Tax Lawyer Explains Trump Tax Bill’s Effects on CNMI

Tax lawyer Tina Azarvand explained potential changes in the CNMI’s tax system following the passage of President Donald J. Trump's "One Big Beautiful Bill" during her latest “Lunch and Learn—A Special Tax Series”—held at Spicy Thai last July 15.

The owner of Azarvand Tax Law said, in general, there have been some good things that came out of the One Big Beautiful Bill with the Tax Cuts and Jobs Act.

“A lot of provisions there, most really, were extended, including 100% bonus depreciation, the Qualified Business Income Deduction. And there were some other small benefits there as well that they have increased. Otherwise, I'd say the boosting of the child tax credit should help some families out here as well, so for those who have children under the age of 17,” she told Marianas Press after the event.

The most noteworthy development that CNMI residents can benefit from is that the child tax credit was slightly increased, which could help some local families.

“So, it was boosted from $2,000 to $2,200, and the refundable portion is now $1,700. So, it's not a huge boost, you know, it's approximately 10%. But it's a small increase that will help families a little bit.”

Azarvand said two of the biggest things people talk about the most from the One Big, Beautiful Bill, with regards to taxes, are the exemption on overtime and the exemption on tax on tips.

“So, really, to clarify what ended up happening with that legislation is that the no tax on tips is actually going to be an income tax deduction for the employee. So, they will still have taxes withheld, income, and FICA (Federal Insurance Contributions Act).”

Azarvand then explained that thresholds will be different as there will be an above-the-line deduction equal to what employees have in overtime, and it's the same thing with the tax on tips.

“It's $12,500 and then $25,000, but it's double when you're married. So that's something to keep in mind. But with them being above the line, the difference is from a regular itemized deduction that's below the line.”

She clarified that above the line means you can be taking the standard deduction and then also taking this deduction on top of that.

“Generally, that's going to help a lot of people because they're going to be able to deduct that from their taxes. However, here people are paying 9% or up to 9% of their wages in tax, and it's a gross tax. So that when it's on the gross amount, that's essentially the pre-deduction amount. So, before any, you know, deduction for their overtime or tax on tips. So, the tax rate effectively is the same.”

Azarvand said the One Big Beautiful Bill also sort of clarifies why servers in bars and restaurants receive FICA tip credit, but it’s not the same for a masseuse or a hairstylist, where employees and employers both get taxed.

“You know, with the tip credit, where that can, it won't necessarily cover 100% of it, but it's going to cover some of it. Because it's a portion, as long as you're paying $5.15, you know, an hour without the tips, you know, because you can pay servers less. So as long as you meet that threshold, there is a portion, you know, where you can get that back.”

Asked about the turnout during her latest Lunch and Learn series, Azarvand said she really can’t complain about the jampacked venue.

“You know, it's never a bad thing when you need to grab more chairs,” she said.

Azarvand was also pleasantly surprised by one particular query during the question-and-answer portion after the presentation.

“Questions are always good. You know, it's good to see people are thinking about relocating here. I like that she asked about, ‘Oh, well, what would be, you know, the difference if I moved from California to here?’ I always find that to be interesting because I do think the CNMI has a very unique tax code that really could attract a lot of people here if they knew about it,” she said.