The House passes The One, Big, Beautiful Bill Act: An overview of its tax provisions
May 29, 2025
The U.S. House of Representatives passed its sweeping tax and spending bill, dubbed The One, Big, Beautiful Bill Act (OBBBA), by a vote of 215 to 214. The bill includes extensions of many provisions of the Tax Cuts and Jobs Act (TCJA) that are set to expire on December 31. It also includes some new and enhanced tax breaks. For example, it contains President Trump’s pledge to exempt tips and overtime from income tax.
The bill has now moved to the U.S. Senate for debate, revisions and a vote. Several senators say they can’t support the bill as written and vow to make changes.
Here’s an overview of the major tax proposals included in the House OBBBA.
Business tax provisions
The bill includes several changes that could affect businesses’ tax bills. Among the most notable:
Bonus depreciation. Under the TCJA, first-year bonus depreciation has been phasing down 20 percentage points annually since 2023 and is set to drop to 0% in 2027. (It’s 40% for 2025.) Under the OBBBA, the depreciation deduction would reset to 100% for eligible property acquired and placed in service after January 19, 2025, and before January 1, 2030.
Section 199A qualified business income (QBI) deduction. Created by the TCJA, the QBI deduction is currently available through 2025 to owners of pass-through entities — such as S corporations, partnerships and limited liability companies (LLCs) — as well as to sole proprietors and self-employed individuals. QBI is defined as the net amount of qualified items of income, gain, deduction and loss that are effectively connected with the conduct of a U.S. business. The deduction generally equals 20% of QBI, not to exceed 20% of taxable income. But it’s subject to additional rules and limits that can reduce or eliminate the tax benefit. Under the OBBBA, the deduction would be made permanent. Additionally, the deduction amount would increase to 23% for tax years beginning after 2025.
Domestic research and experimental expenditures. The OBBBA would reinstate a deduction available to businesses that conduct research and experimentation. Specifically, the deduction would apply to research and development costs incurred after 2024 and before 2030. Providing added flexibility, the bill would allow taxpayers to elect whether to deduct or amortize the expenditures. (The requirement under current law to amortize such expenses would be suspended while the deduction is available.)
Section 179 expensing election. This tax break allows businesses to currently deduct (rather than depreciate over a number of years) the cost of purchasing eligible new or used assets, such as equipment, furniture, off-the-shelf computer software and qualified improvement property. An annual expensing limit applies, which begins to phase out dollar-for-dollar when asset acquisitions for the year exceed the Sec. 179 phaseout threshold. (Both amounts are adjusted annually for inflation.) The OBBBA would increase the expensing limit to $2.5 million and the phaseout threshold to $4 million for property placed into service after 2024. The amounts would continue to be adjusted annually for inflation. (Under current law, for 2025, the expensing limit is $1.25 million and the phaseout threshold is $3.13 million.)
Pass-through entity “excess” business losses. The Inflation Reduction Act, through 2028, limits deductions for current-year business losses incurred by noncorporate taxpayers. Such losses generally can offset a taxpayer’s income from other sources, such as salary, interest, dividends and capital gains, only up to an annual limit. “Excess” losses are carried forward to later tax years and can then be deducted under net operating loss rules. The OBBBA would make the excess business loss limitation permanent.
Individual tax provisions
The OBBBA would extend or make permanent many individual tax provisions of the TCJA. Among other things, the new bill would affect:
Individual income tax rates. The OBBBA would make permanent the TCJA income tax rates, including the 37% top individual income tax rate. If a new law isn’t enacted, the top rate would return to 39.6%.
Itemized deduction limitation. The bill would make permanent the repeal of the Pease limitation on itemized deductions. But it would impose a new limitation on itemized deductions for taxpayers in the 37% income tax bracket that would go into effect after 2025.
Standard deduction. The new bill would temporarily boost standard deduction amounts. For tax years 2025 through 2028, the amounts would increase $2,000 for married couples filing jointly, $1,500 for heads of households and $1,000 for single filers. For seniors age 65 or older who meet certain income limits, an additional standard deduction of $4,000 would be available for those years. (Currently, the inflation-adjusted standard deduction amounts for 2025 are $30,000 for joint filers, $22,500 for heads of households and $15,000 for singles.)
Child Tax Credit (CTC). Under current law, the $2,000 per child CTC is set to drop to $1,000 after 2025. The income phaseout thresholds will also be significantly lower. And the requirement to provide the child’s Social Security number (SSN) will be eliminated. The OBBBA would make the CTC permanent, raise it to $2,500 per child for tax years 2025 through 2028 and retain the higher income phaseout thresholds. It would also preserve the requirement to provide a child’s SSN and expand it to require an SSN for the taxpayer (generally the parent) claiming the credit. After 2028, the CTC would return to $2,000 and be adjusted annually for inflation.
State and local tax (SALT) deduction. The OBBBA would increase the TCJA’s SALT deduction cap (which is currently set to expire after 2025) from $10,000 to $40,000 for 2025. The limitation would phase out for taxpayers with incomes over $500,000. After 2025, the cap would increase by 1% annually through 2033.
Miscellaneous itemized deductions. Through 2025, the TCJA suspended deductions subject to the 2% of adjusted gross income (AGI) floor, such as certain professional fees and unreimbursed employee business expenses. This means, for example, that employees can’t deduct their home office expenses. The OBBBA would make the suspension permanent.
Federal gift and estate tax exemption. Beginning in 2026, the bill would increase the federal gift and estate tax exemption to $15 million. This amount would be permanent but annually adjusted for inflation. (For 2025, the exemption amount is $13.99 million.)
New tax provisions
On the campaign trail, President Trump proposed several tax-related ideas. The OBBBA would introduce a few of them into the U.S. tax code:
No tax on tips. The OBBBA would offer a deduction from income for amounts a taxpayer receives from tips. Tipped workers wouldn’t be required to itemize deductions to claim the deduction. However, they’d need a valid SSN to claim it. The deduction would expire after 2028. (Note: The Senate recently passed a separate no-income-tax-on-tips bill that has different rules. To be enacted, the bill would have to pass the House and be signed by President Trump.)
No tax on overtime. The OBBBA would allow workers to claim a deduction for overtime pay they receive. Like the deduction for tip income, taxpayers wouldn’t have to itemize deductions to claim the write-off but would be required to provide an SSN. Also, the deduction would expire after 2028.
Car loan interest deduction. The bill would allow taxpayers to deduct interest payments (up to $10,000) on car loans for 2025 through 2028. Final assembly of the vehicles must take place in the United States, and there would be income limits to claim the deduction. Both itemizers and nonitemizers would be able to benefit.
Charitable deduction for nonitemizers. Currently, taxpayers can claim a deduction for charitable contributions only if they itemize on their tax returns. The bill would create a charitable deduction of $150 for single filers and $300 for joint filers for nonitemizers.
What’s next?
These are only some of the provisions in the massive House bill. The proposed legislation is likely to change (perhaps significantly) as it moves through the Senate and possibly back to the House. In addition to disagreements about the tax provisions, there are Senators who don’t agree with some of the spending cuts. Regardless, tax changes are expected this year. Turn to us for the latest developments.
© 2025
If you made large gifts to family members or heirs last year, you may need to file a 2025 gift return by April 15. So, it’s important to understand whether you’re required to file a federal gift tax return — and when it might be beneficial to file one even if not required. When filing a return is required Generally, you must file a gift tax return (Form 709) if, during the 2025 tax year, you made gifts (other than to your U.S. citizen spouse) that exceeded the $19,000-per-recipient annual gift tax exclusion. If you split gifts with your spouse to take advantage of your combined $38,000 annual exclusion, both you and your spouse must file separate gift tax returns. You also need to file a gift tax return if you made gifts to a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($95,000) into 2025. Other times filing is required include when you made gifts: That exceeded the $190,000 annual exclusion amount (for 2025) for gifts to a noncitizen spouse, Of future interests (such as remainder interests in a trust), regardless of the amount, or Of community property. Keep in mind that you’ll owe gift tax only to the extent that an exclusion doesn’t apply and you’ve used up your lifetime gift and estate tax exemption ($13.99 million for 2025). As you can see, some gifts require filing a return even if you don’t owe tax. When filing a return isn’t required Generally, no gift tax return is required if you: Paid qualifying education or medical expenses on behalf of someone else directly to the educational institution or health care provider, Made gifts of present interests that fell within the annual exclusion amount, Made outright gifts, in any amount, to a spouse who’s a U.S. citizen, including gifts to marital trusts that meet certain requirements, or Made charitable gifts and aren’t otherwise required to file Form 709 — if a return is required, charitable gifts should also be reported. If you gifted hard-to-value property, such as artwork or interests in a family-owned business, consider filing a gift tax return even if you’re not required to. Adequate disclosure of the gift on a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file. In some cases, it’s even advisable to file a gift tax return to report nongifts. For example, suppose you sold assets to a family member or a trust. Again, filing a return triggers the statute of limitations and prevents the IRS from claiming, more than three years after you filed the return, that the assets were undervalued and, therefore, are partially taxable. Questions? We can help Gift and estate tax rules are complex. Determining whether you must file a gift return (or whether you should file one even if not required) isn’t always easy. If you need help, please contact us. © 2026
Some customers naturally require more time and resources than others. But when certain relationships consistently consume more of your and your employees’ time than they generate in profit, it may be time to reassess. Taking a closer look at customer‑level profitability can help you understand where resources are going and ensure that high‑value relationships receive the attention they deserve. Estimate their value to your business Before you do anything else, determine individual customer profitability. If your business software tracks customer purchases and your accounting system has adequate cost-accounting or decision-support capabilities, this process will be easier. Even if you don’t maintain cost data, you can sort the good from the bad by reviewing customer purchase volume and average sale price. Often, such data can be supplemented by general knowledge of the relative profitability of different products or services. Don’t ignore indirect costs. High marketing, handling, service or billing costs for individual customers or customer segments can significantly affect their profitability even if they purchase high-margin products. Give them a grade After you’ve assigned profitability levels to customers or customer categories, sort them into the following groups: Group A. These customers are highly profitable. To further increase their value to your business, spend time learning what motivates them. Your proprietary products? Your prices? Your customer care? Developing a good understanding of this group will help you grow these relationships and provide insight into attracting similar customers. Group B. Customers in this group may not be extremely profitable, but they positively contribute to your bottom line. There’s a good chance that, with the right mix of product, service and marketing resources, you can turn some of them into A customers. But be sure to monitor them closely to prevent them from slipping into the C group. Group C. These customers tend to be unprofitable. They may also be difficult to work with and perpetually dissatisfied. They may expect special pricing or services, or pay invoices late. Fortunately, eliminating C customers probably won’t require a formal breakup. You can start by reducing the level of attention they receive. Remove them from marketing lists and tell your salespeople to stop contacting them. After a while, most C customers who are ignored will leave on their own. When a strategic overhaul is warranted It’s normal for businesses to have a mix of highly and less profitable customers. The key is making intentional decisions about where to invest your time and resources. Reallocating attention away from consistently unprofitable customer relationships — and toward your A and B groups — can boost your company’s financial performance. However, if C customers make up a large portion of your customer base, you may need to consider broader strategic changes. These could include reviewing pricing, refining service offerings, adjusting processes or rethinking which markets and customer segments you want to serve. Contact us to learn more. © 2026
Raising a family comes with plenty of expenses, but it may also make you eligible for various tax breaks. Some of the most valuable are tax credits, because they reduce your tax liability dollar for dollar (unlike deductions, which only reduce the amount of income subject to tax). Here’s what you need to know. Child, dependent and adoption credits You may be eligible for one or more of these tax credits for families: Child credit. The maximum child credit is $2,200 for 2025. You may be able to claim it for each qualifying child under age 17 at the end of 2025. The credit begins to phase out when 2025 modified adjusted gross income (MAGI) reaches $400,000 for married couples filing jointly and $200,000 for head of household filers. The credit is refundable up to $1,700 per qualifying child. Credit for other dependents. You may be able to claim a credit of up to $500 for each qualifying dependent other than a qualifying child (such as a dependent child over the age limit or a dependent elderly parent). This credit is subject to the same income-based phaseout as the child credit, but it’s not refundable. Child and dependent care credit. For children under age 13 or other qualifying dependents, you may be eligible for a credit for a portion of your 2025 dependent care expenses. For middle-income-and-higher taxpayers, the credit generally equals 20% of the first $3,000 of qualified 2025 expenses for one child or 20% of up to $6,000 of such expenses for two or more children. So, the maximum 2025 credit for these taxpayers generally will be $600 for one child or $1,200 for two or more children. But you can’t claim the credit for expenses reimbursed through an employer-sponsored child and dependent care Flexible Spending Account. Adoption credit. If you incurred eligible adoption expenses in 2025, you may qualify for the adoption credit. The maximum credit per child is $17,280 for 2025. It begins to phase out at MAGI of $259,190, regardless of filing status. New for 2025, up to $5,000 of the credit is refundable. Any nonrefundable portion can be carried forward for up to five years. Higher education credits If you had a child in college in 2025, you may be eligible for one of these credits: American Opportunity credit. This credit covers 100% of the first $2,000 of tuition and related expenses and 25% of the next $2,000 of expenses. The maximum credit, per student, is $2,500 per year for the first four years of postsecondary education in pursuit of a degree or recognized credential. Lifetime Learning credit. If you paid postsecondary education expenses that don’t qualify for the American Opportunity credit, check whether you’re eligible for this credit (up to $2,000 per tax return). Both a credit and a tax-free Section 529 savings plan or Coverdell Education Savings Account distribution can be taken as long as expenses paid with the distribution aren’t used to claim the credit. However, income-based phaseouts also apply to these credits. They begin to phase out at MAGI of $160,000 for joint filers and $80,000 for heads of household. If you don’t qualify for one of the credits on your tax return because your income is too high, your child might. Maximize your tax savings Child, dependent, adoption and education tax credits can provide significant tax savings, but the rules are complex. If you’d like help determining which family-related credits you may qualify for on your 2025 return, contact us. We can help ensure you maximize your tax savings from these and other tax breaks you’re eligible for. © 2026
An advance payment is one received by a business before it provides whatever is being paid for. For federal income tax purposes, generally advance payments must be reported as taxable income in the year received. This treatment always applies if your business uses the cash method of accounting for tax purposes. But, if your business uses the accrual method, it may qualify for favorable tax deferral treatment. Tax deferral privilege Accrual-basis businesses can elect to postpone including all or part of an eligible advance payment in taxable income until the year after it’s received. To be eligible for the deferral election, among other requirements, an advance payment must: At least partially be included in revenue for a later year according to your business’s applicable financial statement (AFS) or, if your business doesn’t have an AFS, treated as earned in a later year, and Be received for goods, services or other eligible items listed in IRS guidance. If your accrual-basis business received eligible advance payments in 2025, you potentially can elect to defer reporting some or all of that income until 2026 for federal tax purposes. What is an AFS? An AFS can be an audited financial statement used for credit or financial reporting purposes or certain reports submitted to federal or state agencies. A form filed with the Securities and Exchange Commission, such as a 10-K or annual report, also can be an AFS. If your business doesn’t have an AFS and elects to use the deferral method for advance payments, the payment must be included in taxable income in the year received to the extent of the amount that is treated by your business as earned in that year. The remaining portion of the advance payment must be included in taxable income the following year. What types of payments are eligible? Advance payments that may be eligible for deferral include payments for: Services, The sale of goods, Gift cards, The use of intellectual property, The sale or use of computer software, Warranty contracts, and Subscriptions. Other payments specified in IRS guidance also may be eligible. Eligible advance payments don’t include rents (with some exceptions), certain insurance premiums, payments for financial instruments, payments for certain service warranty contracts, and other payments specified in IRS guidance. Some examples The following examples illustrate how eligible advance payments can be deferred for federal income tax purposes: Taxpayer has an AFS. A calendar-year accrual method S corporation provides tennis facilities and lessons. On November 15, 2025, it received payment for a one-year contract for 48 one-hour tennis lessons beginning on that date. Eight lessons were given in 2025. On its AFSs, the business recognizes one-sixth (8/48) of the advance payment as revenue for 2025 and five-sixths (40/48) as revenue for 2026. Making the advance payment deferral method election, the business includes only one-sixth of the advance payment in taxable income for 2025. The remaining five-sixths must be included in taxable income for 2026. Taxpayer doesn’t have an AFS. A calendar-year accrual method LLC provides online security protection services for computers, tablets and cell phones. On September 1, 2025, it received payment for two years of protection services beginning on that date. The business determines that four months of its services should be treated as earned in 2025. Making the advance payment deferral election, the business includes only one-sixth (4/24) of the advance payment in taxable income for 2025. The remaining five-sixths (20/24) must be included in taxable income for 2026. Can you benefit? We’ve only scratched the surface of complicated tax rules and regulations that apply to the treatment of advance payments. Contact us for help determining if your business is eligible to defer 2025 advance payments. We can also calculate the possible current tax savings. © 2026
Choosing an executor is one of the most important decisions in the estate planning process. This person (or institution) will be responsible for carrying out your wishes, managing assets, paying debts and taxes, distributing property to beneficiaries and more. Your first instinct may be to name your spouse, adult child or other close family member as executor. While that decision may feel natural, it’s not always the best choice. Co-appointing a professional advisor alongside a trusted family member can provide a more effective and balanced solution. An executor’s duties Your executor has a variety of important duties, including: Arranging for probate of your will and obtaining court approval to administer your estate (if necessary), Taking inventory of — and collecting, recovering or maintaining — your assets, including life insurance proceeds and retirement plan benefits, Obtaining valuations of your assets where required, Preparing a schedule of assets and liabilities, Arranging for the safekeeping of personal property, Contacting your beneficiaries to advise them of their entitlements under your will, Paying any debts incurred by you or your estate and handling creditors’ claims, Defending your will in the event of litigation, Filing tax returns on behalf of your estate, and Distributing your assets among your beneficiaries according to the terms of your will. For someone without financial, legal or tax expertise, these responsibilities can feel overwhelming — especially while grieving. Even highly capable family members may lack the time or experience needed to administer an estate efficiently. Mistakes can result in delays, disputes or even personal liability. Executors are legally responsible for acting in the best interests of the estate and its beneficiaries. If errors occur — such as missed tax deadlines or improper distributions — the executor may be held accountable. Emotional dynamics can complicate matters When a family member serves as sole executor, emotional tensions can arise. Sibling rivalries, blended family dynamics or disagreements about asset values can quickly escalate. Even when everyone has good intentions, beneficiaries may question decisions about timing, asset sales or expense payments. The executor may feel caught between honoring the deceased’s wishes and preserving family harmony. Needless to say, these situations can strain relationships, sometimes permanently. Two can be better than one A practical alternative is to name both a trusted family member and a professional advisor, such as a CPA, estate planning attorney or corporate fiduciary, as co-executors. This structure can offer several key benefits, such as: Technical expertise. A professional advisor can bring knowledge of tax law, probate procedures, accounting requirements and regulatory compliance. This reduces the risk of costly mistakes and helps ensure deadlines are met. Objectivity. A neutral third party can help mediate disagreements and make decisions based on fiduciary standards rather than emotions. This can protect family relationships and minimize conflict. Shared responsibility. Administering an estate can be time consuming. Dividing responsibilities allows the family member to focus on personal matters while the professional handles technical and administrative tasks. Continuity and stability. If a family member becomes overwhelmed, ill or otherwise unavailable, a professional co-executor can provide continuity. Estates often take months — or even years — to settle. A balanced approach Co-appointing a professional doesn’t mean excluding family involvement. In fact, it often enhances it. The family member remains involved in decision-making and ensures that your personal wishes and family values are honored. Meanwhile, the professional ensures that legal and financial matters are handled efficiently and correctly. For larger or more complex estates — such as those involving business ownership, multiple properties or significant investments — this collaborative model can be especially valuable. Contact us if you have questions about having co-executors or choosing them. © 2026
Pay equity is the philosophy and practice of “equal pay for equal work.” Employers known for fair pay practices stand out in today’s competitive labor market. Fostering pay equity can also help reduce the risk of employment law litigation. But what does pay equity mean in practice? What it does and doesn’t mean First and foremost, pay equity doesn’t mean all employees receive the same amount of compensation. Instead, companies that embrace pay equity make compensation decisions free of unjust biases related to protected characteristics such as age, race, gender, disability, national origin and sexual orientation. Employees’ pay, both when workers are hired and when they receive raises, is determined according to objective, job-related factors, including: Education and training, Experience, Skills, Responsibilities, Performance, and Tenure. Determining whether pay inequities currently exist within your business requires a careful, honest assessment. Many companies conduct a formal pay equity audit. This is a thorough statistical analysis of compensation history, policies and structure. The audit’s objective is to identify any inconsistencies, gaps and incongruities that can’t be explained rationally. Consider these policies If you discover signs of pay inequity in your company, put in place policies to help eliminate them. For example, you might want to use only initials or random ID numbers during early screenings of job candidates, such as resumé reviews. This practice minimizes the chance that hiring managers will distinguish candidates by ethnicity, gender or other protected identities. Also, during candidate interviews, refrain from asking about pay history. Many states and municipalities prohibit such questions, so ask your attorney what applies in your situation. (You might also want to take that opportunity to ensure you understand all antidiscrimination laws that affect hiring decisions.) But even if your state or local law doesn’t forbid past salary questions, it’s a well-established best practice to avoid them. Women and people of color are more likely to have been paid less in their previous positions. By using historical compensation to set their current salaries, you risk compounding pay disparities. More ideas Here are some other ideas that can help your organization achieve pay equity: Set standard pay ranges. Generate objective criteria for recruiting, hiring, compensating, evaluating and promoting employees. Then set standard pay ranges that reflect each position’s value to the business. Avoid individual decision-making. Limit managers’ ability to single-handedly adjust pay for specific employees. These decisions can lead to pay inequities and other problems, such as accusations of favoritism. Provide training. To help managers and supervisors understand pay equity, conduct information sessions. Such training will help them recognize potential issues and discuss compensation with their reports. Prioritize transparency. Let staffers know how you set compensation. Also, reassure them that they can discuss pay with their supervisors without fear of retaliation. Fair work culture The best talent is typically drawn to companies that prioritize employee well-being and cultivate a fair, transparent work culture. Pay equity can help communicate such principles to potential job candidates. Contact us if you’d like help analyzing compensation data or coordinating with legal counsel on a pay equity audit. © 2026
An important decision to make when filing your individual income tax return is whether to claim the standard deduction or itemize deductions. A change under the One Big Beautiful Bill Act (OBBBA) will make it beneficial for more taxpayers to itemize deductions on their 2025 returns. Specifically, if you paid more than $10,000 in state and local taxes (SALT) last year, you might save tax by itemizing on your 2025 return even if claiming the standard deduction has saved you more tax in recent years. Claiming the standard deduction vs. itemizing Taxpayers can choose to itemize certain deductions on Schedule A or take the standard deduction based on their filing status instead. Itemizing deductions when the total will be larger than the standard deduction saves tax, but it makes filing more complicated. The OBBBA made permanent and, for 2025, slightly increased the Tax Cuts and Jobs Act’s (TCJA’s) nearly doubled standard deduction for each filing status: $15,750 for single and separate filers, $23,625 for heads of household, and $31,500 for married couples filing jointly. (The new amounts have been adjusted for inflation for 2026 and will continue to be adjusted annually going forward.) Because of the higher standard deduction and the TCJA’s reduction or elimination of many itemized deductions (mostly made permanent by the OBBBA), many taxpayers who once benefited from itemizing have been better off taking the standard deduction for the last several years. If you’re among those taxpayers and you have significant SALT expenses, OBBBA changes could increase your SALT itemized deduction for 2025 enough that your total itemized deductions may exceed your standard deduction, causing itemizing to make sense once again for you. Increased limit on the SALT deduction Deductible SALT expenses include property taxes (for homes, vehicles and boats) and either income tax or sales tax, but not both. Historically, eligible SALT expenses were generally 100% deductible on federal income tax returns if an individual itemized deductions. This provided substantial tax savings to many taxpayers in locations with higher income or property tax rates (or higher home values), as well as those who owned both a primary residence and one or more vacation homes. For 2018 through 2025, the TCJA limited the deduction to $10,000 ($5,000 for married couples filing separately). This SALT cap was scheduled to expire after 2025. Rather than letting the $10,000 cap expire or immediately making it permanent, the OBBBA temporarily quadrupled the limit. Beginning in 2025, taxpayers can deduct up to $40,000 ($20,000 for married couples filing separately), with 1% increases each subsequent year. The $10,000 cap is scheduled to return in 2030. The increased SALT cap could lead to major tax savings compared with the $10,000 cap. For example, a married couple filing jointly in the 32% tax bracket with $40,000 in SALT expenses and MAGI below the threshold for the income-based reduction (see below) could save an additional $9,600 in taxes [32% × ($40,000 − $10,000)]. Reduced limit for higher-income taxpayers While the higher SALT limit is in place, the allowable deduction drops by 30% of the amount by which modified adjusted gross income (MAGI) exceeds a threshold amount. For 2025, the threshold is $500,000; when MAGI reaches $600,000, the previous $10,000 cap applies. (These amounts are halved for separate filers.) The MAGI threshold will also increase 1% each year through 2029. Here’s how the earlier example would be different if the taxpayer’s MAGI exceeded the threshold by $20,000: The cap would be reduced by $6,000 (30% × $20,000), leaving a maximum SALT deduction of $34,000 ($40,000 − $6,000). Even reduced, that’s more than three times what would be permitted under the $10,000 cap. The reduced deduction would still save an additional $7,680 in taxes compared to when the $10,000 cap applied [32% × ($34,000 − $10,000)]. Factoring in other itemized deductions Depending on your 2025 SALT expenses, MAGI and filing status, your SALT deduction alone might be enough for your itemized deductions to exceed your standard deduction. If it isn’t, you’ll need to review your other potential itemized deductions and see if all of them, in aggregate, will exceed your standard deduction. Other possible itemized deductions include: Medical expenses. This deduction is limited to the amount of eligible medical expenses that, in aggregate, exceeds 7.5% of adjusted gross income (AGI). Home mortgage interest. This deduction is available for acquisition debt of up to $750,000. (A $1 million limit still applies to indebtedness incurred on or before December 15, 2017.) Charitable donations. For 2025, cash donations to qualified charities are generally deductible up to 60% of AGI. (Beginning in 2026, the deduction will also be limited to the amount of eligible donations that, in aggregate, exceeds 0.5% of AGI.) Noncash donations may also be deductible, but additional requirements and limits apply. Casualty and theft losses. For 2025, these losses are generally deductible only if they’re due to a disaster declared by the President. (Beginning in 2026, losses due to certain state-declared disasters also will be deductible.) The deduction is limited to the amount of eligible losses that, in aggregate, exceeds 10% of AGI. Keep in mind that additional rules and limits apply to these deductions. A return to itemizing? If you have high SALT expenses but have been claiming the standard deduction in recent years, it’s time to revisit itemizing. A return to itemizing on your 2025 return might save you tax. If you’ve already been itemizing, a larger SALT deduction could also increase your tax savings, perhaps significantly, depending on your SALT expenses, MAGI, filing status and tax bracket. We can assess the impact of the SALT limit increase — and other OBBBA changes — on your tax situation and help ensure you claim all the tax breaks you’re entitled to on your 2025 return. Contact us to set up an appointment. © 2026
The deadlines for filing 2025 tax returns (or extensions) are fast approaching. Although most tax planning moves must be completed by December 31 of the tax year, there are some decisions you can make when filing your return that can save taxes now or in the future. One such decision is whether to claim accelerated depreciation breaks. Depreciation basics For assets with a useful life of more than one year, the cost generally must be depreciated over a period of years (unless accelerated depreciation breaks are available). In other words, taxpayers can deduct only a portion of the asset’s cost each year over the depreciation period. The depreciation period depends on the type of asset, ranging from three years (such as for software and small tools) to 39 years (for commercial real estate). The Modified Accelerated Cost Recovery System (MACRS) provides larger deductions in the early years of an asset’s life than the straight-line method. In many cases, assets can be depreciated much more quickly under special tax breaks. Some of these breaks were enhanced by last year’s One Big Beautiful Bill Act (OBBBA). First-year bonus depreciation Under the OBBBA, 100% first-year bonus depreciation can be claimed on 2025 tax returns for qualified assets that were acquired after January 19, 2025, and placed in service in 2025. Eligible assets include: Depreciable personal property, such as equipment, computer hardware and peripherals, Transportation equipment, including certain passenger vehicles, and Commercially available software. First-year bonus depreciation can also be claimed for real estate qualified improvement property (QIP). QIP is defined as an improvement to an interior portion of a nonresidential building placed in service after the date the building was placed in service. However, expenditures attributable to the enlargement of a building, elevators or escalators, or the internal structural framework of a building don’t count as QIP and usually must be depreciated over 39 years. The first-year bonus depreciation percentage is 40% for qualified assets acquired on or before January 19, 2025, and placed in service in 2025. Bonus depreciation is automatically applied to eligible assets unless you elect out of it. However, you can elect out of it only on an asset class basis. For example, you can elect out of it for all three-year property, but you can’t elect out of it for just one specific three-year asset. Section 179 expensing election Sec. 179 expensing allows small businesses to write off the full cost of 2025 eligible assets. For tax years beginning in 2025, the maximum Sec. 179 deduction is $2.5 million (double the pre-OBBBA limit). Eligible assets include: Depreciable personal property, such as equipment, computer hardware and peripherals, Transportation equipment, including certain passenger vehicles, Commercially available software, and Real estate QIP. For nonresidential real property, Sec. 179 deductions are also allowed for qualified expenditures for: Roofs, HVAC equipment, Fire protection and alarm systems, and Security systems. Finally, eligible assets include depreciable personal property used predominantly to furnish lodging, such as furniture and appliances in a property rented to transients. In addition to the annual expense limit, Sec. 179 expensing is subject to a couple of other limits that don’t apply to bonus depreciation. First, the deduction is phased-out dollar for dollar if you put more than $4 million of qualifying assets into service last year. Second, Sec. 179 deductions can’t cause an overall business tax loss. The Sec. 179 deduction limits can be tricky if you own an interest in a pass-through business entity. That said, claiming Sec. 179 expensing can be beneficial for assets not eligible for 100% bonus depreciation or if you want to immediately deduct the cost of some, but not all, assets in a particular asset class that is also eligible for bonus depreciation. Depreciation deduction strategies Claiming the maximum depreciation deductions you can on your 2025 income tax return will generally provide the greatest 2025 tax savings. Among other benefits, this can boost cash flow and provide more funds for further investment in the business. But there are circumstances where it may be better to depreciate assets over a period of years. For example, the Section 199A qualified business income (QBI) deduction for pass-through businesses can be up to 20% of an owner’s QBI. Because of the income limitations on this deduction, claiming big first-year depreciation deductions can reduce QBI and lower or even eliminate your allowable QBI deduction. Depreciating assets over a period of years can also be beneficial if you expect to be subject to higher tax rates in the future, such as if you may be in a higher tax bracket or lawmakers increase rates. When you claim 100% bonus depreciation or Sec. 179 expensing today, you’re eliminating your depreciation deductions for those assets in the future. And deductions save more tax when tax rates are higher. Time to get started We can identify which depreciation breaks you’re eligible for, review your overall tax situation and help determine whether it will be beneficial for you to maximize depreciation-related breaks on your 2025 tax return. We can also strategize with you on tax planning for 2026 asset investments. Please contact us to get started. © 2026
Many people think of estate planning as a “one-and-done” task — something you complete and file away. But an estate plan should evolve as your life and finances and relevant laws change. An outdated plan can create confusion, unintended tax consequences or outcomes that no longer reflect your wishes. The higher federal gift and estate tax exemption that was made permanent by last year’s One Big Beautiful Bill Act is one reason to review your estate plan now. But you should also review your plan whenever something significant changes in your life. Let’s take a look at common situations that signal the need to revisit your will, trusts, powers of attorney or other estate planning documents. Major life events Life transitions are the most common reasons estate plans need attention. Marriage or remarriage is a big one, especially if you have children from a prior relationship. Divorce is equally important. Failing to update your documents could leave an ex-spouse in control of your assets or medical decisions. The birth or adoption of a child or grandchild should also trigger a review. You’ll want to name a guardian or adjust beneficiary designations to reflect your growing family. Similarly, the death or incapacity of a spouse, beneficiary, trustee or executor means your plan may no longer function as intended. Financial changes matter, too Your estate plan should reflect your current financial situation. If your net worth has increased significantly — through business growth, inheritance, real estate appreciation or investment success — your existing plan may not adequately address tax planning or asset protection. Starting, buying or selling a business is another major reason to update your estate plan. Business ownership often requires specific provisions for succession planning, valuation and continuity. Retirement also can prompt changes, as income sources shift and distribution strategies evolve. Don’t forget supporting documents Updating an estate plan isn’t just about your will or trusts. Beneficiary designations on retirement accounts and life insurance policies should be reviewed regularly, as they generally override what’s stated in your will. Powers of attorney and health care directives are also critical to review. Make sure they continue to reflect your wishes and that those you’re providing with decision-making authority are still people you trust and who are able to serve. The bottom line An estate plan is only effective if it reflects your current wishes and circumstances, as well as current law. Regular reviews help ensure your assets are distributed as intended, your loved ones are protected, and unnecessary taxes or legal complications are avoided. Because estate planning intersects with taxes, financial planning and your long-term goals, it’s wise to review your plan with qualified professionals. We can help you identify when updates may be needed and coordinate with your legal and financial advisors to keep your plan on track. © 2026
As remote and hybrid work have become more common, corporate retreats have surged in recent years. Some or all of your employees may now work from home and experience little in-person interaction with coworkers. A retreat can foster collegial relationships and, ultimately, greater productivity. But the first decision you’ll likely need to make is whether your retreat will be a smaller-scale affair held in your office or an off-site retreat. There are ways to make either one affordable. Your office Staying on your company’s premises can keep out-of-pocket costs in check. The most obvious is that you won’t need to rent meeting rooms. And, assuming employees live in the area, you won’t have transportation and lodging expenses. You’ll also likely spend less on food and beverages. A local restaurant can cater your meals and snacks, and you could buy beverages in bulk. On the downside, employees tend to view on-site retreats as just another day at the office. This can hamper creative thinking and team building and limit possible activities. Worse, employees may be distracted if they can frequently run back to their desks to check email and voicemail. Off-site locations In general, workers are better able to focus on a retreat agenda at an off-site location. They’re in a new, “special” environment with no visual cues to trigger workday routines. So, even though you’ll incur greater costs than if you’d stayed in your office, you may get a better return on investment. The fact is, hotels and other facilities that host company retreats need and want your business! Many things may be negotiable, and you might be able to snag discounts by booking or paying early. Get several quotes and compare prices and services. You’ll have more leverage if you avoid scheduling your retreat during seasonal peaks when local venues tend to be busy with weddings, trade shows and industry conferences. Hotels earn their biggest margins on food, beverages and meeting setup fees, so they may be willing to provide complimentary or discounted rooms for guest speakers and out-of-town employees. Also, try to negotiate a flat food-and-beverage price for the entire retreat, rather than a per-person or per-event rate. Possible tax relief Here’s another way to save: Some of your company retreat expenses may be tax-deductible. They need to meet IRS criteria as “ordinary and necessary” business expenses and can’t be extravagant or include expenditures for employees’ spouses. In general, business meals are only 50% deductible, and entertainment costs are nondeductible. Contact us to learn more about tax-deductible costs and the IRS’s documentation requirements. © 2026