📅 2026 Update: Recent Changes in Taxation Models

Since the original article was published, several significant updates have occurred in the tax landscape across various states. These changes are especially relevant as many states have introduced new Pass-Through Entity Taxes (PTET) that align with Illinois' entity-level tax model. The earlier article continues further down the page, providing foundational information on the council tax taxation model.

🏛️ New Pass-Through Entity Taxes

Many states have enacted new PTET laws from 2023 to 2026. These taxes affect how business income is taxed at the entity level, rather than at the individual level. This shift can impact partnerships and other pass-through entities significantly.

  • 🔍 Hawaii: On June 1, 2023, Hawaii enacted Act 50, SLH 2023, establishing a PTET similar to Illinois' model.
  • 📜 Iowa: Iowa passed House File 352 on May 11, 2023, creating a PTET that mirrors Illinois' entity-level tax.
  • 📅 Kentucky: Kentucky introduced a PTET through HB 360, Section 16, on March 24, 2023, aligning with the Illinois framework.
  • 🌄 Montana: Montana created a PTET with SB 554 on May 19, 2023, reflecting similar changes seen in other states.

⏳ Changes in Filing and Forms

Several forms related to tax processes have also seen updates. Understanding these processes can help taxpayers navigate their obligations more effectively.

  • 📄 Form 3911: This form can be completed by taxpayers who have not received their refunds. It requests a trace on the missing refund.
  • ⏰ Form 8716: Taxpayers seeking an extension for certain business returns must file this form with the IRS by the due date of the return.

💲 Current Fees and Costs

As of October 2026, some states have updated their fees associated with various services. Staying informed about these costs is essential for effective budgeting.

  • 🚗 Connecticut DMV Fees: Connecticut's DMV now requires fees for vehicle title services. Specific fees can be checked on the Connecticut DMV website.

📌 Key Points Summary

  • 🏛️ Several states have introduced PTETs similar to Illinois' model.
  • 📄 Important tax forms have updates, including Form 3911 for refund tracing.
  • 🚗 Connecticut DMV has updated its fees for vehicle title services.
  • ⏰ Filing deadlines remain critical for taxpayers to adhere to in 2026.

💡 Tips for Navigating Changes in Taxation

Review your unique tax situation with an attorney to ensure compliance with recent changes.

📊 Understand PTET Implications

If your business operates in a state with a new PTET, understand how it affects your tax obligations. These taxes can shift the way income is taxed, influencing your overall tax strategy.

🔍 Keep Track of Deadlines

Stay alert to deadlines for forms like 3911 and 8716. Missing these dates can lead to delays in refunds or extensions, impacting your financial planning.

💻 Use Free Resources

Consider utilizing free assistance programs such as IRS Free File or Volunteer Income Tax Assistance (VITA). These can provide valuable help in navigating your tax filings without additional costs.

📞 Contact Tax Agencies for Help

If you have questions about state tax obligations, reach out to your state tax agency. They often provide resources and support to help you understand changes in tax laws.

📅 Stay Updated on Changes

Regularly check for updates from the IRS and state tax agencies. Tax laws can change frequently, and staying informed can prevent unexpected issues.

🏆 Ranked by User Reviews (2026)

This section highlights various tax preparation services relevant to navigating the current taxation landscape. The services listed here are based on Trustpilot data as of October 2026. Ratings may fluctuate over time, and customer experiences vary widely.

It's important to consider both the scores and individual reviews when making a choice.

🥇 1. Libre Tax Service

Libre Tax Service has been rated 4.1. It is known for online tax preparation and IRS audit defense. Some users find the website navigation challenging, which can affect overall satisfaction.

🥈 2. Jackson Hewitt Tax Service

Jackson Hewitt Tax Service holds a rating of 4.2. This service is recognized for its nationwide locations and tax preparation services. However, some customers have reported complaints about the responsiveness of customer service.

🥉 3. TaxSlayer

TaxSlayer averages a score of 4.0. It is known for its online tax preparation software at affordable prices. Users have occasionally reported issues with software glitches, which can impact the filing process.

4️⃣ KBO Tax & Accounting Services

KBO Tax & Accounting Services has a rating of 4.5. This company offers nationwide tax preparation and bookkeeping services. However, it has limited in-person office locations, which may be a drawback for some clients.

5️⃣ Advanta Tax

Advanta Tax holds a score of 4.3. It is known for offering nationwide tax services, including IRS resolution and state tax debt assistance. Some clients have reported delays in service, which could affect timely tax resolution.

6️⃣ SMAART Tax

SMAART Tax has been rated 4.4. It provides virtual tax services to clients across all 50 states. While the online services are convenient, in-person consultations are limited, which may not suit all taxpayers.

🆓 Free Tax Assistance Options

Free options like IRS Free File, VITA, and Tax Counseling for the Elderly (TCE) are available. These programs provide valuable assistance to eligible taxpayers, helping them prepare their returns without incurring additional costs.

🔎 Key Considerations for Choosing Tax Services

  • 📈 Compare user reviews and ratings to gauge service quality.
  • 💲 Assess fees and costs associated with each service.
  • 🕒 Check for availability of customer support for assistance.
  • 🌐 Look at the range of services offered to meet your needs.

❓ Frequently Asked Questions

❓ What is a Pass-Through Entity Tax?

A Pass-Through Entity Tax (PTET) is a tax imposed on business income at the entity level rather than at the individual level. This tax structure allows businesses to pass their income to owners or partners without facing double taxation.

📆 How often do tax laws change?

Tax laws can change annually based on new legislation at both federal and state levels. It is essential for taxpayers to stay informed about these changes as they can affect filing requirements and tax obligations.

📞 Where can I get help with my taxes?

Free help is available through programs like VITA, TCE, and IRS Free File. These resources provide assistance to those who qualify, including low-income taxpayers and seniors.

📄 What is Form 1065 used for?

Form 1065 is used by partnerships to report income, deductions, and other information to the IRS. It is an essential form for any partnership to ensure compliance with federal tax regulations.

⏰ What are the consequences of missing tax deadlines?

Missing tax deadlines can result in penalties and interest on unpaid taxes. It is crucial to file on time to avoid additional financial burdens.

💻 How can I use online services for tax preparation?

Online services like TaxSlayer and Libre Tax Service offer tools for tax preparation and filing. These platforms often provide user-friendly interfaces and resources to assist you in completing your tax returns.

⚖️ Recent Court Cases Relating to Taxation

Recent court rulings have addressed various aspects of taxation that connect to the council tax taxation model discussed in this article. These rulings can influence how tax laws are interpreted and applied.

For more insights into recent rulings, please check out more rulings on the news page.

End of October 2026 Update





Introduction

The Council Tax is a system of local taxation in the United Kingdom that was introduced in 1993 as a replacement for the unpopular Community Charge or Poll Tax. The Council Tax is charged to households to pay for local services, such as rubbish collection, libraries, and schools. It is a type of property tax that is charged based on the value of the property and the number of people living in it.

In this article, we will look into the Council Tax taxation model. We will explore the history of Council Tax, how it is calculated, how it is collected, and its impact on the UK population. We will also examine the criticisms of the Council Tax system and the proposed reforms.

The History of Council Tax

The Council Tax was introduced in the UK in 1993 as part of the Local Government Finance Act. It was designed to replace the Community Charge or Poll Tax, which was introduced in 1989 and was deeply unpopular. The Poll Tax charged every adult in a household the same amount, regardless of their income or circumstances, which led to widespread protests and riots.

The Council Tax system was designed to be more fair and progressive than the Poll Tax system. It is based on the value of the property, with higher value properties paying more than lower value properties. The value of a property is based on its market value as of 1 April 1991 and is split into eight bands, ranging from A to H, with band A being the lowest and band H being the highest.

The amount of Council Tax payable also depends on the number of adults living in the property. If a property is occupied by a single adult, a 25% discount is applied to the Council Tax bill. If the property is occupied by two or more adults, the full Council Tax amount is payable.

📝 See Also

How Council Tax is Calculated

The Council Tax bill is calculated by the local council, which sets a budget for local services and then divides this amount by the number of properties in the area. This gives the Council Tax band for each property, which is then multiplied by the Council Tax rate set by the local council.

The Council Tax rate is expressed as a percentage of the Council Tax band. For example, if the Council Tax band for a property is band C and the Council Tax rate is 100%, the Council Tax payable for the property will be the same as the value of the Council Tax band.

In practice, the Council Tax rate is not usually 100%, as the local council may set a different rate to take account of local circumstances. For example, if the local council needs to raise more money to pay for services, it may increase the Council Tax rate to generate more revenue.

Each local council sets its own Council Tax rate, although it is limited by the government. The local council can increase the Council Tax rate by up to 2% per year without holding a referendum. If it wants to increase the rate by more than 2%, it must hold a referendum and get the support of the local population.

Council Tax Collection

The Council Tax is collected by the local council, usually on a monthly basis. The Council Tax bill is sent to the occupier of the property and must be paid by the due date, which is usually the 1st of each month.

If the Council Tax bill is not paid on time, the local council can take legal action to recover the debt. This may include taking the matter to court, asking for a deduction order from the occupier's wages or benefits, or seizing and selling goods to pay the debt.

Impact of Council Tax on the UK Population

Council Tax is an important source of revenue for local councils, and it is estimated that it raises around £33 billion per year. It is used to fund a wide range of local services, including rubbish collection, libraries, and schools.

The impact of Council Tax on the UK population depends on a number of factors, including the value of the property, the number of adults living in the property, and the Council Tax rate set by the local council.

Generally, the Council Tax is seen as a regressive tax, as it takes up a larger proportion of income for people on lower incomes. This is because the Council Tax is based on the value of the property, which is often not related to the income of the occupier.

However, the Council Tax system is designed to be progressive, as it applies discounts for single occupiers and provides exemptions for certain groups, such as students and people on low incomes.

Criticism of the Council Tax System

Since it was introduced in 1993, there has been much criticism of the Council Tax system. Some of the main criticisms include:

- It is a regressive tax, as it takes up a larger proportion of income for people on lower incomes.
- It is not related to the income of the occupier, as it is based on the value of the property.
- It is difficult to value properties accurately, especially in areas where property prices are volatile.
- It is difficult for local councils to raise enough revenue to pay for local services, especially in areas with high levels of deprivation where there are fewer properties in higher Council Tax bands.
- It does not take into account the ability of the occupier to pay, as there is no means testing.

Proposed Council Tax Reforms

There have been a number of proposed reforms to the Council Tax system over the years in response to the criticisms outlined above. Here are some of the main proposed reforms:

- A Mansion Tax: This would be a tax on high value properties, such as those in Council Tax bands E to H. The tax would be based on the value of the property and would be designed to raise more revenue from people on higher incomes.
- A Land Value Tax: This would be a tax on the unimproved value of land, regardless of whether it has buildings on it. The tax would be based on the market value of the land and would be designed to encourage efficient use of land and discourage property speculation.
- A Local Income Tax: This would be a tax based on the income of the occupier, rather than the value of the property. The tax would be collected by the local council and could be used to fund local services.

Conclusion

The Council Tax system is an important source of revenue for local councils in the UK. It is based on the value of the property and the number of adults living in it, and it is designed to be fair and progressive. However, there are many criticisms of the Council Tax system, including that it is a regressive tax and not related to the occupier's income.

There have been a number of proposed reforms to the Council Tax system over the years, including a Mansion Tax, a Land Value Tax, and a Local Income Tax. While these proposed reforms have not been implemented yet, they highlight the need for a fairer and more efficient system of local taxation.

Council Tax Defined:
•    The council system is a local taxation model used in Scotland, England, and Wales to help fund the public services provided by the local governments in each country.

•    The council tax was introduced in 1993 as part of the Local Government Finance Act of 1992; the Council Tax replaced the formerly unpopular Community Charge.

•    The basis for the Council Tax is a levy placed on residential properties, where discounts are offered for single homeowners or property owners. Similar to the property tax in the United States, the Council Tax imposes a taxation model based on the underlying value of the property in question. The Council Tax further mimics the property tax of the United States in its general principle—the Council tax is a levy placed on landowners of a particular community and the funds generated from the tax are used to fund the underlying community’s public services, such as roads, parks, and fund government-run agencies like schools and law enforcement departments.

•    The Council Tax is collected by local authorities (known as collecting authorities), however, the tax may consist of various components that are levied and further distributed to other authorities (referred to as precepting authorities).

•    Collecting authorities are councils of the districts of England, the principal areas of Wales and the council areas of Scotland. These are the lowest tiers of local governments aside from communities and parishes.

•    The precepting authorities are councils from other branches (such as a county or parish council) of a local government. In the majority of metropolitan counties where there is no county council, the joint boards act as precepting authorities.

How is the Council Tax Calculated?

•    Each dwelling within the aforementioned countries is allocated to one of eight regions coded by letters A thru H. The dwellings are classified on the basis of the assumed capital value of the regions. The regions or bands are classified based on value—Band A is a grouping of the least costly homes while Band H is the most expensive. Following the evaluation and adherence of such a classification system, each local authority places a tax rate that is expressed as the annual levy on a property inhabited by one or two adults.

The nominal property total is calculated by adding together all the properties within a given grouping and multiplying it by an established ratio. Each collecting authority will then add together the assessed values for their area to reach a total council tax. Following the calculation, a ratio is then applied which takes the affirmed calculation and matches it up with properties within a varying classification. When the numbers are finalized a formal system is created that places a different council tax on each classification. Using the council tax system, an individual who lives in a multi-million dollar mansion will only pay roughly 3 times more than someone who lives in a loft.

•    The average council tax for an individual living in Band A (homes up to 40,000 Pounds) is roughly 845 Pounds per year, whereas, the average council tax for an individual living in Band H (home valued at 320,001 Pounds and above) is roughly 2,500 Pounds per year.