Alas, poor Microsoft Points, gamers knew them well. We knew they were being abandoned in the transition from the Xbox 360 to the Xbox One, but the change came so quickly. The August 26, 2013 Xbox Live update has transformed all Microsoft Points back into your region's official currency.
For those in the United States, the Microsoft Point conversion rate is unchanged. Only where before people got 80 Microsoft Points for every $1, they're now getting $1 per every 80 Microsoft Points. If you have Microsoft Point cards you haven't redeemed, or buy one in a store before they're phased out later this year, Microsoft will automatically give you the dollar value of those cards when you enter the code into Xbox Live.
However, you should watch that balance just added to your virtual wallet. The money Microsoft gave users in exchange for your current Microsoft Point balance has an expiration date. They are only good until June 1, 2015, and if you don't use them before then, they expire.
Xbox Live purchases will also now be taxed. If you are using the money Microsoft has given you to replace your Microsoft Points, then the purchases you make with it will not be taxed. If you go and add a Microsoft Point or Xbox Gift Card now, after the transition has been made, then purchases made with that money will be taxed.