New provisions for 2026 may affect your tax planning

March 10, 2026

The many tax-related provisions that went into effect last year after the One Big Beautiful Bill Act (OBBBA) was signed into law are affecting 2025 federal income tax returns being filed now. However, some OBBBA provisions aren’t taking effect until this year. Plus, some changes under previous legislation are also taking effect in 2026. Here’s an overview of new tax provisions that individuals and businesses need to consider when conducting their 2026 tax planning.


Tax provisions affecting individual taxpayers


Changes going into effect for individual taxpayers this year include:


New charitable contribution deduction for nonitemizers. For 2026 and future years, the OBBBA reinstates the COVID-era deduction for cash donations to qualified charities by taxpayers who claim the standard deduction, subject to an increased annual limit of $1,000, or $2,000 for joint filers. (The limits were $300 and $600, respectively, for 2021 when this nonitemizer deduction was last available.)


The definition of “cash donation” may be broader than you think. It includes gifts made by debit or credit card, check, electronic bank transfer, online payment platform, and payroll deduction. If you make such gifts in 2026, be sure to retain proper substantiation so you can deduct them when you file your return next year.


New floor on charitable deduction for itemizers. Under the OBBBA, if you itemize deductions rather than claiming the standard deduction, your otherwise allowable charitable deductions are limited to the amount that, in aggregate, exceeds 0.5% of your adjusted gross income (AGI). Put another way, your 2026 charitable deduction is limited to the amount that exceeds 0.5% of your 2026 AGI.


If you’ll be affected, you may want to “bunch” donations into alternating years to minimize the negative impact of the new floor. (If you won’t itemize deductions in the nonbunching years, consider making cash donations up to the nonitemizer charitable deduction limit in those years.)


New limit on itemized deductions for taxpayers in the 37% tax bracket. Generally, this OBBBA limitation for 2026 and subsequent years means that the tax benefit from itemized deductions for taxpayers in the 37% bracket will be treated as if they were in the 35% bracket. For 2026, the 37% bracket starts when taxable income exceeds $640,600 for singles and heads of households, $768,700 for married couples filing jointly, and $384,350 for married couples filing separately.


If you may be affected, factor this into your 2026 tax planning so you don’t overestimate the tax savings your itemized deductions will provide.


Alternative minimum tax (AMT) exemption changes. You must pay the AMT if your AMT liability exceeds your regular tax liability. The top AMT rate is 28%, compared to the top regular ordinary-income tax rate of 37%. But the AMT rate typically applies to a higher taxable income base. An AMT exemption is available, but it phases out when AMT income exceeds certain levels.


Under the OBBBA, those thresholds revert to their 2018 levels for 2026 (i.e., removing the inflation adjustments made for 2019–2025), and they’ll be adjusted annually for inflation in subsequent years. Also, the OBBBA effectively phases out the exemption twice as fast beginning in 2026. The 2026 phaseout ranges are $500,000–$680,200 for singles and heads of households and $1,000,000–$1,280,400 for joint filers (half those amounts for separate filers), compared to the 2025 ranges of $626,350–$978,750 and $1,252,700–$1,800,700, respectively. Both changes mean more taxpayers could be subject to the AMT in 2026.


If it’s looking like you’ll be subject to the AMT this year, consider accelerating income and short-term capital gains into 2026. This may allow you to benefit from the lower maximum AMT rate. Also consider deferring expenses you can’t deduct for AMT purposes until next year, such as state and local taxes (SALT). You may be able to preserve those deductions — but watch out for the annual limit on the SALT deduction. Additionally, if you defer expenses you can deduct for AMT purposes to next year, such as charitable donations, the deductions may become more valuable because of the higher maximum regular tax rate.


New tax-advantaged Trump Accounts. Created under the OBBBA, these accounts are available to U.S. citizens under 18. Contributions to a properly established account can begin on July 4, 2026. Generally, up to $5,000 per year can be contributed. Although contributions aren’t tax deductible, the account can grow tax-deferred until the child is 18, when it converts into a traditional IRA.


Eligible children born between January 1, 2025, and December 31, 2028, whose parents have elected to participate in a pilot program, will receive a one-time, tax-free $1,000 federal contribution to their accounts. The $1,000 government contribution doesn’t count against the annual limit. So, if your child (or grandchild) is born this year, up to $5,000 could be contributed to his or her Trump Account in 2026 on top of the $1,000 from the government.


Increase in tax-free 529 plan withdrawal limit for qualified elementary and secondary school expenses. Distributions used to pay qualified expenses are income-tax-free for federal purposes and potentially also for state purposes, making the tax deferral a permanent savings. In recent years, certain elementary and secondary school expenses of up to $10,000 per year per beneficiary have been considered qualified and thus eligible for tax-free treatment.


Only tuition qualified through July 4, 2025. Under the OBBBA, various additional expenses after July 4, such as books, instructional materials and certain fees, also qualify. Beginning in 2026, the annual limit increases to $20,000 per year per beneficiary.


So, you may be able to take advantage of more tax-free funds from your child’s 529 plan to pay his or her elementary and secondary school expenses in 2026. And you may want to increase your contributions to your child’s (or grandchild’s) 529 plan so that funds are available in the account to take advantage of the increased limit in the future.


New Roth requirement for higher-income taxpayers’ catch-up contributions. Beginning in 2026, new rules under the SECURE 2.0 Act (signed into law in 2022) require higher-income participants in 401(k), 403(b) and 457(b) retirement plans to make any catch-up contributions as after-tax Roth contributions. For 2026, this requirement applies to participants with 2025 Social Security wages exceeding $150,000. That threshold will be annually adjusted for inflation.


If you’re subject to this limit, no longer being able to make pretax catch-up contributions could increase your 2026 taxable income. This, in turn, could push you into a higher tax bracket and impact your eligibility for various tax breaks. You may want to consider other steps for reducing your income in 2026, such as minimizing sales of stock or other investments that would generate capital gains income (or offsetting gains by selling other investments at a loss).


Elimination of certain energy-efficiency credits for homeowners. The OBBBA repealed two credits for taxpayers who take steps to make their homes more energy efficient, such as installing energy-efficient windows or adding solar panels: 1) the Energy Efficient Home Improvement Credit for qualified improvements to an existing home and 2) the Residential Clean Energy Credit for both existing and newly constructed homes. The credits aren’t available for any property placed in service after December 31, 2025.


Tax provisions affecting businesses and their owners


Business-related changes going into effect this year include:


Expansion of the income ranges over which the Section 199A qualified business income (QBI) deduction limitations phase in. Under the OBBBA, for 2026 and beyond, instead of the distance from the bottom of the range (the threshold) to the top (the amount at which the limit fully applies) being $50,000, or, for joint filers, $100,000, it’s $75,000, or, for joint filers, $150,000. This will allow larger deductions for some taxpayers.


For 2026, the ranges are $201,750–$276,750 (up from $197,300–$247,300 for 2025), double those amounts for married couples filing jointly. The threshold amounts will continue to be annually adjusted for inflation.


Consider the potential impact of the limit phase-ins on your 2026 QBI deduction. There may be steps you can take to make the most of the significantly expanded phase-in ranges.


Reduction of the threshold for the excess business loss limitation. The deductions for current-year business losses incurred by noncorporate taxpayers generally can offset income from other sources, such as salary, self-employment income, interest, dividends and capital gains, only up to the annual limit. “Excess” losses are carried forward to later tax years and can then be deducted under the net operating loss rules.


The OBBBA makes the limit permanent and reduces the threshold at which the limitation goes into effect. For 2026, the threshold is $256,000 (down from $313,000 for 2025), double that amount for joint filers. The threshold will be adjusted for inflation annually going forward.


If you’ll be affected by this change, you may want to adjust your individual tax planning strategies to help make up for a reduced loss deduction. You also might consider making changes to your business strategy to avoid generating losses that would be suspended until later years because of the lower excess business loss limitation threshold.


New option for claiming the family and medical leave credit. The OBBBA permanently extended the employer tax credit for paid family and medical leave, which was scheduled to expire on December 31, 2025. For 2025, the credit amount ranged from 12.5% to 25% of eligible wages paid to qualifying employees for up to 12 weeks of paid leave.


Beginning in 2026, the OBBBA allows employers to claim the credit for the same percentage of insurance premiums paid or incurred during the tax year for active family and medical leave coverage. You can’t claim the credit for both wages and premiums, however.


If you don’t currently offer paid family and medical leave, consider whether funding it with insurance premiums eligible for the credit would make doing so feasible while helping to achieve other business goals, such as increasing employee retention. If you do offer paid family and medical leave, you’ll need to look at whether claiming the credit for actual wages paid to employees on leave or for insurance premiums will save you more tax. (If you offer paid leave but don’t fund it with insurance, you may want to revisit whether insurance would make sense for your business now that premiums are eligible for the credit.)


Elimination of certain clean energy incentives. The Section 179D deduction for energy-efficient commercial buildings allows owners of new or existing commercial buildings to immediately deduct the cost of certain energy-efficient improvements rather than depreciate them over the 39-year period that typically applies. The base deduction is calculated using a sliding scale, ranging for 2026 from $0.59 per square foot to $5.94 per square foot, depending on energy savings and whether specific prevailing wage and apprenticeship requirements have been met. The OBBBA eliminates the deduction for property that begins construction after June 30, 2026.


The Section 30C alternative fuel vehicle refueling property credit is for property that stores or dispenses clean-burning fuel or recharges electric vehicles. The credit is worth up to $100,000 per item (each charging port, fuel dispenser or storage property). The OBBBA eliminates the credit for property placed in service after June 30, 2026.


If you’re considering one of these clean energy investments, you may want to act soon so you can be eligible for the associated tax break before it’s eliminated.


Begin planning now


All the tax law changes can be overwhelming. If you need help understanding how these provisions might affect your tax strategies, contact us. We can help you develop a plan to reduce your tax liability so you can keep more of your hard-earned income while staying compliant.


© 2026 

Moving to a new state? Review the tax implications first

May 12, 2026
Whether you’re relocating for work, retirement, family or lifestyle reasons, state taxes can have a significant financial impact. Taxes vary widely from state to state. And establishing residency for tax purposes may be more complicated than you expect. Before moving, be sure you understand how changing states could affect your overall tax situation. A variety of taxes to consider It may seem like a tax-smart idea to simply move to a state with no personal income tax. But to make an informed decision, you must consider all taxes that can potentially apply to a state resident. In addition to income taxes, these may include property taxes, sales taxes and estate taxes. If the state you’re considering has an income tax, look at the types of income it taxes. For example, some states offer tax breaks for pension payments, retirement plan distributions and Social Security payments. Some states with low or no income tax have higher-than-average property tax rates or sales tax rates that could offset income tax savings. Even if you’re moving from one no-income-tax state to another, it’s important to look at how your potential property and sales tax expenses in each state compare. When it comes to estate taxes, the federal estate tax doesn’t apply to many people these days. For 2026, the federal gift and estate tax exemption is $15 million per individual, or $30 million for a married couple (with proper planning). But some states that have an estate tax provide a much lower exemption. And some states have an inheritance tax in addition to (or in lieu of) an estate tax. Effectively establishing domicile If you make a permanent move to a new state and want to ensure you’re not taxed in the state you came from, be careful to establish legal domicile in the new location and terminate it in your old one. The definition of legal domicile varies from state to state. In general, domicile is your fixed and permanent home and the place where you plan to return, even after periods of residing elsewhere. The more time that passes after you change states and the more steps you take to establish domicile in the new state, the harder it will be for your old state to claim that you’re still domiciled there for tax purposes. Five ways to help establish domicile in a new state are to: Change your mailing address at the post office, Change your address on insurance policies, will or living trust documents, and other important documents, Buy or lease a home in the new state and sell your home in the old state (or rent it out at the market rate to an unrelated party), Open and use bank accounts in the new state and close accounts in the old one, and Register to vote, get a driver’s license and register your vehicle in the new state. If you’re required to file an income tax return in the new state, file a resident return. And file a nonresident return or no return (whichever is appropriate) in the old state. We can help you make these decisions and file these returns. Plan before you relocate Moving to another state can affect your taxes in ways that aren’t always obvious. Before you relocate, contact us to review the potential income, property, sales and estate tax implications. We can help you minimize potential negative tax consequences and make the most of any tax advantages offered by the new state. © 2026 

Tax identity theft: Businesses are at risk, too

May 11, 2026
Tax identity theft isn’t limited to individual taxpayers — businesses are also targeted through their Employer Identification Numbers (EINs), payroll systems and tax filings. The financial impact of these crimes can be significant. Businesses may face delayed or stolen tax refunds, unauthorized payroll filings, and the time and expense of resolving IRS issues. There may even be credit damage or, if employee or customer data is compromised, reputational harm. Here’s what you need to know to protect your business. How tax identity theft happens Business tax identity theft comes in many forms and can affect sole proprietors, corporations, partnerships and limited liability companies. For example, criminals may file fraudulent returns using a company’s EIN, impersonate executives to steal employee W-2 data, or use forged IRS documents to pose as a business for financial or tax-related activity. In more advanced cases, hackers combine stolen data from breaches with synthetic identities to create entirely fake businesses capable of filing returns and securing credit. These schemes often go undetected until the IRS rejects a legitimate tax filing or flags duplicate activity. Other warning signs may include rejected extension requests, unexpected IRS transcripts or notices, or missing IRS correspondence. You also might receive a Letter 5263C or 6042C from the IRS. If your business receives one of these notices, don’t panic — it may stem from an IRS verification issue or a filing inconsistency, such as transposed numbers on your return. But it could signal something more serious. So contact your tax advisor to help answer all the questions in the letter within the timeframe specified in the notice (typically within 30 days). In some cases, the IRS may require you to file Form 14039-B, “Business Identity Theft Affidavit,” to report suspected identity theft. How to protect your business Tax identity theft can be costly, so prevention and early detection are critical. Consider the following seven security measures to help protect your business: 1. Prioritize cybersecurity. Your business should have a formal cybersecurity plan that provides a step-by-step approach for detecting identity theft. When breaches happen, your plan should trigger a prompt, thorough response. Review your plan regularly and update it to reflect changes in your business operations and emerging cyber risks. 2. Safeguard sensitive business data. Store employee and customer data, along with other proprietary records, such as financial statements and prior years’ tax returns, in a secure location. Keep your EIN information up to date with the IRS, including the responsible party and contact details. Shred nonessential documents before throwing them out, and limit access to your EIN to parties with whom you initiated the contact. Share sensitive information via the internet or email only if the recipient is trusted (such as your lender or tax preparer) and the site is secure or the email is encrypted. 3. Guard your logins and passwords. Some businesses store account logins and passwords in a single location, which can be convenient but risky. If a dishonest employee or hacker gains access, they could reach sensitive systems, including those tied to your EIN and tax filings. Use strong security controls to protect this information. 4. Use the latest cybersecurity technology. This includes firewalls, antivirus and antimalware software, spam filters, encryption and multi-factor authentication. Also exercise common sense: Don’t download files, click links or open attachments sent from unknown sources. It’s also prudent to back up sensitive data to a secure, external source not connected to your network. 5. Educate employees. Conduct periodic training sessions to remind employees about the latest scams, such as phishing emails that impersonate familiar businesses or colleagues to steal sensitive information. Employees should be aware of your cybersecurity plan and each person’s role if a breach occurs. Also remind them that the IRS doesn’t initiate contact by telephone, email, text or social media to request sensitive information. 6. Monitor business credit reports. It doesn’t take much effort to monitor your company’s profiles from the three major business credit bureaus: Equifax, Experian and TransUnion. Subscribe to their monitoring services and real-time alerts for suspicious activity, which may signal unauthorized accounts or broader identity theft affecting your business. 7. Secure your tax filings and accounts. Work with a trusted tax professional and use secure portals to share tax documents. Review IRS notices promptly and investigate any rejected filings, unexpected transcripts or unusual activity tied to your EIN. Be proactive, not reactive No preventive measure is 100% fail-safe, so identifying suspicious activity is also critical. Uncovering identity theft early makes it easier to address. Contact us if you have questions about protecting your business’s tax filings, employee tax data or IRS account information. We can help you review your risks, implement practical data security measures and determine the next steps if something looks suspicious. © 2026 

Estate planning for foreign assets requires extra attention

May 7, 2026
Do you hold assets such as overseas real estate, foreign bank accounts or investments in international markets? Properly addressing foreign assets in your estate plan is essential to avoid unexpected tax consequences, legal complications and asset transfer delays for heirs. Double taxation If you’re a U.S. citizen, all your worldwide assets, regardless of where you live or where the assets are located, are potentially subject to federal gift and estate taxes to the extent they exceed your lifetime gift and estate tax exemption. So, if you own assets that are subject to estate, inheritance or other death taxes in those countries, there’s a risk of double taxation. You may be entitled to a foreign death tax credit against your U.S. gift or estate tax liability — particularly in countries that have tax treaties with the United States. But in some cases, those credits aren’t available. Even if you’re not a U.S. citizen, you may be subject to U.S. gift and estate taxes on your worldwide assets if you’re domiciled in the United States. Domicile is a somewhat subjective concept — essentially, it means you reside in a place with the intent to stay indefinitely and return to whenever you’re away. Once the United States becomes your domicile, its gift and estate taxes apply to your foreign assets, even if you leave the country, unless you take steps to change your domicile. You might not feel concerned about federal gift and estate taxes if your estate is well within the 2026 $15 million gift and estate tax exemption (annually indexed for inflation going forward). But keep in mind that lawmakers could reduce the exemption in the future. So, it can still be a good idea to plan for a potential estate tax bill down the road. Further, for married couples, the rules are different — and potentially much more complex — if one spouse is neither a U.S. citizen nor considered domiciled in the United States for gift and estate tax purposes. Consider drafting two wills If you own foreign assets, your will must be drafted and executed in a manner that will be accepted in the United States and in the country or countries where those assets are located. Otherwise, your foreign assets may not be distributed according to your wishes. Often, it’s possible to prepare a single will that meets the requirements of each jurisdiction. But it may be preferable to have separate wills for foreign assets. One advantage is that a separate will, written in the foreign country’s language (if not English), may help streamline the probate process. If you prepare two or more wills, work with local counsel in each foreign jurisdiction to ensure the will meets that country’s requirements. And it’s critical for your U.S. and foreign advisors to coordinate their efforts so that one will doesn’t nullify the other. Plan proactively If you own foreign assets, proactive planning can help preserve your wealth and reduce the burden on heirs. We can explain the steps to help ensure all your assets are distributed in accordance with your wishes and in the most tax-efficient manner possible. © 2026 

2 retirement plans for small businesses with lean budgets

May 6, 2026
Most business owners would like to offer their employees a 401(k) retirement savings plan with all the bells and whistles. But for small businesses with lean budgets and small staffs, offering such benefits may be out of the question. Fortunately, SEP IRAs and SIMPLE IRAs are less expensive and easier to administer. Might one of these tax-advantaged options work for your workforce? SEP: Flexible and zero setup fees Simplified Employee Pension (SEP) IRAs are individual retirement accounts you establish on behalf of each participant. (Self-employed individuals can also establish SEP IRAs.) Participants own their accounts, so they’re immediately 100% vested. If participants decide to leave your company, their account balances go with them. Most people roll their accounts over into a new employer’s qualified plan or traditional IRA account. SEP IRAs don’t require annual employer contributions. That means you can choose to contribute only when cash flow allows. In addition, there are typically no setup fees for SEP IRAs. But participants generally must pay trading commissions and fund expense ratios (a fee typically set as a percentage of the fund’s average net assets). In 2026, the SEP IRA annual contribution limit is 25% of a participant’s compensation, up to $72,000. That amount is higher than the standard 401(k) account contribution limit of $24,500 (in 2026). What’s more, employer contributions are tax-deductible. Meanwhile, participants won’t pay taxes on their SEP IRA funds until they’re withdrawn. However, there are a few downsides to consider. Although participants own their accounts, only employers can make SEP IRA contributions. And if you contribute sparsely or sporadically, participants may see little value in the accounts. Also, unlike many other qualified plans, SEP IRAs don’t permit participants age 50 or over to make additional “catch-up” contributions. SIMPLE: Easy and participant-friendly Another possibility is to offer a Savings Incentive Match Plan for Employees (SIMPLE) IRA. As with a SEP IRA, your business creates a SIMPLE IRA for each participant, who’s immediately 100% vested in the account. Unlike SEP IRAs, SIMPLE IRAs allow participants to contribute to their accounts if they choose. Other advantages of SIMPLE IRAs include: They’re relatively easy for employers to set up and administer. They don’t require your business to file IRS Form 5500, “Annual Return/Report of Employee Benefit Plan.” You don’t need to submit the plan to nondiscrimination testing. Participants pay no setup fees and enjoy tax-deferred growth on their account funds. Participants can contribute up to $17,000 annually in 2026. Participants age 50 or over can make catch-up contributions of up to $4,000 in 2026 ($5,250 for those ages 60 to 63). Participants can contribute more to a SIMPLE IRA than to a self-owned traditional or Roth IRA. But SIMPLE IRA contribution limits are lower than limits for 401(k)s. Also, because contributions are made with pretax dollars, participants can’t deduct them. They also can’t take out plan loans. Then again, making pretax contributions does lower their taxable income. Perhaps most important is that employer contributions to SIMPLE IRAs are mandatory, regardless of your cash-flow situation. However, in general, you can deduct contributions as a business expense. SIMPLE Roth IRAs are available, too. Ask your financial and employee benefits advisors whether this might be a better option for your business. Lower-cost options If you’ve thought you can’t afford to offer workers a retirement plan, think again. In addition to SEP and SIMPLE IRAs, there are now some lower-cost 401(k) options available as well. We can review your budget, tax situation and benefit needs and suggest how best to proceed. Contact us. © 2026 

Fine-tune your tax withholding after filing your return

May 5, 2026
Many taxpayers discover at filing time that their tax payments during the year didn’t align with their actual liability — either too much or too little was withheld from their paychecks. A small difference is to be expected, but withholding that’s significantly off target can have negative consequences. Overwithholding reduces the amount available to you throughout the year. Substantial underwithholding can lead to a large balance due, along with potential interest and penalties. If you received a large refund or owed a lot of tax when you filed your 2025 return, it’s a good idea to take a closer look at how much tax is being withheld from your income this year. Reviewing and fine-tuning your withholding now can help you better align your payments with your 2026 tax liability. Review your income and withholding If all or most of your income is from wages, whether from a salary or hourly pay, your employer withholds amounts from your paychecks intended to cover your annual income tax liability. However, these withholding amounts are estimates based on IRS withholding tables, which approximate a typical worker’s annual tax liability at your compensation level. Your situation may differ from that of a comparably compensated worker for various reasons. You might have larger deductions or credits than is typical, which could make standard withholding too high. Or you might have additional income from other sources, which could make standard withholding too low. Adjust your withholding if needed One way to minimize overpayments or underpayments is to estimate your tax liability for the year. Then, if necessary, adjust your withholding by completing a new Form W-4, “Employee’s Withholding Certificate.” The IRS’s Tax Withholding Estimator can help. It now reflects key provisions of the One Big Beautiful Bill Act (OBBBA), including the elimination of taxes on qualified tips and qualified overtime (up to applicable limits), as well as new deductions for seniors and auto loan interest. It also more accurately accounts for OBBBA changes to tax breaks related to families, homeownership and charitable giving. Once you submit a new Form W-4 to your employer, changes typically will take a few weeks to go into effect. Keep that in mind when you determine your adjustments. Revisit withholding after life changes Changes during the year can affect the accuracy of your withholding. Review your Form W-4 and consider making adjustments if you: Experience a significant increase or decrease in income, Get married or divorced, Have a child or add a dependent, Buy a home, or Receive new sources of income not subject to withholding. Even if you’ve already adjusted your withholding, reviewing it again after a major life event can help you stay on track. Use withholding strategically If part of your income isn’t subject to withholding, estimated tax payments may also come into play. You can avoid penalties for missing or underpaying an estimated payment by increasing your withholding to make up the difference. Unlike estimated tax payments, withholding amounts are treated as paid evenly throughout the year — regardless of when they’re actually withheld. Using this strategy, you can increase withholding from your wages (or from your spouse’s, if you’re married). Alternatively, if you’re retired and don’t have wages from which to withhold taxes, increasing withholding from your IRA or other retirement plan distributions may be possible. Find the right balance Keeping your withholding aligned with your expected tax liability can help you enjoy better cash flow during the year and avoid surprises at filing time. We can review your current withholding (and estimated tax payments, if applicable), project your tax liability for the year and assist with deciding whether to make any withholding changes for 2026. © 2026 

Cost segregation studies can reveal substantial tax savings

May 4, 2026
Businesses that own commercial real property may be sitting on an overlooked treasure chest of tax savings — and a cost segregation study can be the key to unlocking it. This is a strategic tool that combines accounting and engineering techniques to identify building costs that are properly allocable to tangible personal property rather than real property. A cost segregation study may allow you to accelerate depreciation deductions on certain items, thereby deferring taxes and boosting cash flow. Timing counts when depreciating assets Commercial rental properties and buildings used for business purposes are generally depreciated over 39 years under federal tax law. But such properties may include a wide range of components with much shorter depreciation recovery periods. These can include parts of various systems such as HVAC, plumbing, electrical, fire protection, alarm and security, as well as: Drywall, Doors, Fixtures, Data and communication ports, Flooring, and Cabinetry. These assets could have useful lives of five, seven or 15 years — all significantly less than 39 years. By segregating such assets, you can claim greater depreciation deductions sooner. You’ll claim the same total amount of depreciation on the assets over time but reduce your tax bill in the short term, providing greater cash flow. OBBBA changes add value Recent tax law changes under the One Big Beautiful Bill Act (OBBBA) enhanced these benefits by increasing first-year depreciation write-offs. The two most widely relevant provisions relate to: 1. Bonus depreciation. The OBBBA restored 100% first-year bonus depreciation deductions for eligible assets acquired and placed in service after January 19, 2025. While commercial real properties aren’t eligible for first-year bonus depreciation, segregated building components with shorter recovery periods may be eligible. There are no phaseout limits for bonus depreciation, which is helpful for larger companies. 2. Section 179 expensing. For tax years beginning in 2025, the OBBBA increased the maximum amount of eligible assets you can immediately deduct under the Sec. 179 expensing election to $2.5 million. A phaseout reduces the maximum Sec. 179 deduction if, during the year, you place in service eligible assets in excess of $4 million. Both figures are adjusted annually for inflation. For 2026, they’re $2.56 million and $4.09 million, respectively. Again, commercial real properties aren’t eligible for Sec. 179 expensing, but segregated building components with shorter recovery periods may be eligible. Additionally, if your business involves manufacturing or certain agricultural activities, you may be eligible for a new depreciation-related tax break. The OBBBA introduced a 100% deduction for the cost of qualified production property (QPP). To be eligible, among other requirements, a qualifying real property’s construction must begin after January 19, 2025, and before January 1, 2029, and it must be placed in service before 2031. This break allows eligible businesses to immediately deduct the cost of QPP that otherwise would be depreciable over 39 years. The QPP deduction makes cost segregation studies less relevant for qualifying property. But it’s subject to several specific requirements and exceptions that may prevent you from claiming it. Ready, set, save A cost segregation study can significantly lower your taxes, but it isn’t a do-it-yourself project. Although this strategy has been consistently upheld in the courts, the IRS closely monitors deductions based on cost segregation studies. And the rules can be confusing. So, it’s prudent to hire experienced professionals to help you identify various building components and break down write-off periods for them. Contact us to discuss whether a cost segregation study could potentially save you taxes. We can determine reasonable cost allocations to help withstand IRS scrutiny. © 2026 

What’s the meaning of that estate planning term?

April 30, 2026
Estate planning can be overwhelming. One reason is that it has a language all its own. While you may be familiar with common terms such as “will” or “executor,” you may not be as certain about others. This uncertainty can make it difficult to make informed decisions about protecting your assets, providing for your family and ensuring your wishes are carried out. For quick reference, here’s a glossary of key terms you may come across when planning your estate: Administrator. An individual or fiduciary appointed by a court to manage an estate if no executor or personal representative has been appointed or the appointee is unable or unwilling to serve. Ascertainable standard. The legal standard, typically relating to an individual’s health, education, maintenance and support, which is used to determine what distributions are permitted from a trust. Attorney-in-fact. The individual named under a power of attorney (POA) as the agent to handle the financial and/or health affairs of another person. Codicil. A legally binding document that makes minor modifications to an existing will without requiring a complete rewrite of the will. Community property. A form of ownership in certain states in which property acquired during a marriage is presumed to be jointly owned regardless of who earned it or paid for it. (There are exceptions, such as inherited property, as long as it’s not commingled with community property.) Credit shelter trust. A trust established to bypass the surviving spouse’s estate to take full advantage of each spouse’s federal estate tax exemption. It’s also known as a bypass trust or A-B trust. Fiduciary. An individual or entity, such as an executor or trustee, designated to manage assets or funds for beneficiaries and legally required to exercise an established standard of care. Grantor trust. A trust in which the grantor retains certain control so that it’s disregarded for income tax purposes and the trust’s assets are included in the grantor’s taxable estate. Inter vivos. The legal phrase used to describe various actions (such as transfers to a trust) made by an individual during his or her lifetime. Intestacy. This occurs when a person dies without a legally valid will and the deceased’s estate is distributed through a court-supervised probate process in accordance with the applicable state’s intestacy laws. Joint tenancy. An ownership right in which two or more individuals (such as a married couple) own assets equally, often with rights of survivorship. Living trust. A trust that’s established during an individual’s lifetime to hold and manage assets for the benefit of that individual and, ultimately, for his or her beneficiaries. Also commonly referred to as a “revocable trust” or “inter vivos” trust. The individual creating the trust often serves as the trustee, retaining control over the assets while alive. One of the primary advantages of a living trust is that it allows assets to pass to beneficiaries without going through probate, helping to save time, reduce costs and maintain privacy. No-contest clause. A provision in a will or trust stating that an individual who pursues a legal challenge to assets will forfeit his or her inheritance or interest. Pour-over will. A will used upon death to pass to a living trust the ownership of assets that weren’t transferred to the trust during life. Power of appointment. The power granted to an individual under a trust that authorizes him or her to distribute assets on the termination of his or her interest in the trust or in certain other circumstances. Power of attorney. A legal document authorizing someone to act as attorney-in-fact for another person, relating to financial and/or health matters. A “durable” POA continues if the person is incapacitated. Probate. The legal process of settling an estate in which the validity of the will is proven, the deceased’s assets and debts are identified, all debts and taxes are paid, and the remaining assets are distributed. Qualified disclaimer. The formal refusal by a beneficiary to accept an inheritance or gift, which allows the inheritance or gift to pass to the successor beneficiary. Spendthrift clause. A clause in a will or trust restricting the ability of a beneficiary (such as a child under a specified age) to transfer or distribute assets. Tenancy by the entirety. An ownership right between two spouses in which property automatically passes to the surviving spouse on the death of the first spouse. Tenancy in common. An ownership right in which each person possesses rights and ownership of an undivided interest in the property. If you have questions about the meanings of these terms, contact us. We’d be pleased to provide context for any estate planning term you’re unfamiliar with. © 2026 

Strategic alliances: Collaborate now, possibly combine later

April 29, 2026
Even if you aren’t currently preparing to sell your business, you might want to think strategically about your eventual buyer. Sophisticated buyers won’t only look at your financials, they’ll also evaluate how your company fits into their long-term business plan. One way to strengthen current profitability and future exit options is with a strategic alliance. Current and long-term objectives Strategic alliances are structured in several ways, including joint ventures, revenue-sharing arrangements and co-development agreements. In some relationships, the two companies simply agree to work together on a particular project. Others involve long-term agreements, with the end game being a merger. Alliances can have set expiration dates or be renewed at intervals after they pass performance reviews. Among the many reasons companies pursue alliances are to leverage core assets, expand sales capacities and reduce operating costs. Your company doesn’t have to enter into a strategic alliance to make it easier to sell one day. It may, after all, be performing well on its own. Instead, look at a potential strategic alliance as a near-term growth and expense-cutting mechanism with long-term benefits. If you agree to an alliance, focus on financial and operational objectives, including achieving economies of scale. For example, by combining orders for everything from raw materials to office supplies, both partners may qualify for supplier discounts and reduce overhead costs. What about jointly purchasing capital equipment or upgrading both companies’ IT networks? Or you may want to find a partner to improve transportation logistics by consolidating warehouses. Another idea: Sharing intellectual property, such as customized software. Keys to success Your strategic alliance may require time and effort to get up and running. But if you’ve thoroughly vetted your partner and have a well-structured agreement in place, you’re likely to realize benefits. If you don’t, and the relationship becomes a drain on resources, take immediate action. Some problems can be fixed. For example, it’s easy for alliances to drift from their original purpose. A partnership forged mainly to upgrade an IT system could wind up focusing on improving employee productivity instead — with mixed results. In this case, the partners could refocus and reinforce their alliance objectives. But if problems seem intractable, it’s usually better to terminate the alliance. Profitable arrangements Not only can strategic alliances be mutually profitable, but they can help both partners envision a permanently combined company. Alliances often begin informally or as short-term agreements that eventually lead to mergers when the companies realize their synergistic potential. A successful prior relationship can smooth the merger process. Before joining a strategic alliance, companies typically conduct due diligence on one another. Financial and other conditions can certainly change between the initiation of a strategic alliance and the beginning of merger negotiations. But a well-structured alliance allows partners to keep tabs on each other. If one of the companies experiences leadership challenges or has trouble getting financing, the other is likely to know about it. Such knowledge can speed up the merger transaction process and simplify integration. Exercise in discipline Regardless of whether your business eventually merges with a strategic partner, the discipline of building and managing your relationship can strengthen operations and expand your market reach. It can also enhance financial transparency and position your business more favorably to potential buyers. Contact us for help honing your financial objectives, vetting possible alliance partners and selling your business. © 2026 

IRS issues final regulations on tips tax break

April 28, 2026
Last year, a new income tax deduction for qualified cash tips went into effect under the One Big Beautiful Bill Act (OBBBA). The break is scheduled to expire after 2028. In September 2025, the IRS released proposed regulations to provide guidance for taxpayers. The IRS has now published final regs that largely mirror the proposed regs but also include some important clarifications and additions. What does the deduction cover? Under the OBBBA, individual taxpayers can claim a tax deduction, available to both itemizers and nonitemizers, for up to $25,000 in “qualified tips.” The deduction begins to phase out if your modified adjusted gross income (MAGI) exceeds $150,000, or $300,000 if you’re married filing jointly. The deduction is completely phased out if your MAGI reaches $400,000, or $550,000 if you’re a joint filer. (Married taxpayers filing separately can’t claim the tips deduction.) Important: The $25,000 limit applies per tax return, so joint filers who both receive qualified tips can’t claim two separate deductions. In addition, tips remain subject to federal payroll taxes and, where applicable, state income and payroll taxes. Qualified tips generally refers to tips paid in cash (or an equivalent medium, such as checks or credit and debit cards) to an individual in an occupation that customarily and regularly received tips on or before December 31, 2024. They must be paid voluntarily, without any consequence for nonpayment, in an amount determined by the payor and without negotiation. Tips received in the course of a specified service trade or business are excluded. What’s in the final regs? The final regs address several critical areas, including: Eligible occupations. The proposed regs identified 68 eligible occupations in eight categories. The final regs expand the list to 71 occupations (adding visual artists, floral designers and gas pump attendants) and tweaked some of the categories, ending up with: Beverage and Food Service, Entertainment and Events, Hospitality and Guest Services, Home Services, Personal Services, Personal Appearance and Wellness, Recreation and Instruction, and Transportation and Delivery. The final regs also expanded some of the proposed regs’ categories and clarified others. For example, they added “app/platform-based delivery person” to the illustrative list for the “Goods Delivery People” occupation in the “Transportation and Delivery” category. The final regs also include two new examples dealing with payments to digital content creators. If customers’ payments give them access to the content, the payments are treated as compensation for services provided. But if customers make voluntary payments after gaining access to the content, the payments are tips. Digital assets. The final regs state that digital assets aren’t considered cash tips — for now. Thus, they’re currently not eligible for the tips deduction. But the IRS has indicated it will consider the treatment of stablecoins in connection with the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act and any future legislation that modifies the characterization of digital assets. Voluntariness. Under the proposed regs, service charges, automatic gratuities and any other mandatory amounts automatically added to a customer’s bill by the vendor or establishment generally weren’t considered voluntary, even if the amounts were subsequently distributed to employees. To be voluntary, the customer must be expressly provided an option to disregard or modify amounts added to a bill. The final regs retain this approach. However, they modify the language to make clear that a tip is voluntary if the customer has the option to reduce the tip amount to zero. So tips made on POS systems with a tip slider that goes to zero or an option for the customer to select “other” and enter zero are voluntary. Note: Payments in excess of mandatory amounts are voluntary. Managers/supervisors. Under the final regs, tips received by a manager or supervisor via a voluntary or mandatory tip-sharing arrangement, such as a tip pool, aren’t considered qualified tips. But tips received directly by supervisors or managers for services they provided in the course of duties performed in an eligible occupation (for example, performing the duties of wait staff while the restaurant is crowded) are qualified tips if all other requirements are satisfied. Anti-abuse rules. To prevent the reclassification of income as qualified tips, under the proposed regs, a payment wasn’t a qualified tip if the recipient had an ownership interest in or was employed by the payor of the tip. The final regs relax this standard somewhat. Under the final regs, an amount isn’t a qualified tip if, based on all relevant facts and circumstances, the amount is a recharacterization of wages or payment for goods or services for the purpose of claiming the deduction. Facts and circumstances that might indicate that wages, payment for services or other income have been recharacterized as tips in order to claim the deduction include when: The invoiced charge for services is less than the payment from the payor shown on a related receipt, and the amount of the cash tip reported on the receipt approximates the difference between the invoiced charge and the payment amount on the receipt, and A significant shift in historical tipping or payment practices between the payor and the tip recipient occurs. Moreover, the final regs establish an irrebuttable presumption that a “tip” reflects a recharacterization of wages, payment for services or other income when the employer is the payor of a cash tip received by the employee. The presumption also is triggered if the tip recipient has a direct ownership interest in the tip payor. Questions? If you receive tips for work you perform, check the list of occupations eligible for the deduction and plan accordingly. If you have any questions about this tax break, contact us. We can help you determine if the tips you receive qualify for the deduction. © 2026 

Tax mitigation strategies when rebalancing your investment portfolio

April 28, 2026
Large stock market gains in recent years, coupled with some significant volatility in 2026, have left many investors with portfolios that are out of balance with their desired asset allocation. If you haven’t rebalanced recently, it may be time to do so. But you also must consider the tax implications. Careful planning can minimize the tax cost of rebalancing. What does rebalancing mean? When you built your investment portfolio, you took several factors into account, such as your performance goals, risk tolerance and age, to arrive at an allocation across asset classes (such as money market funds, stocks and bonds) and subcategories (such as small-cap vs. mid-cap vs. large-cap U.S stocks and U.S. Treasury vs. municipal bonds). When one asset class (or subcategory) outperforms, it will become a larger portion of your portfolio than your original asset allocation. This situation can potentially increase your risk and cause your portfolio to no longer align with your goals. To keep your asset allocation in alignment, monitor your portfolio regularly and rebalance it as needed. Rebalancing involves selling some investments in classes that have become overweighted, usually appreciated stocks and mutual fund shares. You then reinvest the proceeds in other asset classes to help achieve your desired allocation. But the gain you recognize from selling appreciated investments will be currently taxable — unless the investments are held in tax-advantaged retirement accounts, such as 401(k)s and IRAs. Taxable brokerage accounts When you file your tax return, your recognized capital gains for the year are netted against your recognized capital losses. If your gains in your taxable accounts exceed your losses, you have a net capital gain. If a net capital gain is from investments held for more than a year, it will be taxed at the federal long-term gains rate. Most individuals will pay 15%, but, depending on your income, the rate could be 0% or 20%. Also depending on your income, you may owe the 3.8% net investment income tax (NIIT) on all or part of your net long-term gain. Depending on your state, you might owe state income tax, too. If you have a net capital gain from investments held for one year or less, it will be taxed at the short-term gains rate. This is your ordinary federal income tax rate, which may be as high as 37%. You may also owe the NIIT on all or part of your net short-term gain. And, again, you might owe state income tax. If losses in your taxable accounts for the year exceed your gains, you have a net capital loss. You can deduct the loss against up to $3,000 of ordinary income ($1,500 if you’re married and file separately). Any remaining net capital loss is carried over to next year. Tax-advantaged retirement accounts If you sell assets held in a tax-advantaged retirement account, the resulting gains and losses affect your account balance. But they have no tax impact until you start taking withdrawals. If it’s a non-Roth account, the taxable portion of withdrawals (generally any amount attributable to appreciation or to contributions that were pretax or deductible) will be taxed at your ordinary federal income tax rate. Depending on your state, you may also owe state income tax. If it’s a Roth account, qualified withdrawals will generally be income-tax-free for federal purposes. This includes withdrawals attributable to appreciation. Tax-smart strategies If you have both taxable and tax-advantaged accounts, consider them together when rebalancing your portfolio. For example, let’s say your overall portfolio across brokerage and retirement accounts has become overweighted in large-cap U.S. stocks. You can save taxes for the current year if you sell some of this appreciated stock from a retirement account because the gain won’t be taxed. Sometimes selling appreciated assets in a taxable brokerage account will be necessary to achieve rebalancing goals. In this case, look to see if there are also assets in that account (or another taxable account) that you can sell at a loss. The recognized loss can offset some or all of your capital gains on the appreciated assets you sell. Remember that selling assets at a loss in your tax-advantaged retirement account won’t provide a current-year tax loss. If you need to sell appreciated assets in a brokerage account and you won’t be able to recognize enough losses to offset your gains, try to sell assets you’ve held more than one year. That way, the gain will be taxed at your lower long-term gains rate. Rebalancing involves not only selling assets in classes that have become overweighted but also using the proceeds to buy assets in classes that have become underweighted. As you invest in new assets, consider which assets make more sense to hold in taxable vs. tax-advantaged accounts. It generally makes sense to hold the investments you think will generate the highest long-term returns in a Roth account, because you can eventually take the resulting income and gains out free of federal income taxes. And if you do a lot of short-term trading that would generate high-taxed short-term gains in a taxable brokerage firm account, it makes sense to do the trading in a tax-advantaged retirement account. Look beyond current tax consequences Despite the significant impact taxes can have, don’t make investment decisions — including those related to rebalancing your portfolio — based primarily on current-year tax consequences. You should also consider investment goals, time horizon, risk tolerance, investment-specific factors, fees and the long-term tax consequences. If you have questions or would like more information about investment portfolio rebalancing, contact us. © 2026