Writing an AI governance policy for your business

Does your business own its real estate in a separate holding company, such as a limited liability company (LLC) or limited partnership? This practice can provide several advantages, including shielding property from your company’s creditors. It can also ease estate planning if, for example, you want to transfer business interests to your children while retaining ownership of the real estate. In addition, there are good tax reasons to separate the two. Let’s take a look. Asset protection and estate planning advantages Owning real estate in a separate legal entity can wall off an operating business from its real estate’s potential liabilities (and vice versa). A creditor who targets your business generally can’t reach real estate held in a separate entity. And if, for example, someone slips and falls in your office, factory or warehouse and sues, holding the property in a separate entity may help protect your operating business’s other assets. Such protection extends to bankruptcy. If your business is forced to file for bankruptcy, creditors typically can’t recover separately owned real estate. However, there’s at least one exception. Real estate you’ve pledged as collateral for a business loan may still be subject to claims by lenders. Owners of real estate in LLCs or limited partnerships also enjoy estate planning and succession flexibility. Let’s say you have two grown children, but only one is actively involved in the business. You can equitably divide assets by transferring the business to the actively involved child and the real estate to the other. Also, gradually gifting interests in a separate entity holding real estate can reduce the value of your taxable estate. Tax matters C corporations that hold real estate can risk unnecessary taxes. Real estate expenses are treated as ordinary expenses on the company’s income statement. If the property is sold, any profit is subject to double taxation: first at the corporate level and then at the owner’s individual level when proceeds are distributed. If you instead own real estate in a pass-through entity, and then lease it to your company, the profit upon sale would be taxed only once — at the individual owner level. Also, your operating business might be able to deduct lease payments so long as the rent is reasonable. To simplify matters, some business owners buy business real estate themselves. However, this can transfer the property’s liabilities directly to owners and put other personal assets — including the business interests — at risk. So it’s generally best to hold real estate in its own limited liability entity. Just make sure your entity carries adequate insurance coverage. Possible downsides Aside from the costs, there are possible downsides to owning real estate separately. For instance, you’ll need to manage separate finances, tax filings and legal structures. But for most small to midsize businesses, the advantages outweigh any disadvantages. Contact us to discuss this strategy and determine what’s right for your situation. © 2026 

Last year’s One Big Beautiful Bill Act (OBBBA) terminated several clean energy tax incentives earlier than previously scheduled. But if you bought an electric vehicle or made certain green home improvements last year, you might be eligible for a tax credit on your 2025 individual income tax return. Remember, tax credits reduce your tax liability dollar-for-dollar (unlike deductions, which reduce the amount of income subject to tax). So tax credits are especially valuable. Did you buy an electric vehicle? If you bought an eligible clean vehicle by September 30, 2025, you may be able to claim one of these tax credits on your 2025 return: New clean vehicle credit. Buyers of new electric and fuel cell vehicles may be able to claim a credit up to $7,500, depending on how the battery components and critical minerals were sourced. Vehicles that meet only one of the sourcing criteria may be eligible for a $3,750 credit. This credit was originally set to expire after 2032. But, under the OBBBA, it expired on September 30, 2025. The maximum manufacturer’s suggested retail price for a vehicle to be eligible for the credit is $55,000 for cars and $80,000 for SUVs, trucks and vans. The vehicle also must have undergone final assembly in North America. In addition, the credit isn’t allowed for vehicles with any battery components from a “foreign entity of concern.” For you to qualify, your 2025 adjusted gross income (AGI) must not exceed $150,000 ($300,000 if you’re married filing jointly and $225,000 if you’re filing as a head of household). Used clean vehicle credit . Buyers of used electric or fuel cell vehicles may be able to claim a credit of up to $4,000 or 30% of the purchase price — whichever is lower — if they bought the vehicle from a dealer. Like the new clean vehicle credit, this credit had been set to expire after 2032 but, under the OBBBA, it expired on September 30, 2025. The maximum purchase price for a vehicle to be eligible for the credit is $25,000. For you to qualify, your 2025 AGI must not exceed $75,000 ($150,000 if you’re a joint filer and $112,500 if you’re a head-of-household filer). Did you make green home improvements? If you made certain home upgrades in 2025, you may be eligible for one of these tax credits on your 2025 return: Energy-efficient home improvement credit. This nonrefundable credit equals up to 30% of qualified expenses to make your home more energy efficient. The maximum credit you can claim for 2025 generally is $1,200. There are no AGI-based limits, but there are credit caps that vary by item. Some examples of 2025 credit limits are $150 for energy audits, $250 per exterior door ($500 total), $600 for windows and $2,000 for heat pumps (superseding the usual $1,200 limit). Before the OBBBA, this credit was scheduled to end after 2032. Residential clean energy credit. This nonrefundable credit equals 30% of the cost of eligible renewable energy systems such as solar, wind and geothermal installations. There generally are no caps or AGI-based limits. Before the OBBBA, this credit was set to end after 2034. Are you eligible for a tax credit? One more clean energy credit you might be able to claim on your 2025 return is the alternative fuel vehicle refueling property credit. You may be eligible if last year you installed equipment at your home to recharge electric vehicles. The credit equals 30% of the installation cost, up to $1,000 per charging port. If you didn’t install a charging port in 2025, it’s not too late. If you install one by June 30, 2026, you potentially can claim the credit on your 2026 return next year. (Before the OBBBA, this credit was also scheduled to expire after 2032.) If you purchased a clean vehicle or made green home improvements and aren’t sure whether you’re eligible for one or more of these credits, contact us. © 2026 

Did you know that you can claim tax deductions for animals that serve a bona fide business purpose? This benefit extends beyond agricultural operations. Working animals in many sectors may qualify. Here are the details. Working animals vs. personal pets A working animal must provide a clear and direct business benefit. Common examples include: Dogs used to deter theft, vandalism or unauthorized entry at a business location, Cats used to control rodents that could damage inventory, equipment or facilities, and Animals used in agricultural operations. In these cases, the animal’s presence directly supports business operations, making related expenses potentially deductible. However, it’s important to distinguish bona fide working animals from those that provide personal companionship or emotional support. If an animal is a part-time worker and part-time pet, you can deduct only the percentage of expenses that correspond to the animal’s working time. For instance, if a dog spends approximately 60% of its time guarding a warehouse and 40% as a pet, only 60% of eligible expenses would typically be deductible. The IRS will likely deny deductions for an animal that’s clearly primarily a household pet. Likewise, service animals for owners or employees aren’t eligible for business deductions. Deductible expenses Many costs associated with the care of a working animal may be deductible as ordinary and necessary business expenses. These include costs for raising, feeding, caring for, training and managing animals used in a trade or business. Examples include: Food and treats, Veterinary care and medications, Grooming necessary for the animal’s role, Training costs related to the animal’s work function, and Supplies such as leashes, collars, bedding and shelter. The deduction applies only to reasonable expenses connected to the animal’s business use. Luxury or purely personal costs may draw IRS scrutiny. It’s important to note that different tax rules apply to farmers, ranchers and professional breeders. In general, farmers may deduct feed, veterinary care and other costs directly associated with the business use of animals. The costs associated with animals used for draft, breeding, sport or dairy purposes are typically capitalized and depreciated, rather than immediately deducted, unless they’re included in inventory. Recordkeeping requirements Proper documentation is key to supporting deductions for working animals. You’ll need to maintain records to demonstrate that the animal performs a legitimate business function, the expenses are ordinary and necessary for your industry, and any allocation between business and personal use is reasonable. Contact us to discuss your situation and assess your eligibility. © 2026 

A Health Savings Account (HSA) can be a valuable asset in your estate. Contributions to an HSA are pretax or tax-deductible, the funds grow on a tax-deferred basis, and withdrawals for qualified medical expenses are tax-free. HSA balances may be carried over from year to year, continuing to grow on a tax-deferred basis indefinitely. Over time, this can allow HSAs to accumulate substantial value (if significant withdrawals aren’t taken to pay medical expenses). But there can be major tax consequences for the designated beneficiary who inherits an HSA. So, if you have an HSA, it’s important to carefully factor it into your estate planning. Breaking down the numbers If you’re covered by a qualified high-deductible health plan (HDHP), you can contribute pretax income to an employer-sponsored HSA — or make deductible contributions to an HSA that you open for yourself — up to applicable limits. For 2026, an HDHP is a plan with a minimum deductible of $1,700 ($3,400 for family coverage) and maximum out-of-pocket expenses of $8,500 ($17,000 for family coverage). Under the One Big Beautiful Bill Act, signed into law July 4, 2025, the definition of HDHP is expanded beginning in 2026 to include bronze and catastrophic plans. You can’t contribute to an HSA if you’re covered by any non-HDHP insurance or enrolled in Medicare. However, if you already have an HSA from a time when you were eligible to contribute, you can continue to withdraw funds tax-free to pay for qualified expenses. For 2026, the annual contribution limit for HSAs is $4,400 for individuals with self-only coverage and $8,750 for individuals with family coverage. If you’re 55 or older, you can add another $1,000. Typically, contributions are made by individuals, but some employers contribute to employees’ accounts. An HSA can bear interest or be invested, growing tax-deferred, similar to a traditional IRA. After age 65, you can take penalty-free distributions to use for nonmedical expenses, but they’ll be taxable. Estate planning implications Because an HSA’s account balance (less any funds used to pay qualified medical expenses) continues to grow on a tax-deferred basis indefinitely, an HSA can provide significant additional assets for your heirs. However, the tax implications of inheriting an HSA differ substantially depending on who receives it. So it’s important to carefully consider your beneficiary designation. If you name your spouse as a beneficiary, the inherited HSA will be treated as his or her own HSA. That means your spouse can allow the account to continue growing tax-deferred and withdraw funds tax-free for his or her own qualified medical expenses. If you name your child or someone other than your spouse as a beneficiary, the HSA terminates, and your beneficiary is taxed on the account’s fair market value. Note, however, that any of your qualified medical expenses paid with HSA funds within one year after death aren’t taxable to the HSA beneficiary. What if your estate is the beneficiary of the HSA? The full amount of the HSA is taxed to you in the year of death. In some situations (for instance, if you’re in a low tax bracket and the beneficiary is in a high tax bracket), this may be a good tax planning strategy. But in others (if you’re in a high tax bracket and your beneficiary is in a low tax bracket), it could be a bad idea tax-wise. As with most tax planning issues, be sure to consider the tax consequences and other relevant factors when making a beneficiary designation. Also, keep in mind that, if you do have qualified medical expenses during your life, it generally will be more tax efficient for you to use tax-free HSA distributions to pay them. You won’t have to tap non-HSA funds for medical expenses, leaving you with more non-HSA assets to pass on to your nonspouse heirs. For those heirs, the income tax treatment of non-HSA assets will typically be more favorable. Have questions? An HSA is a tax-efficient way to fund your health care expenses during your life while helping you build more assets to pass on to your heirs. However, careful planning is critical, especially regarding HSA beneficiary designation. Contact us to discuss how to incorporate an HSA into your estate plan. © 2026 

Efficient, accurate billing practices are critical to your business’s financial health. Billing errors or delays can lead to revenue leakage, cash-flow shortages and customer attrition. If your company is struggling with billing issues — or it’s been a while since you evaluated this function — now’s a good time to review your processes and make any needed upgrades. At the root Often, billing issues stem from inadequate systems and processes. Assess your billing practices to ensure you’re: Invoicing customers for the correct amounts and applying any promised discounts, Paying attention to customer complaints and taking immediate steps to resolve them, Tracking errors to identify trends, Verifying account information to ensure invoices are addressed correctly, and Setting clear standards and expectations with customers (both verbally and in writing) about your policies regarding pricing, payment terms, credit, and delivery times. In addition, train employees to enforce billing policies properly. They should ask customers to pay any portion of a bill that isn’t under dispute. And once a dispute is satisfactorily resolved, they need to ask the customer to pay the remainder immediately. Rising billing disputes may signal a deterioration in the quality of a company’s products or services. Damaged or late orders may give customers an excuse not to pay their bills. The same goes for services that aren’t provided in a timely or professional manner. Flexible schedules and tech solutions If your business is invoice-based, know that regularly sending out bills late can harm collection efforts — so timeliness is critical. Traditionally, many businesses have offered 30-, 45- or 60-day payment terms. But this may have changed in your industry, particularly now that most billing is done electronically. What’s more, many companies permit their most important or largest customers to negotiate customized payment schedules. If you adopt this practice, adjust your cash flow expectations and projections to recognize such variances. Both small and large businesses generally use automated billing systems these days. But if your company employs manual methods, we strongly advise you to find a technology solution that lets you easily send electronic invoices and receive paperless payments. Doing so can reduce labor-intensive work, improve recordkeeping and expedite payment. As with any technology, however, you’ll need to review it from time to time to determine whether it continues to meet your needs or if better options have become available. We can help Contact us for billing software recommendations. We can also help you identify potential billing issues early — before they escalate into cash-flow problems, customer disputes or even legal complications. © 2026 

You know your 2025 federal income tax return is due April 15, 2026. But do you know what else has an April 15 deadline? If you don’t, you could miss out on valuable tax-saving opportunities or become subject to interest and even penalties. Making 2025 contributions to an IRA It may be 2026, but you can still make a 2025 contribution to a traditional or Roth IRA until April 15. For 2025, eligible taxpayers can contribute up to $7,000 ($8,000 if they’re age 50 or older). The limit applies to traditional and Roth IRAs on a combined basis. If you contribute to a traditional IRA, you may be able to deduct the amount on your 2025 income tax return. But if you (or your spouse, if applicable) participate in a work-based retirement plan such as a 401(k) and your income exceeds certain limits, your deduction will be subject to a phaseout. Roth contributions aren’t tax-deductible, but qualified distributions will be tax-free. Roth contributions are subject to an income-based phaseout, whether or not you (or your spouse) participate in a 401(k) or similar plan. If your Roth IRA contribution is partially or fully phased out, you can make nondeductible traditional IRA contributions instead, assuming you’re otherwise eligible. Be aware that the 2025 IRA contribution deadline is April 15 regardless of whether you file for an income tax return extension. Making 2025 contributions to a SEP If you own a business or are self-employed, you still can reduce your 2025 tax liability by making deductible contributions to a Simplified Employee Pension (SEP) plan by April 15. If you don’t already have a SEP in place, you can contribute for 2025 as long as you set up the plan by the contribution deadline. The 2025 contribution limit is 25% of your eligible compensation up to $70,000 (though special rules apply if you’re self-employed). Keep in mind that, if you have employees who work enough hours and meet other qualification requirements, generally they must be allowed to participate in the plan. And you’ll have to make contributions on their behalf at the same percentage you contribute for yourself. If you file to extend your 2025 return, you have until the extended October 15 deadline to set up your plan and make deductible 2025 contributions. Filing for an automatic six-month extension If you’re unable to file your individual return by April 15, you generally must file for an extension (Form 4868) by April 15 to avoid failure-to-file penalties. But this isn’t an extension of the tax payment deadline. If you expect to owe taxes, you should project and pay the amount due by April 15 to minimize interest and late payment penalties. If you live outside the United States and Puerto Rico or serve in the military outside these two locations, you’re allowed an automatic two-month extension without filing for one. But you still must pay any tax due by April 15. Paying the first installment of 2026 estimated taxes If you make estimated tax payments, the first 2026 payment is due April 15. You can be subject to penalties if you don’t pay enough tax during the year through estimated tax payments and withholding. Generally, you’ll need to make estimated tax payments if you have taxable income without withholding, such as self-employment income, interest, dividends or capital gains from asset sales, and will likely owe $1,000 or more when you file your 2026 tax return next year. For you to avoid penalties, your estimated payments and withholding must equal at least 90% of your tax liability for 2026 or 110% of your tax for 2025 (100% if your adjusted gross income for 2025 was $150,000 or less or, if married filing separately, $75,000 or less). Paying the appropriate amount of estimated taxes on time can help you avoid or reduce interest and penalties. Filing a 2025 income tax return for a trust or estate If you’re the trustee of a trust or the executor of an estate that follows a calendar tax year, you may be required to file an income tax return (Form 1041) for the trust or estate — and pay any tax due — by April 15. Filing is required when a trust or estate has gross income of $600 or more during the tax year or if any beneficiary is a nonresident alien. For the year of death, a Form 1041 must also be filed for the deceased to report any income, as well as deductions and credits, up until the date of death. If the deceased’s assets immediately passed to the heirs, a Form 1041 generally won’t be required because the estate won’t have any post-death income. If you’re not ready to file Form 1041 by April 15, you can file an automatic five-and-a-half-month extension (Form 7004) to September 30, 2026 (or a six-month extension to October 15, 2025, if it’s a bankruptcy estate). But any tax due still needs to be paid by April 15. Meet your deadlines As you can see, depending on your situation, you may have more to do by April 15 than just file your Form 1040. And this isn’t a complete list. For example, April 15 is also the deadline for individuals to file a federal gift tax return and a Report of Foreign Bank and Financial Accounts (FBAR). We can help you determine which April 15 deadlines apply to you and assist you with meeting them so you can stay in compliance and potentially save taxes and avoid becoming subject to interest and penalties. © 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 

Many businesses offer health care and dependent care flexible spending accounts (FSAs) as part of their employee benefits package. These plans provide valuable tax savings to employees and payroll tax savings to employers. If your company operates a calendar-year FSA with a 2½-month grace period, employees have until March 15 to incur eligible expenses for their 2025 plan balances. After that, any unused 2025 funds may be forfeited under the “use-it-or-lose-it” rule. Here’s a refresher on how FSAs work and what employers can do with forfeited balances. The basics Under an employer-sponsored FSA plan, employees may be able to contribute a portion of their pay to a: Health care FSA. These accounts may be used for qualifying out-of-pocket medical, dental and vision expenses for the employee and his or her spouse and/or qualified dependents. For 2026, the maximum employee contribution to a health care FSA increases to $3,400 (from $3,300 in 2025). (The limit is annually indexed for inflation.) Dependent care FSA. These accounts may be used for qualifying child care or adult dependent care expenses. For 2026, under 2025 tax legislation, the dependent care FSA contribution limit increases to $7,500 per household ($3,750 for married couples filing separately). The limit for 2025 was $5,000 ($2,500 for separate filers). (The limit isn’t inflation-indexed, so it won’t go up in the future unless another increase is passed by Congress and signed into law.) Employee contributions are made on a pretax basis, reducing federal income tax, Social Security tax and Medicare tax (and often state income tax). The FSA plan directly pays or reimburses employees for qualified expenses, and the payments or reimbursements are tax-free. Use-it-or-lose-it rule If employees don’t use their full FSA balances by the end of the plan year, leftover balances generally revert to the employer under the use-it-or-lose-it rule. However, there are two exceptions: An FSA plan can allow a grace period of up to 2½ months. Most FSA plans operate on a calendar-year basis. For a calendar-year FSA plan, the grace period gives employees until March 15 of the following year to incur qualified expenses to drain their unused FSA balances from the previous year. A health care FSA plan can allow employees to carry over up to an annually inflation-indexed amount of unused balances from one year to the next. The amount that can be carried over from 2026 to 2027 is $680 (up from the $660 that could be carried over from 2025 to 2026). It’s important to note that a health care FSA plan can offer either the carryover or the grace period, but not both. Dependent care FSA plans can offer only the grace period, not the carryover. Options for forfeited FSA funds After any applicable grace period ends, or after applying any permitted health care FSA carryover, employers may retain forfeited balances under IRS cafeteria plan rules. Many businesses use the funds to offset plan administrative expenses. Other permitted uses generally include, on a reasonable and uniform basis: 1) reducing the amount employees need to contribute in a future year to reach a certain FSA balance (for example, employees need to contribute only $950 to have a $1,000 FSA balance, with the extra $50 funded by forfeited balances from a previous year), or 2) returning amounts to participants (typically treated as taxable wages and subject to payroll taxes and income tax withholding). Forfeitures can’t be returned to plan participants based on individual claims experience. Any allocation of returned funds must be nondiscriminatory and consistent with plan terms. Natural check-in point Around the grace-period deadline is a natural time for business owners to review how their FSA plans handle unused balances. It’s also a good opportunity to confirm that your current plan design, including grace period or carryover provisions, aligns with your employees’ needs and your administrative practices. Contact us to help review and modify your FSA plan provisions, handle forfeitures properly and prepare for next year’s enrollment cycle. © 2026 

A comprehensive estate plan does more than simply distribute your assets after your death — it also protects your voice, your values and your loved ones during a difficult moment. One critical yet often overlooked component of an estate plan is a living will. Living will vs. last will and testament Many people confuse a living will with a last will and testament, but they aren’t the same. These separate documents serve different but vital purposes. A last will and testament is what you probably think of when you hear the term “will.” This document details how your assets will be distributed upon your death. A living will (sometimes referred to as a “health care directive”) details your preferences for how life-sustaining medical treatment decisions should be made if you become incapacitated and unable to communicate them yourself. While many people focus on wills and trusts to manage property after death, a living will addresses critical decisions during your lifetime. Including one as part of your estate plan offers significant personal and financial benefits, such as: Easing emotional stress on family members. Few situations are more emotionally taxing than making end-of-life medical decisions for a family member. When loved ones are forced to make choices without clear guidance, feelings of guilt and doubt can arise. A living will can provide clarity and reassurance. It relieves your family of the burden of guessing what you would have wanted. Instead of debating difficult choices, they can focus on supporting one another. Helping to avoid family disputes. Unfortunately, disagreements over medical treatment can strain even the closest families. Different personal beliefs, religious views or interpretations of “quality of life” can lead to conflict. By documenting your wishes in advance, you reduce the risk of disputes. Health care providers and family members can rely on a legally recognized document rather than differing opinions. This can help preserve family harmony. Reducing unnecessary medical costs. End-of-life medical care can be expensive. While financial considerations shouldn’t drive medical decisions, unwanted or prolonged treatments can significantly impact your estate and your family’s financial security. A living will helps ensure that you receive only the type of care you want — no more and no less. This clarity can prevent costly interventions that don’t align with your preferences, helping to protect the assets you’ve worked hard to build. Don’t forget powers of attorney Often, a living will is drafted in conjunction with two other documents: a durable power of attorney for property and a health care power of attorney. A durable power of attorney identifies someone who can handle your financial affairs, such as paying bills and undertaking other routine tasks, should you become incapacitated. A health care power of attorney becomes effective if you’re incapacitated but not terminal or in a vegetative state. Your designee can make medical decisions on your behalf — for example, agreeing to a surgical procedure recommended by your physician — if you’re unable to do so. But this person can’t officially make life-sustaining choices. That requires a living will. Seek professional help Because laws governing living wills vary by state, it’s important to work with qualified professionals in your area to ensure your documents are properly drafted and integrated into your broader estate planning strategy. We can explain how a living will fits within your overall financial and legacy goals. Be sure to turn to your attorney to draft your living will. © 2026