An electric vehicle grudge match may be underway. On one side, California Gov. Gavin Newsom (D) has proposed a $200 million state-level EV tax rebate. On the other, the federal government appears to be doing all it can to kill EV adoption.
California isn’t new to the rebate game. The state handed out millions in subsidies through its Clean Vehicle Rebate Project before the program ended in 2023. That sunsetting, coupled with the expiration of the federal $7,500 credit last fall, contributed to a significant nationwide drop in EV sales.
Newsom is now scrambling to plug a federal-sized hole with a state-sized budget. The problem is that while $200 million doesn’t get what it used to in terms of benefits, it’s more than enough to buy a massive federal headache.
The Trump administration has barred states from letting EVs automatically qualify for high-occupancy vehicle lanes. It sent penalties for automakers failing fuel-efficient standards to the scrapheap and gutted the market for regulatory credits—potentially saving automakers billions while hamstringing the clean car compliance market.
That isn’t regulatory rollback; it’s a full-on assault.
So how might the administration respond to Newsom’s initiative? Don’t be surprised if the administration challenges any state emissions rules in court. It also may tie federal highway funding to infrastructure policies that don’t “discriminate” in favor of EVs. And expect regulatory tweaks designed to slow down charger installations, grid upgrades, and anything else that makes EVs easier to drive or buy.
For California and other states that want to support EV adoption, a modest rebate program won’t cut it. They’ll need lawyers, coordinated strategies among states, and a willingness to fight a legal and regulatory war of attrition.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined the US’ Pillar Two side-by-side deal, state and local tax issues to watch in 2026, and more.
The Exchange —It’s where great ideas on tax and accounting intersect.
Insights
New Small Business Stock Tax Rules to Reshape Corporate Mergers
Changes to qualified small business stock thresholds will redefine planning and corporate strategy in 2026, offering incentives and competitive advantages.
Buy or Build? New IRS Online Platform Forces E-Filers to Choose
The IRS’s new online platform for filing information returns will require taxpayers to maintain their own software or hire a trusted vendor to help navigate all the changes and business rules.
US’ Global Minimum Tax Carveout Is an Illusion of Sovereignty
If the OECD’s new Pillar Two “side-by-side” agreement with the US works as intended, it will constrain rather than preserve congressional sovereignty over domestic tax laws.
Here’s How Businesses Can Handle AI Content and Transfer Pricing
Businesses can take several key steps to determine how AI-generated content should be handled in transfer pricing.
Business Entity Type Is a Tough but Crucial Tax Decision in 2026
Companies deciding whether to be a C corporation or pass-through entity must analyze the 2025 tax-and-spending law through the lens of their unique business goals and financial strategy.
US Investors in Dubai Property Have Unique Tax Reporting Hurdles
Local private foundations in the United Arab Emirates operate like a trust and can help resolve tax complications for US citizens who own or invest in UAE real estate.
How to Navigate Protectionism, Incentives, Pillar Two in 2026
In a turbulent global environment, tax, trade and customs, treasury, sustainability, and government affairs teams should collaborate from the start of project planning to ensure that investment structures are compliant and optimized.
Supreme Court Case Among State and Local Tax Issues to Watch
In 2026 we’ll see developments involving state income taxes on out-of-state businesses, digital advertising taxes, interstate disputes, and a US Supreme Court ruling involving the government’s right to take property to satisfy a tax lien.
New Crypto Tax Form Requires Tax Pros to Keep Asset Inventories
Digital asset advisers need to know what Form 1099-DA includes and omits to avoid filing returns that are incomplete or inconsistent with the taxpayer’s actual transactions.
UK VAT Grouping Policy Shift Aims to Attract Foreign Investment
By confirming that the restrictive approach derived from EU case law doesn’t apply to UK VAT grouping provisions, the tax authority has signaled a more flexible regime that could reduce compliance burdens and encourage foreign investment.
Columnist Corner
The NASCAR tax break is set to expire, and Congress should keep it that way, Andrew Leahey argues in his latest Technically Speaking column. “It would send a rare signal that the tax code isn’t a permanent rewards system for well-connected industries,” he writes.
More broadly, Congress should adopt a disciplined, formulaic approach to evaluating expiring tax provisions based on core policy metrics rather than lobbying pressure or legislative reflexiveness, Andrew says. Read More
News Roundup
Data Centers Won Billions in Tax Breaks. Some States Are Balking
Data center developers have saved billions of dollars by negotiating long-term sales tax exemptions. Some states are rethinking those agreements, noting the lack of jobs created, the excessive drain on energy and water resources and their own looming budget woes.
Treasury, IRS Issue Guidance on Bonus Depreciation Tax Break
The IRS and the Treasury Department issued guidance to implement the “bonus depreciation” tax break on capital spending that was enacted last July as part of the GOP’s big tax-and-spending bill.
Hard Tax Choices Await Spanberger to Fund Affordability Agenda
Virginia Gov.-elect Abigail Spanberger (D) will face tough tax choices as she looks to raise revenue needed to deliver on her party’s affordability promises, despite the state’s slowing economy and weakening labor market.
African Nations Want to Know if US Tax Carve-Out Deal Helps Them
African tax authorities are meeting with Organization for Economic Cooperation and Development officials this week to learn how their nations might be affected by the exemption US companies have won from the global minimum tax.
Tax Management International Journal
Pillar Two: No Time to Die, Die Another Day, You Only Live Twice?
Recent OECD Pillar Two guidance introduces new safe harbours for global minimum tax implementation, offering simplification for some multinational groups while maintaining complexity for others.
Expatriates, Cross-Border Workers Must Plan for Social Security
International workers and retirees must consider a complex array of factors in planning for future Social Security entitlement, including totalization agreements, work impacts, foreign benefits, timing, location, taxation, and Medicare changes.
India’s New Tax Act Reshapes the Fiscal Landscape for Businesses
India’s Income Tax Act, 2025, introduces a new era of digital enforcement and enhanced administrative powers and fundamentally reshapes certain long-standing tax principles.
Tax Management Memorandum
How Do States Determine Trust Income Tax Nexus in the Modern Era?
State trust income tax nexus rules vary widely, requiring regular review to minimize tax exposure as courts increasingly reject perpetual nexus claims.
From Tax Court to SCOTUS: Cases That May Reshape Tax Law in 2026
Key tax cases in 2026 will address economic substance, limited partnerships’ distributive shares in calculating self-employment tax, and the nondelegation doctrine related to executive authority.
Career Moves
Morrison Foerster Adds Schwier as London Corporate Tax Partner
Freddie Schwier joined Morrison Foerster as a partner in its tax group and transactions department in London, the firm announced Monday.
Morgan Lewis Boosts Tax Practices With New Partners in NY, Miami
Daniel Hudson and Alexios Hadji joined Morgan Lewis as partners, the firm announced Monday. Hudson joined the private client practice in Miami, while Hadji returned to the global tax practice in New York.
Fredrikson Brings on Former IRS Deputy Area Counsel Teri Jackson
Teri Jackson joined Fredrikson & Byron as a partner in its tax disputes & litigation group in Minneapolis, the firm announced Monday.
Gowling WLG Adds Annette Rickert to International Tax Practice
Annette Rickert joined Gowling WLG as a tax partner in Frankfurt, the firm announced.
FBT Gibbons Lands Wick Phillips Tax Partner Botts in Dallas
Andrew Botts joined FBT Gibbons as a partner in its tax practice group in Dallas, the firm announced Thursday.
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