Tax Oddities of 2025: A Year of Surprising Tax Rules

Tips and Pornography Debate

In 2025, the tax world witnessed some unusual developments, with one of the most talked-about topics being the debate around tips and pornography.

• IRS Proposal: The IRS proposed regulations that excluded tips from illegal activities, including prostitution and pornographic activities, from a new tax deduction.
• Controversy: This sparked significant controversy, as many questioned how the IRS would define and enforce these restrictions.
• Definition Issues: The lack of a clear definition for "pornographic activity" added to the confusion.
• First Amendment Concerns: Critics argued that this was a legal profession and raised First Amendment concerns.
• Impact on Digital Content Creators: The debate intensified as digital content creators, especially those on platforms like OnlyFans, rely heavily on tips. With over 4.6 million content creators and 377 million subscribers, the impact of this disallowance could be significant.

Ian Freeman's Appeal

Another interesting case involved Ian Freeman, who appealed his criminal tax conviction.

• Charges: Freeman, an early cryptocurrency enthusiast, was charged with money laundering, running an unlicensed money service business, and tax evasion.
• Argument: He argued that regulating cryptocurrency should fall under the major questions doctrine.
• Court's Decision: The appeals court was not convinced and found sufficient evidence of willfulness, including his use of entities like the Crypto Church of New Hampshire to hide his activities.

Salam Mahmood's Case

In a different case, Salam Mahmood tried to convince the court that he hid his foreign account from his wife, not the IRS.

• Government's Argument: The government argued that hiding money from a spouse still constitutes willfulness.
• Pending Decision: The court has yet to rule on this case, but it highlights the growing trend of taxpayers using marital discord as a defense.

Hasbro's Move and Tax Incentives

Lastly, Hasbro's move from Rhode Island to Massachusetts brought attention to tax incentives.

• Tax Credits: Massachusetts approved $14 million in tax credits for Hasbro, which plans to move 700 full-time employees to its new headquarters in Boston.
• Role of Tax Credits: While tax credits were not the only factor, they played a significant role in the decision.
• Rhode Island's Response: Rhode Island officials downplayed the impact, pointing to other job creations in the state.