a plan.

Work out all your bills and outgoings and what income you have and factor in any changes, such as bills going up or new income streams.

Think about what you need to do to make the most of your money. For example, do you need to prioritise paying off debts or saving for a house deposit.

Our guide to paying less tax legally could help you avoid giving away more cash to the tax man than necessary.

Review your mortgage deal

If your mortgage deal is coming to an end soon, act now.

Locking in a fixed rate could shield you from rising rates and market uncertainty.

Aaron Strutt, of mortgage broker Trinity Financial, said “For the moment there have not been significant price hikes but it’s probably worth locking in a mortgage rate if you are buying somewhere or due to remortgage, to try and keep away from any market turbulence.”

If you are coming to the end of a fixed deal, most lenders let you lock in a new rate up to six months beforehand, which can be worth doing.

If rates fall after you agree a new deal, some lenders will let you sign a new one at a lower rate.

Think when investing

Gold prices surged to a record high of $3,546.99 per ounce (£2,643.82) on Wednesday, marking its seventh consecutive daily rise.

Investors are flocking to the precious metal as a safe haven amid inflation fears and fiscal uncertainty.

However, financial advisers suggest maintaining a balanced and diverse investment portfolio as a better strategy for managing market volatility.

A small allocation to gold (5-10%) can be useful, but it shouldn’t be the core of your investment plan, according to Charles Stanley.

Don’t forget a will

If you’re concerned about potential changes to inheritance tax, it’s essential to have a will in place.

Without a will, your estate will be subject to intestacy rules, which could result in a higher inheritance tax bill.

This is especially important for unmarried couples, as they won’t automatically inherit from each other, even if they’ve lived together for years.

Check how to make one in our guide.

Make your savings work harder

More than 31million bank customers have £186billion in savings accounts earning just 1.5% interest, according to banking app Spring.

These accounts generate £2.3billion a year in interest, but savers could earn over three times more by switching to accounts offering up to 5% interest, The Sun can reveal.

The average bank customer has around £10,000 in savings, according to Raisin.

If that £10,000 is kept in an easy access account earning 1.5% interest, it would generate just £150 in interest each year.

But switching to Cahoot’s 5% easy access account would boost that to £500, earning you an extra £350.

If your savings account pays less than the current inflation rate of 3.8%, it’s time to look for a better deal.

Aug. 26 (UPI) — President Donald Trump threatened to raise tariffs and restrict U.S. chip exports on countries that have a digital services tax.

He wrote on Truth Social Monday that digital service taxes, largely implemented by Britain and the European Union, “are all designed to harm, or discriminate against, American Technology.”

“I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A.,” Trump wrote.

He added that the United States would also “institute Export restrictions on our Highly Protected Technology and Chips.”

“Show respect to America and our amazing Tech Companies or, consider the consequences!” he wrote.

The taxes are meant to apply only to the largest tech companies like Alphabet, Meta and Amazon, which are based in the United States. The countries that have digital services taxes argue that tech titans like Amazon operate within their borders and generate huge profits from their people while paying little or no taxes to those governments.

The U.K.’s digital services tax raises about $1.1 billion annually from global tech companies through a 2% tax on revenues. Trump said these taxes “outrageously give a complete pass to China’s largest tech companies.”

France, Italy and Spain also have DSTs.

Trump declared in June that he would cut off all trade talks with Canada over the tax, which it had recently passed. When Canada quickly removed its tax just before it was set to turn on, the White House boasted that Canada had “caved” to pressure.

In February, Trump signed an executive order titled Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties, threatening tariffs.

In April, it emerged that Keir Starmer offered big U.S. tech companies a reduction in the headline rate of the DST to appease Trump, at the same time applying the tax to companies from other countries.

KEMI Badenoch has thrown down the gauntlet to Keir Starmer on the economy demanding no stealth taxes on Brits.

The Tory leader has written to the Prime Minister saying “tax rises are a choice”.

She has challenged him to repeat Chancellor Rachel Reeves’ promise at the Budget last year not to extend the freeze on income tax and National Insurance thresholds.

Failing to end the freeze as planned in 2028 would mean millions more Brits are forced into paying a higher rate of tax under fiscal drag.

This is when people are pulled into higher income tax brackets as inflation pushes their wages up.

It comes after a bombshell report said the Chancellor must find £50billion in her autumn Budget to keep the country’s finances in check.

She will have to raise taxes or cut spending to maintain her stated financial cushion of £9.9billion by the end of the decade, according to the National Institute of Economic and Social Research.

At the Budget, Ms Reeves said: “Extending the threshold freeze would hurt working people.

“It would take more money out of their payslips.

“I am keeping every single promise on tax that I made in our manifesto, so there will be no extension of the freeze in income tax and national insurance thresholds.”

Ms Badenoch asked the PM: “I am writing to you to ask: does this remain government policy?”

A Labour spokesperson said: “We’ll take no lectures from this failed Tory Party.

“They crashed the economy which sent bills and mortgages rocketing, and left a £22 billion blackhole.

“Kemi Badenoch’s next letter should be an apology to hard-pressed households for the Conservatives’ role in hammering their family finances.

“Labour is the only party focused on creating a fairer Britain.”

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Taxes must rise in the autumn if Chancellor Rachel Reeves is to meet her self-imposed borrowing rules, according to an economic think tank.

The National Institute of Economic and Social Research (Niesr) said the government was on track to miss the target it has set itself by £41.2bn.

It recommended “a moderate but sustained increase in taxes” including reform of the council tax system to make up the shortfall.

The government said “the best way to strengthen public finances is by growing the economy”, but the Conservatives said Labour “always reaches for the tax rise lever”.

When she became chancellor, Reeves set out two rules for government borrowing, which is the difference between public spending and tax income.

The first rule was that day-to-day spending would be paid for with government revenue, which is mainly taxes. Borrowing can only be for investment.

The second rule was that debt must be falling as a share of national income by the end of a five-year period.

Reeves has repeatedly said these rules are “non-negotiable”.

The chancellor originally promised not to raise taxes further, but recently refused to rule it out after disappointing data on economic growth.

Stephen Millard, deputy director for macroeconomics at Niesr, said Reeves “will need to either raise taxes or reduce spending or both in the October Budget if she is to meet her fiscal rules”.

Niesr argues that raising taxes would help build a “buffer” that would reassure investors about the stability of the UK’s public finances.

That in turn “may reduce borrowing costs” for the government, it said.

Niesr said the £41bn shortfall in the government’s budget was in part due to weakening growth over the past few months, resulting in a lower tax take and higher government borrowing.

But the reversal of welfare cuts, which were originally designed to save £5.5bn a year by 2030, had also had an impact, it said.

The welfare cuts were watered down, following opposition from within the Labour Party, and are now expected to save less than half the original amount.

As a result the chancellor now faced a “trilemma”, the thinktank said, over which of her pledges to fulfill: meeting her spending commitments, her manifesto promises to avoid tax rises on working people, or meeting the limits she has set on borrowing.

One of these commitments will need to be dropped, Niesr concluded, but it said the government should prioritise protecting public expenditure that supports the most vulnerable, while also safeguarding public investment which supports future growth.

Niesr said the government’s other priority should be policies to promote growth and productivity, to boost living standards across the UK.

It said that the living standards of the poorest 10% of the population were now 10% lower than pre-Covid levels.

When Labour came to power a year ago, it said it wanted to make the UK the fastest growing country in the G7 group of nations.

However, the UK had faced trade policy uncertainty and geopolitical risk, as well as domestic challenges, the thinktank said.

Niesr said its analysis suggested the economy would grow “modestly” at 1.3% in 2025 and 1.2% in 2026, placing the UK in the middle of the G7 economies.

The IMF recently said it thought the UK was set to be the third fastest growing economy out the world’s so-called most advanced economies this year and the next, after US and Canada.

Niesr said inflation, the rate at which prices are rising, remained “stubborn” and would be 3.5% this year and 3% next year.

The think tank, which is not affiliated to any political party or movement, did not suggest which taxes should rise or by how much.

However, it added that the government should also consider reducing welfare spending by speeding up plans to help people relying on benefits get into work.

The chancellor should also consider reforming council tax or even replacing it altogether with a land value tax, Niesr suggested.

A Treasury spokesperson said: “As set out in the plan for change, the best way to strengthen public finances is by growing the economy – which is our focus.”

However, shadow chancellor Sir Mel Stride accused Labour of not understanding the economy.

“Experts are warning Labour’s economic mismanagement has blown a black hole in the nation’s finances which will have to be filled with more tax rises – despite Rachel Reeves saying she wouldn’t be back for more taxes,” he added.

RIO DE JANEIRO — Brazilian President Luiz Inácio Lula da Silva said Thursday that he will impose retaliatory tariffs on the United States if President Donald Trump follows through on a pledge to boost import taxes by 50% over the South American country’s criminal trial against his predecessor, Jair Bolsonaro.

Lula said he will trigger Brazil’s reciprocity law approved by Congress earlier this year if negotiations with the U.S. fail.

“If there’s no negotiation, the reciprocity law will be put to work. If he charges 50 [% tariffs] from us, we will charge 50 from them,” Lula told Record in excerpts of an interview. “Respect is good. I like to offer mine, and I like to receive it.”

Lula’s comments raise the risk of a tariffs war erupting between the two countries, similar to what has happened between the U.S. and China. Trump has vowed to respond forcefully if countries seek to punish the U.S. by adding tariffs of their own.

The tariffs letter that Trump sent to Brazil — and posted on social media Wednesday — railing against the “witch hunt” trial against Bolsonaro opened up a new front in his trade wars, with the U.S. leader directly using import taxes to interfere with another nation’s domestic politics. Trump has already tried to use tariffs to ostensibly combat fentanyl trafficking and as a negotiating tool to change how other nations tax digital services and regulate their economies.

In Brazil’s case, Trump is trying to dictate the outcome of the criminal trial of Bolsonaro, an ally who, like Trump, has been charged with attempting to overturn a presidential election. Bolsonaro maintains that he is being politically persecuted by Brazil’s Supreme Court over his charges on the alleged plot to remain in power after his 2022 election loss to Lula.

“There’s nothing Lula or Brazil can do about Bolsonaro’s trial,” said Carlos Melo, a political science professor at Insper University in Sao Paulo. “Any change in that would be Brazil’s capitulation. Bolsonaro’s situation here won’t change. How do you negotiate over that?”

Lula ordered his diplomats on Thursday to return Trump’s letter if it physically arrives at the presidential palace in Brasilia. The document attacks the country’s judiciary and mentions recent rulings on social media companies among the reasons why goods from the South American nation will have higher tariffs from Aug. 1.

Trade negotiations now ‘up in the air’

Trump has initiated his tariffs under the 1977 International Emergency Economic Powers Act, saying in April that the persistent deficit between what the U.S. exports and what it imports is a national crisis.

But the U.S. runs a trade surplus with Brazil, undermining some of the rationale.

A staffer of Brazil’s foreign ministry told the Associated Press that trade negotiations that were ongoing since Trump imposed a first set of tariffs in April are now “up in the air.”

Some members of the Lula administration say Trump’s move is actually aimed at Brazil’s connection with other Southern economies, as displayed on Sunday at the summit of BRICS nations hosted in Rio de Janeiro. Brazil’s president once again mentioned the hope for an alternative currency to the dollar for transactions, a topic that frequently draws Trump’s ire.

“Trump was never worried about democracy anywhere, much less with Bolsonaro’s destiny,” said Gleisi Hoffmann, Brazil’s institutional relations minister. “What he fears is the strengthening of the commercial and financial relations of the global south, which Brazil is helping to build in the BRICS bloc and in other forums. We won’t be Trump’s hostages.”

Brazil’s new unity

Trump’s interference in Brazilian affairs has brought a sense of unity that was largely absent in the politically divided nation. Some of Bolsonaro’s allies claimed Lula had drawn the U.S. president’s anger with other decisions, including criticism of Israel’s war in Gaza. But other supporters of the former president chose to ask for prudence in negotiations.

Daily newspaper O Estado de S. Paulo, a frequent critic of Lula and his administration, said in an editorial on Thursday that Trump’s move against the Brazilian government is “a mafia thing.” It also said Lula’s reaction was correct, a rare feature for the newspaper.

“Trump meddles in a degrading form into Brazil’s affairs,” the editorial said. “It is true that Trump has no respect for liturgy and rituals of the relations between States, but even for his standards the letter sent to the Brazilian government crossed every boundary.”

While Trump has talked tough, it has not necessarily produced his desired political outcomes abroad. Canadians recently elected Mark Carney as prime minister, with his Liberal Party reenergized by Trump’s tariffs and threats to make Canada the 51st U.S. state.

Analysts also see Trump’s attempt to interfere in the country’s domestic affairs as a potential backfire for Bolsonaro during his trial and a push for Lula, whose reelection bid was facing unpopularity headwinds this year.

“The reaction of a lot of people is that this is a political gift to Lula,” said Andre Pagliarini, a professor of history and international studies at Louisiana State University who is also affiliated with the Quincy Institute for Responsible Statecraft.

Thomas Traumann, an independent political consultant and former Brazilian minister, called Trump’s move “a game changer” for next year’s election.

“Trump put Lula back in the game,” Traumann said. “This gives Lula a narrative, puts Bolsonaro as the guilty part for any economic problems.”

Exceeding the authority

The U.S. Court of International Trade ruled in May that Trump had exceeded his authority by declaring an emergency to impose tariffs without congressional approval. The Trump administration is appealing that decision, but opponents plan to use his Brazil letter to bolster their case.

“This is a brazenly illegal effort by Donald Trump to sacrifice the economy to settle his own personal scores, and it is far outside his legal authority,” said Democratic Oregon Sen. Ron Wyden.

The Republican administration has argued that their tariffs are now relatively harmless for the U.S. economy, since inflation has trended down in recent months. But many companies stockpiled imports to get ahead of the import taxes, and it’s unclear what happens when their inventories dwindle and consumers consider the risk of higher prices. Most outside economic analyses expect growth to decline.

In Brazil, Trump’s interest in Bolsonaro’s trial is expected to weigh over the trial. Media outlets have reported that lawmakers and judges are worried the former president will try to leave Brazil for the U.S. if he is convicted.

“We can’t rule out that Trump will give him some sort of exile later and is hiking tariffs to prepare his excuse,” said Melo, the professor in Sao Paulo. Bolsonaro’s passport was seized by Brazil’s Supreme Court because he is perceived as a flight risk.

Lawmaker Eduardo Bolsonaro, a son of the former president, moved to the U.S. in March. On Wednesday night, he asked his supporters on X to post “their thank you to President Donald Trump.”

In Thursday’s interview, Lula said the elder Bolsonaro “should take the responsibility for agreeing with Trump’s taxation to Brazil.”

“His son went there to make up Trump’s mind, then he [Trump] writes a letter to speak about a case that is on the hands of the Supreme Court. A case that is not a political trial. What is under investigation is the evidence of the case,” Lula said.

Savarese and Boak write for the Associated Press. Boak reported from Washington.

June 28 (UPI) — President Donald Trump cited potential Canadian taxes on U.S. tech companies as his reason for ending trade talks with Canada on Friday.

The tech taxes on Amazon, Google, Meta and other U.S. tech firms are due on Monday, and Trump said it is a deal-breaker.

“We have just been informed that Canada … has just announced that they are putting a Digital Services Tax on our American technology companies,” Trump said in a Truth Social post on Friday.

He called the tax a “direct and blatant attack on our country” and accused Canada of “copying the European Union, which has done the same thing.”

“We are hereby terminating all discussions on trade with Canada, effective immediately,” Trump said.

His administration in the coming week will notify Canadian officials of the tariff that it will have to pay to do business in the United States, Trump added.

Trump last week attended the G7 economic trade summit hosted by Canada and Canadian Prime Minister Mark Carney and sought common ground on trade talks, The Washington Post reported.

Officials at U.S. tech firms oppose the Canadian tax, the amount of which is based on the revenues generated by Canadians’ use of e-commerce sites, social media and the sales of data.

All tech companies that generate more than $14.59 million from such services would be subject to the new 3% Digital Services Tax.

The tax is retroactive to 2022 and could cost U.S.-based tech firms up to $3 billion, NBC News reported.

Upon learning of Trump halting trade talks, Canadian officials on Friday limited U.S. steel imports and placed a 50% surcharge on steel imports that surpass the quota.

Canadian Finance Minister Francois-Philippe Champagne said the surcharge will help to protect Canadian steel against what he called “unjust U.S. tariffs.”

He said the Canadian government is prepared to take additional actions, if necessary.

WASHINGTON — The Supreme Court decided Thursday that a Catholic charity doesn’t have to pay Wisconsin unemployment taxes, one of a set of religious-rights cases the justices are considering this term.

The unanimous ruling comes in a case filed by the Catholic Charities Bureau, which says the state violated the 1st Amendment’s religious freedom guarantee when it required the organization to pay the tax while exempting other faith groups.

Wisconsin argues the organization has paid the tax for over 50 years and doesn’t qualify for an exemption because its day-to-day work doesn’t involve religious teachings. Much of the groups’ funding is from public money, and neither employees nor people receiving services have to belong to any faith, according to court papers.

Catholic Charities, though, says it qualifies because its disability services are motivated by religious beliefs and the state shouldn’t be making determinations about what work qualifies as religious. It appealed to the Supreme Court after Wisconsin’s highest court ruled against it. President Trump’s administration weighed in on behalf of Catholic Charities.

Wisconsin has said that a decision in favor of the charity could open the door to big employers like religiously affiliated hospitals pulling out of the state unemployment system as well.

The conservative-majority court has issued a string of decisions siding with churches and religious plaintiffs in recent years. This term, though, a plan to establish a publicly funded Catholic charter school lost when the justices deadlocked after Amy Coney Barrett recused herself.

The nine-member court is also considering a case over religious objections to books read in public schools. In those arguments, the majority appeared sympathetic to the religious rights of parents in Maryland who want to remove their children from elementary school classes using storybooks with LGBTQ characters.

Whitehurst writes for the Associated Press.

The Canary Island of Fuerteventura will start charging British holidaymakers a tourist tax if they want to visit its most beautiful locations, officials on the Spanish holiday hotspot have announced

British holidaymakers heading to the Canary Island of Fuerteventura will soon have to fork out a tourist tax if they fancy visiting its most stunning spots.

The island’s government has confirmed it will introduce the charge for the wild beach of Cofete, the awe-inspiring sand dunes of Correlejo and the vast sea caves of Ajuy.

The move will follow the example of Tenerife, which has already started charging visitors to the mountain-top village of Masca and intends to do the same with Mount Teide.

Jessica de León, Minister of Tourism and Employment of the Government of the Canary Islands, has insisted that Fuerteventura “must now be incorporated into the regional debate on the ecotax in protected natural spaces.”

Fuerteventura’s president, Lola Garcia, said the collection of a tourist tax was necessary to raise money for the maintenance of the natural spaces visited by hundreds of thousands of holidaymakers each year.

READ MORE: ‘I’m a Brit living in Benidorm and tourists should avoid these three areas’

In this same framework, the city council of La Oliva is looking at implementing a tourist tax of its own. La Oliva is in the north of the island and is again a hotspot for tourists due to its wealth of history. Ms Garcia has argued that a tourist tax in these specific locations was justified, given the significant impacts of mass tourism.

She added: “The landscape and natural spaces must be protected, in addition to the fact that public institutions must listen to the citizens who, recently, expressed it in the street” through protests across the Canary Islands.

“Now is the time to take measures and decisively, and one of them is the tourist tax.”

The island’s president announced that the tax may be introduced for the beaches of Cofete, within the Jandía Natural Park, the Corralejo Dunes, the Ajuy Caves and the Betancuria Rural Park. A deadline on when they might be introduced has not been set.

Area councillor, David Fajardo, has proposed a minimal fee for visitors to La Oliva. “It would not involve a significant cost for the visitor, but it would allow reinforcing services such as cleaning, environmental conservation or maintenance of public spaces,” he explained. “It is not a collection measure but a tool that aims that each tourist who stays overnight in La Oliva contributes to the improvement and maintenance of our territory.”

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The Canary Islands have arguably been most impacted by the negative effects of too many tourists of anywhere in Spain. In the first quarter of 2025, 4.36 million international visitors made their way to the islands. As a result, angry locals have hit the streets brandishing banners.

Officials in Tenerife are taking action to dampen the impact of overtourism. One such action is a new online booking system for some of the trails in Teide National Park, a UNESCO World Heritage site home to Spain’s highest peak. As of this summer, tourists visiting the peak will be charged an ‘eco-tax,’ and security cameras are reportedly being installed to control the park’s visitor numbers.