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 

An ILIT has many benefits, but options are available to undo it

April 2, 2026
Life insurance can provide peace of mind. But if your estate is large enough that estate taxes are a concern, it’s important not to own the policy at death. Why? The policy’s proceeds will be included in your taxable estate. To avoid this result, a common estate planning strategy is to set up an irrevocable life insurance trust (ILIT) to hold the policy. However, there may come a time when you no longer need the ILIT. Does its irrevocable nature mean you’re stuck with it forever? Maybe not. Depending on the ILIT’s terms and applicable state law, you might have the option of pulling a life insurance policy out of an ILIT or even unwinding the ILIT entirely. How does an ILIT work? An ILIT shields life insurance proceeds from estate tax because the trust, rather than the insured, owns the policy. (Note, however, that under the “three-year rule,” if you transfer an existing policy to an ILIT and then die within three years, the proceeds remain taxable. That’s why it’s preferable to have the ILIT purchase a new policy, if possible, rather than transferring an existing policy to the trust.) The key to removing the policy from your taxable estate is to relinquish all “incidents of ownership.” This means, for example, that you can’t retain the power to change beneficiaries; assign, surrender or cancel the policy; borrow against the policy’s cash value; or pledge the policy as security for a loan (though the trustee may have the power to do these things). What are the options for undoing an ILIT? Generally, there are two reasons you might want to undo an ILIT: You no longer need life insurance, or You still need life insurance, but your estate isn’t large enough to trigger estate tax, and you’d like to eliminate the restrictions and expense associated with the ILIT structure. Although your ability to undo an ILIT depends on the ILIT’s terms and applicable state law, potential options include: Allowing the insurance to lapse. This may be a viable option if the ILIT holds a term life insurance policy that you no longer need (and no other assets). You simply stop making contributions to the trust to cover premium payments. Technically, the ILIT continues to exist. But once the policy lapses, the ILIT owns no assets. It’s also possible to allow a permanent life insurance policy to lapse, but other options may be preferable — especially if the policy has a significant cash value. Swapping the policy for cash or other assets. Many ILITs permit the grantor to retrieve a policy from an ILIT by substituting cash or other assets of equivalent value. If you have illiquid assets but need cash, you may be able to gain access to a policy’s cash value by swapping the policy for illiquid assets of equivalent value. Surrendering or selling the policy. If your ILIT holds a permanent insurance policy, the trust might surrender it, which will preserve its cash value but avoid the need to continue paying premiums. Alternatively, if you’re eligible, the trust could sell the policy in a life settlement transaction. Distributing the trust assets. Some ILITs give the trustee the discretion to distribute trust funds (including the policy’s cash value, other trust assets or possibly the policy itself) to your beneficiaries, such as your spouse or children. Typically, these distributions are limited to funds needed for “health, education, maintenance and support.” Going to court. If the ILIT’s terms don’t permit the trustee to unwind the trust, it may be possible to obtain a court order to terminate it. For example, state law may permit a court to modify or terminate an ILIT if unanticipated circumstances require changes to achieve the trust’s purposes or if the grantor and all beneficiaries consent. We’re here to help These are some, but by no means all, of the strategies that may be available to unwind an ILIT. Bear in mind that some of these solutions can have tax implications for you or your beneficiaries. Contact us to learn more about ILITs. © 2026 

Benefits that help you care for your company’s caregivers

April 1, 2026
With caregiving costs rising faster than inflation, it’s harder than ever to juggle parenting young children or caring for elderly relatives while also working nine to five. Your business can help support caregiving employees and boost productivity by offering dependent care flexible spending accounts (FSAs). This benefit provides a tax-advantaged method to pay for eligible caregiving expenses using pretax dollars. Or maybe you want to make a bigger commitment but are concerned about the costs. If you provide child care directly to workers — for example, by setting up a day care facility in your building — your company may qualify for a significant tax credit. When employees opt in To sponsor dependent care FSAs, you’ll need to implement a dependent care assistance program (DCAP), which enables you to retain ownership of your workers’ FSAs. Participating employees must opt in, typically during your company’s open enrollment period or after experiencing a qualifying life event. Then they make pretax compensation deferrals to their accounts, up to $7,500 annually for married couples filing jointly, single filers and heads of households, $3,750 for those married and filing separately. These amounts aren’t indexed for inflation. Workers can use their FSA balances to pay for eligible expenses, including day care, before- and after-school care, summer day camps, and care for dependent adults who can’t care for themselves. Qualifying expenses must enable participants (and, if applicable, their spouses) to work or seek employment. Using pretax dollars to fund accounts allows participants to pay for qualifying care while reducing their taxable incomes. Employers win, too For employers, sponsoring dependent care FSAs also offers potential advantages. First, these accounts can help attract strong job candidates and retain employees. Second, because participants’ contributions occur pretax, they’re exempt from Social Security and Medicare taxes. That reduces your business’s (and your employees’) payroll tax burden. To increase dependent care FSA participation, you may make contributions to employees’ accounts. However, the $7,500/$3,750 annual contribution limits apply to combined employer-employee contributions. Note that you can’t deduct contributions as a business expense. You’ll need to ensure that your DCAP complies with IRS regulations, including nondiscrimination rules. Proper recordkeeping, timely reimbursements and clear communication are also critical. Be sure to educate participants about the “use-it-or-lose-it” rule that says FSA balances generally must be spent by the end of the year. (Unused account funds generally revert to employers.) Be sure to train employees to estimate expenses and submit claims to minimize the risk of losing FSA funds. And let participants know their FSAs aren’t portable — meaning they can’t take their balances with them if they leave your company. Tax help with costs Another way to retain loyal, hardworking staff is to provide child care directly. For 2026, you may be able to claim an employer-provided child care tax credit equal to 40% of your qualified expenses for providing child care to employees, plus 10% of qualified resource and referral expenditures, up to $500,000. For eligible small businesses, these amounts are 50% and up to $600,000, respectively. The maximum dollar amount will be adjusted annually for inflation after 2026. (The additional 10% credit for resource and referral expenses will continue to be available.) Qualified costs include those spent to acquire, construct, renovate and operate a child care facility. Or you can claim expenses for contracting with a licensed child care facility. If you provide on-site care, at least 30% of the enrolled children must be your employees’ dependents. Competitive package Dependent care FSAs and employer-offered child care can be competitive additions to your employee benefits package. But because of the resources involved, think carefully before designing a DCAP or establishing a child care facility. Your workforce may not want them. Consider distributing a survey to gauge interest before you commit to offering new fringe benefits. And to help ensure you’re offering the most cost- and tax-effective benefits to your workforce, contact us. We can review your benefits lineup, potentially suggest changes and advise on program setup and administration. © 2026 

Are you eligible for mileage deductions?

March 31, 2026
Whether you’re filing your 2025 individual income tax return or planning for 2026, it’s important to know if you can deduct vehicle-related expenses. A change that was made permanent by last year’s One Big Beautiful Bill Act (OBBBA) limits who can claim a deduction for business mileage. But you might still be eligible, and deductions also may be available if you use your vehicle for certain nonbusiness purposes. Rules have been evolving Historically, if you were an employee, you potentially could deduct unreimbursed business mileage as a miscellaneous itemized deduction subject to a 2% of adjusted gross income (AGI) floor. But for 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) suspended miscellaneous itemized deductions subject to the 2% floor. And the OBBBA made that suspension permanent. This means employees can’t deduct business mileage related to their employment. (However, if your employer reimburses you for mileage under an accountable plan, those reimbursements are excluded from your taxable income.) If you’re self-employed, expenses for business use of your vehicle are deducted from self-employment income. Therefore, they’re not affected by the permanent suspension of miscellaneous itemized deductions subject to the 2% floor and are still deductible — as long as they otherwise qualify. For example, commuting doesn’t qualify, but driving from your home or office to a customer’s location does generally qualify. Here are three other types of vehicle use that might make you eligible for mileage deductions: 1. Moving. Before 2018, work-related moving expenses were generally deductible without having to itemize deductions. But for 2018 through 2025, under the TCJA, moving expenses are deductible only for certain military families. The OBBBA made this change permanent, except that, beginning in 2026, certain intelligence community members are also eligible. 2. Medical. Expenses related to using your vehicle to get to and from medical appointments continue to be deductible as part of the medical expense itemized deduction. However, medical expenses are deductible only to the extent they exceed 7.5% of your AGI. It can be hard for taxpayers with larger AGIs to exceed this floor. And, with the high standard deduction made available by the TCJA and made permanent (and slightly increased) by the OBBBA, fewer taxpayers are benefiting from itemizing. 3. Charitable. Expenses related to using your vehicle for charitable purposes (if unreimbursed by the charity) continue to be deductible as a charitable itemized deduction. Unlike the medical expense deduction, no floor applies to the charitable deduction for 2025. But, under the OBBBA, a 0.5% of AGI floor goes into effect beginning in 2026. Mileage deduction rates vary Rather than keeping track of your actual vehicle expenses, you can use a standard mileage rate to compute your deductions. The rates vary depending on the driving purpose and the year: Business: 70 cents (2025), 72.5 cents (2026) Moving: 21 cents (2025), 20.5 cents (2026) Medical: 21 cents (2025), 20.5 cents (2026) Charitable: 14 cents (2025 and 2026) The business rate is significantly higher because it takes into account depreciation, which isn’t an allowable vehicle expense deduction for medical, moving or charitable deduction purposes. The charitable rate is the lowest because it isn’t annually indexed for inflation. Occasionally, when gas prices increase substantially during the year, the IRS will increase the mileage rates midyear. If you choose to claim deductions based on the standard mileage rate, you may also deduct actual parking fees and tolls. Substantiation is critical Without adequate records, the IRS may disallow your vehicle expense deduction, even if the expense would otherwise qualify. If you use the standard mileage rate, your records should show the date, mileage, purpose and destination of each trip. A mileage log kept throughout the year is one of the simplest ways to support your deduction. If you choose to deduct actual expenses, documentation is also critical. Which specific expenses you can deduct depends on whether you’re claiming the deduction for business, moving, medical or charitable use of your vehicle. Evaluating your deduction opportunities If you’re self-employed or itemize deductions, you’re more likely to be able to benefit from vehicle-related deductions. But other factors can affect your potential benefit, such as whether your total expenses exceed applicable deduction floors. Also keep in mind that you might be eligible for the new auto loan interest expense deduction for a vehicle purchased in 2025 or 2026. Contact us to discuss your particular situation. We can help you claim any vehicle-related deductions you’re entitled to on your 2025 return if you haven’t filed yet. And we can help determine what steps you can take now to maximize your deduction opportunities for 2026. © 2026 

Debt vs. equity: Classification counts when shareholders put money into their corporations

March 30, 2026
If you operate your business as a C corporation, how you put money into your company — and how you take it back out — can have a major impact on your tax bill. Payments from shareholders to fund the business can either be classified as capital contributions (equity) or shareholder loans (debt). That might sound like an accounting technicality, but it has real tax consequences because our federal income tax system treats corporate debt more favorably than corporate equity. Put simply, equity can lead to double taxation; loans can help you avoid it. Why it matters Companies occasionally need capital infusions. Start-ups need cash to help get the business up and running. And established businesses may need additional funds to pursue growth opportunities or cover short-term cash flow gaps. If your business needs money, you could seek financing from a third-party lender. But for closely held businesses, shareholders are often a more convenient (and affordable) source of financing. Some closely held C corporations are funded exclusively with equity, but many are intentionally structured with a mix of equity and shareholder loans. Lending money to your corporation can be a tax-smart move over the long run. That’s because when you later get your money back out of the corporation in the form of loan repayments, the repayments of loan principal will generally be tax-free. Interest payments on a shareholder loan are taxable to you as ordinary income, but the corporation gets an offsetting deduction. In essence, shareholder loans provide a built-in, tax-advantaged mechanism for C corporation owners to get cash out of the business. In contrast, making a capital contribution (a stock investment) can be costly from a tax perspective. When you later, as an equity investor, want to take cash out of the corporation, the withdrawals may be treated as nondeductible dividends to the extent of the corporation’s earnings and profits. This results in double taxation. In other words, the corporation already paid income taxes on the profits (at a flat 21% rate), and you as a shareholder must pay individual-level taxes on the dividends. The maximum federal rate on qualified dividends is 20%, but most taxpayers pay 15%. Individuals may also owe the 3.8% net investment income tax (NIIT) on dividends. How it works Suppose your C corporation needs a $5 million capital infusion. As the sole shareholder, you ante up with a $2 million capital contribution and a $3 million loan. You execute a formal, written note that specifies the loan terms, including the interest rate, maturity date, any collateral pledged to secure the loan and a repayment schedule. If the interest rate on your loan to the company equals or exceeds the applicable federal rate (AFR), you’ll avoid federal income tax complications and possible adverse tax results. AFRs can change monthly. In April 2026, the monthly AFR for mid-term loans with terms of three to nine years is only 3.75%. This is significantly lower than the rate you’d get from a third-party lender. This capital structure allows you to recover $3 million of your investment in the company as tax-free repayments of loan principal. The interest payments give you additional cash from the corporation without double taxation, because your company can deduct the interest. If you instead supply the full $5 million as a capital contribution and later want to withdraw money, all or part of the withdrawal could be treated as a double-taxed dividend. For instance, say you withdraw $3 million after a few years, and the entire amount is treated as a taxable dividend. Assuming you’d be subject to the maximum 20% federal income tax rate and the 3.8% NIIT, you’d owe Uncle Sam $714,000 on the withdrawal ($3 million × 23.8%). You could have avoided incurring that tax liability by making a $2 million capital contribution and a $3 million loan to the corporation. Bottom line Structuring part of a needed capital infusion as a loan — rather than all equity — can minimize double taxation, giving you a more tax-efficient way to access cash in the future. But this arrangement only works if it’s properly documented and respected as bona fide debt. This includes 1) drafting a written promissory note with a stated interest rate and stated repayment dates, and 2) making timely principal and interest payments. The IRS may reclassify shareholder loans as equity if they’re not properly structured, thereby eliminating the intended tax benefits. If you’d like to take advantage of this strategy, we can explain your options and help you structure the loan to reduce the chance of IRS reclassification. © 2026 

How can an FLP fit into your overall estate planning strategy?

March 26, 2026
A family limited partnership (FLP) allows you to manage and protect your wealth while gradually transferring it to your children or other heirs. Additional benefits include potential tax savings and protection from creditors. And you don’t have to own a business to have an FLP. FLPs in a nutshell To take advantage of an FLP, you form a limited partnership to transfer a family business, real estate, investments or other assets. Initially, you receive a general partnership interest of 1% or 2% and limited partnership interests totaling 99% or 98%. You then sell or gift the limited partnership interests to your children or other family members. As a general partner, you retain management control over the partnership assets, even after you’ve transferred most of the assets’ value to other family members. The significant benefit here is that an FLP removes wealth from your estate while the federal gift and estate tax exemption is at a record high without you immediately parting with control over that wealth. For 2026, the exemption amount is $15 million ($30 million on a combined basis for married couples). (Although there’s no longer an expiration date for the high exemption, lawmakers could still reduce the amount in the future.) Limited partners, on the other hand, have minimal control over the partnership, and their ability to sell their interests to nonfamily members is generally highly restricted by terms of the partnership agreement. This allows the older generation to consolidate management of family assets and keep them in the family. Reduce your taxable estate Transferring FLP interests to family members removes the value of the underlying assets from your taxable estate. Although interests that are gifted rather than sold (or sold for less than fair market value) are taxable gifts, they can be shielded (in whole or in part) from federal gift tax by your gift and estate tax exemption. In addition, because limited partnership interests possess little control over the partnership and are challenging to sell, their value for gift tax purposes is generally discounted substantially. This allows the older generation to give away even more wealth tax-free. Shift income to a lower tax bracket A properly structured and operated FLP allows you to shift income to your children or other family members who may be in lower tax brackets. An FLP is a pass-through entity for income tax purposes. In other words, there’s no entity-level federal tax. Instead, the FLP’s income (as well as its deductions, credits and other items) is passed through to the individual partner, who reports his or her share on a personal income tax return. So, for example, if you’re in the 35% tax bracket and transfer FLP interests to family members in the 10% or 12% bracket, the tax savings can be substantial. However, your ability to shift income to children may be limited because of the “kiddie” tax, which can apply to children as old as 23, depending on the circumstances. Increase asset protection Transferring assets to an FLP can place them beyond the reach of certain creditors. Generally, an FLP’s assets are protected against claims by the limited partners’ personal creditors. In most cases, those creditors are limited to obtaining rights to distributions, if any, received by a limited partner. In addition, limited partners’ personal assets held outside the FLP are generally shielded against claims by the FLP’s creditors. General partners don’t enjoy the same protections. Still, they may be able to limit their personal liability by forming a corporation or limited liability company to hold their general partnership interests. Seek professional guidance A potential downside to consider is that establishing and maintaining an FLP requires legal and tax expertise, ongoing administrative oversight and strict adherence to partnership formalities to withstand IRS scrutiny. Contact us for help determining whether an FLP would be beneficial for your family. © 2026

Cross-functional teams can boost collaboration — and sales

March 25, 2026
“Cross-functional” sales teams that collaborate with other departments often perform more effectively than siloed ones. By providing feedback and support, employees with varied skill sets and knowledge bases can help your sales team create more holistic sales strategies, better align product offerings with customer needs and efficiently adapt to market changes. Here’s how sales can leverage the expertise of marketing, product development, customer service, finance and other internal stakeholders. Fighting silos A cross-functional team is any group of employees from different departments brought together to solve a problem or pursue a goal. Your company might assemble such teams to develop new products or services, implement technology upgrades, and complete short-term projects. However, the cross-functional approach really shines when applied to sales and marketing. Even though these departments are closely connected, they often operate in separate spheres. Silos can also exist within the sales team, where individuals work largely on their own and share limited information. Many salespeople spend their time interacting with prospective customers or clients. They might only “come up for air” to share information and experiences at sales meetings or in conversations with managers. This can result in missed opportunities to communicate insights on customers, prices and other issues. Team members By building a cross-functional sales team, you can eliminate such silos. You should aim to create an environment where employees feel comfortable sharing information and working together. Seek early buy-in from employees who communicate well and are open to collaboration. They can help you promote the concept and encourage broader employee buy-in. Your team will obviously need to include members of both the sales and marketing departments. But don’t stop there. Someone from your IT department could help recommend tech solutions for sales department challenges. A customer service rep might be able to provide insights into how customers are likely to respond to changes in product features. A finance team member could weigh in on profitability by product or customer. Cross-functional sales teams don’t require complex leadership structures. In fact, appointing a team leader from within the group can encourage open participation and accountability. Other benefits The advantages of forming a cross-functional sales team extend beyond improving sales results: Such teams can infuse fresh perspectives into all your departments, inspire greater communication companywide and support more consistent decision-making. Over time, this approach can lead to clearer visibility into what’s driving revenue and profitability. If you’re looking to better align sales with your overall business strategy, contact us. We can help you identify where cross-functional collaboration will likely pay off. © 2026 

Don’t miss your opportunity to make a 2025 IRA contribution — whether you can deduct it or not

March 24, 2026
Generally, each year you can contribute up to the annual limit to a traditional or Roth IRA (or a combination of the two). But once the contribution deadline has passed, the opportunity to contribute for that year is lost forever. The deadline for 2025 IRA contributions is April 15, 2026. You may be eligible to deduct all or part of your IRA contribution and save taxes on your 2025 return. But even if you can’t claim a deduction, contributing can still be beneficial. How much can you contribute? For 2025, the IRA contribution limit is $7,000. If you’re age 50 or older, you can make an additional $1,000 catch-up contribution. Generally, contributions can’t exceed the IRA owner’s earned income. However, spousal IRAs allow contributions to be made to an IRA in a nonworking spouse’s name based on the working spouse’s earned income. The contribution limit applies to traditional and Roth IRAs on a combined basis. So, assuming you’re eligible, you can contribute $7,000 to a traditional IRA or $7,000 to a Roth IRA — or you can split the limit and, say, contribute $5,000 to a traditional IRA and $2,000 to a Roth (or whatever split you prefer that doesn’t exceed $7,000). Are you eligible to deduct your contributions? Deductible traditional IRA contributions reduce your current tax bill. Earnings in the IRA are also tax deferred. However, every dollar you withdraw is taxed (and subject to a 10% penalty before age 59½, unless an exception applies). You can make a fully deductible contribution to a traditional IRA if you (and your spouse, if you’re married) aren’t an active participant in an employer-sponsored retirement plan. But if you (and/or your spouse) are an active participant in an employer plan, your deduction might be partially or fully phased out. The phaseout applies if your modified adjusted gross income (MAGI) exceeds certain levels that vary from year to year by filing status. For 2025, the deduction phases out over the following MAGI ranges: If you’re single or a head of household: $79,000 to $89,000. If you’re married filing jointly and you’re covered by an employer plan: $126,000 to $146,000. If you’re a joint filer and not actively participating in an employer retirement plan but your spouse is: $236,000 to $246,000. If you’re married filing separately and lived with your spouse at any time during 2025: $0 to $10,000. If your MAGI is in the applicable range, you can make a deductible contribution equal to a portion of the $7,000 contribution limit. (The specific amount depends on where your MAGI falls within the range.) If it exceeds the applicable range, you can’t deduct any IRA contribution. Are you eligible to make Roth IRA contributions? Contributions to a Roth IRA aren’t deductible. However, withdrawals from a Roth IRA are tax-free as long as the account has been open at least five years and you’re age 59½ or older. This means that growth in the account is never taxed as long as you meet those two requirements. There are income limits on who can make Roth IRA contributions. For 2025, the ability to contribute phases out over the following MAGIs: If you’re single or a head of household: $150,000 to $165,000. If you’re married filing jointly: $236,000 to $246,000. If you’re married filing separately and lived with your spouse at any time during 2025: $0 to $10,000. You can make a Roth contribution equal to a portion of the $7,000 contribution limit if your MAGI falls within the applicable range. (The specific amount depends on where your MAGI falls within the range.) But you can’t make any Roth contribution if it exceeds the top of the range. Should you make nondeductible traditional IRA contributions? If you’re ineligible to make Roth IRA contributions or deductible traditional IRA contributions because your income is too high, a nondeductible traditional IRA contribution can be beneficial. While it won’t reduce your 2025 taxes, the contribution can grow tax-deferred. When you take qualified withdrawals in retirement, only the portion attributable to the growth will be taxed. The portion attributable to your contribution will be tax-free because the contribution was made with income that had already been taxed. If you don’t already have a traditional IRA, you can use a nondeductible contribution to create a “backdoor” Roth IRA. You set up a traditional IRA and make a nondeductible contribution to it. Then you can convert the traditional account to a Roth account as soon as the contribution transaction clears. Normally, Roth conversions are taxable. But in this case, the only tax due will be on any growth in the account between the time you made the contribution and the date of conversion. What else is there to consider? Making a 2025 IRA contribution can provide tax savings today or when you take distributions in retirement. And you can benefit from tax-deferred or tax-free compounding. But you need to contribute by April 15, 2026 — even if you file for an extension on your 2025 return. And be sure to indicate that it’s for 2025 and not 2026. Do you have more questions about IRA contributions or other tax-advantaged retirement savings options? Contact us. © 2026 

Should your business consider a fiscal year end?

March 23, 2026
Most businesses close their books for tax and accounting purposes on December 31 because it aligns with the calendar year. But a calendar year isn’t always the best option. For some companies, choosing a fiscal year end that better reflects their business cycle can improve financial reporting and simplify year-end procedures and tax filing. Here’s what you should know when deciding on the right tax year end for your business. Fiscal-year basics A fiscal year is a 12-month accounting period that doesn’t end on December 31. For example, a company might operate on a fiscal year running from July 1 through June 30. Some businesses use a 52- or 53-week fiscal year. These periods don’t necessarily end on the last day of a month. Instead, they may close on the same weekday each year, such as the last Friday in March. This approach is common in industries where weekly activity cycles are more meaningful than monthly reporting. Using a fiscal year also changes tax filing deadlines. Pass-through entities — including partnerships, limited liability companies and S corporations — generally must file their tax returns by the 15th day of the third month after their fiscal year ends. For example, a business with a June 30 fiscal year end would file its return by September 15. Fiscal-year C corporations generally must file by the 15th day of the fourth month following the fiscal year close. (These correspond to the calendar-year deadlines of March 15 for pass-throughs, which is the 15th day of the third month after December 31, and April 15 for C corporations, which is the 15th day of the fourth month after December 31.) When a fiscal year makes sense Not every business can choose its own tax year. Sole proprietorships typically must use a calendar year because the business isn’t legally separate from its owner, who files an individual tax return based on the calendar year. Other businesses may be able to adopt a fiscal year if they can demonstrate a valid business purpose or qualify for certain IRS elections. In practice, this usually means aligning the tax year with the company’s operating cycle. For seasonal businesses, a fiscal year can provide a clearer view of performance. Construction companies, farms, accounting firms and retailers often experience significant fluctuations throughout the year. Consider a snowplowing company that earns most of its revenue between November and March. A December 31 year end divides one winter season into two tax years, making it harder to evaluate profitability for that period. A fiscal year ending after the winter season may present financial results more accurately than a calendar year would. Businesses that restructure or significantly change their operations may also consider changing their tax year. Doing so generally requires IRS approval by filing Form 1128, “Application to Adopt, Change or Retain a Tax Year.” Companies that change their tax year usually must also file a return for the short period created during the transition. Beyond taxes The benefits of adopting a fiscal year aren’t limited to tax reporting. Choosing the right year end can also make financial reporting and planning easier.  If a company’s busiest months fall late in the calendar year, closing the books on December 31 can disrupt operations and strain accounting staff during an already demanding period. Moving the year end to a slower time can make it easier to perform inventory counts, review contracts and complete financial statements. This can be especially helpful for businesses that rely on detailed job costing or inventory management. Completing year-end accounting tasks when operations are less hectic can reduce errors and improve the financial data that business owners and stakeholders rely on for decision-making. We can help Selecting a fiscal year end involves more than choosing a convenient date. The right year end can streamline reporting, provide more meaningful insights and support better planning. If you’re thinking about a change, contact us. We’ll help you determine the best fit for your operations and guide you through the IRS approval process. © 2026

IRS releases guidance on new depreciation deduction

March 20, 2026
A new but temporary special depreciation allowance for qualified production property (QPP) was created by last year’s One Big Beautiful Bill Act (OBBBA). It’s available for certain manufacturing-related real property placed in service after July 4, 2025, and before January 1, 2031. Under previous law, taxpayers had to depreciate such property over a 39-year period. The OBBBA allows them to elect a deduction equal to 100% of the property’s adjusted basis in the tax year it’s placed in service — basically, it’s bonus depreciation for certain buildings and production facilities. The IRS recently issued interim guidance (Notice 2026-16) that taxpayers generally can rely on until proposed regulations are published. It clarifies several important issues related to the deduction. Identifying QPP The guidance defines QPP as any portion of nonresidential real property that is: Subject to the Modified Accelerated Cost Recovery System, Used by the taxpayer as “an integral part” of a qualified production activity (QPA, defined below), and Placed in service in the United States or any of its territories. In addition, the property’s construction must begin after January 19, 2025, and before January 1, 2029. Its original use generally must begin with the taxpayer, though certain used property may qualify as QPP under special rules. Property (or a portion of property) is used as an integral part of a QPA if the QPA takes place in the physical space of the property (or a portion of the physical space). Each unit of property (including additions and improvements) must satisfy the integral part requirement on its own, with an exception for “integrated facilities.” Taxpayers can treat multiple properties that operate as an integrated facility on the same piece or contiguous pieces of land as a single unit of property. For example, if a manufacturer constructs a new building to store raw materials and other manufacturing inputs for activities in two factories on the same site, the three buildings constitute a single unit of property for purposes of the integral part requirement. The guidance also includes a de minimis rule: If 95% or more of a property’s physical space satisfies the integral part requirement when the property is placed in service, the taxpayer can elect to treat the entire property as satisfying the requirement. For purposes of determining whether property meets the integral part requirement, property used by a lessee generally isn’t considered to be used by the lessor taxpayer as part of a QPA. The guidance provides exceptions, though, for intercompany leases within consolidated groups and commonly controlled pass-through entities. The guidance specifies several types of ineligible property, including property used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to a QPA. Property used to store finished products is also ineligible. Under the guidance, taxpayers may use any reasonable method to allocate a property’s unadjusted depreciable basis between eligible property and ineligible property. The use of square footage, cost segregation data, architectural or engineering plans, process diagrams, or construction invoices to allocate unadjusted depreciable basis to eligible property may be reasonable methods. Taxpayers can also use any reasonable method to allocate the basis for “dual-use infrastructure” that serves both eligible property and ineligible property (such as an HVAC or sprinkler system). Identifying QPAs A QPA is the manufacturing, production or refining of a qualified product that results in a “substantial transformation” of the qualified product (generally, any tangible personal property except a food or beverage prepared in the same building where it will be sold). The guidance explains that “substantial transformation” refers to the further manufacturing, production or refining of the constituent elements, raw materials, inputs or subcomponents into a final, complete and distinct item of property that’s fundamentally different from those original elements, materials, inputs or subcomponents. The guidance interprets the term QPA somewhat broadly. It says that a QPA can include “essential activities” that are critical to the completion of the product (for example, the receiving and storage of raw materials or other inputs to be used or consumed during a QPA). A QPA also includes certain related activities, such as oversight and direction of the manufacturing, production or refining activities that result in the substantial transformation of a qualified product. The guidance includes specific definitions for “manufacturing,” “production,” “refining” and other important terms. Notably, “production” is limited to activities in the agricultural or chemical industries. And that’s not all The interim guidance also includes special rules, election procedures and a safe harbor for property placed in service in 2025 — as well as information about how depreciation must be recaptured and included in ordinary income if a QPP change in use occurs within 10 years after the property is placed in service. We can help you navigate the rules and maximize this new tax break if you’re eligible. © 2026 

Accounting for intellectual property in your estate plan

March 19, 2026
When most people think about estate planning, they focus primarily on tangible assets, such as real estate, investments and personal property. However, in some cases, intellectual property (IP) can make up a substantial portion of an individual’s wealth. Proper planning can help ensure that these assets are preserved, accurately valued and transferred according to your wishes. Defining IP IP generally falls into four main categories: patents, copyrights, trademarks and trade secrets. We’ll focus here only on patents and copyrights. They’re protected by federal law to promote scientific and creative endeavors by providing inventors and artists exclusive rights to benefit economically from their work for a certain period. Patents protect inventions, and the two most common are utility and design patents. Under federal law, utility patents protect an invention for 20 years from the patent application filing date. (It typically takes at least a year to a year and a half from the date of filing to the date of issue.) Design patents last 15 years from the patent issue date. Copyrights protect the original expression of ideas that are fixed in a “tangible medium of expression,” typically in the form of written works, music, paintings, film and photographs. Unlike patents, which must be approved by the U.S. Patent and Trademark Office, copyright protection kicks in as soon as a work is fixed in a tangible medium. And copyrights last much longer than patents. The specific term depends on various factors. Valuing and transferring IP Valuing IP is a complex process. Unlike physical assets, the value of IP often depends on future income potential. Valuation may consider factors such as licensing agreements, royalty streams, market demand, brand recognition and comparable sales. Often, a professional appraiser is needed to determine fair market value. Accurate valuation is particularly important for estate tax reporting and equitable distribution among heirs. After you know the IP’s value, it’s time to decide whether to transfer the IP to family members, colleagues, charities or others through lifetime gifts or bequests after your death. The gift and estate tax consequences will likely affect your decision. But you also should consider your income needs, as well as who’s in the best position to monitor your IP rights and take advantage of their benefits. If you’ll continue to depend on the IP for your livelihood, hold on to it at least until you’re ready to retire or you no longer need the income. You also might want to retain ownership of the IP if you feel that your children or other beneficiaries lack the desire or wherewithal to take advantage of its economic potential and monitor and protect it against infringers. Whichever strategy you choose, it’s important to plan the transaction carefully to ensure your objectives are achieved. There’s a common misconception that when you transfer ownership of the tangible medium on which IP is recorded, you also transfer the IP rights. But IP rights are separate from the work itself and are retained by the creator. Working with us If you hold intangible assets, such as a patent or copyright, contact us. We can help ensure that these potentially valuable assets are properly accounted for in your estate plan. © 2026