Author: Slattery & Holman, P.C.

The One, Big, Beautiful Bill Act (OBBBA) brings significant updates to the tax landscape for individuals. From expanded deductions and new credits to permanent provisions from the Tax Cuts and Jobs Act (TCJA), understanding these changes is crucial for year-end planning and beyond.

Let’s walk through the most notable changes and what they mean for your tax strategy in 2025 and beyond.

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State and Local Tax (SALT) Deduction

Starting in 2025, the SALT deduction cap increases to $40,000 for joint filers and $20,000 for married filing separately — with a 1% increase each year through 2029. In 2030, the original $10,000 cap returns.

High-income taxpayers with MAGI above $500,000 ($250,000 if married filing separately) will see a reduction in their SALT cap. To maximize your deduction, consider strategies to reduce MAGI, like increasing retirement contributions or making qualified charitable distributions from IRAs.

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Child Tax Credit (CTC) & Credit for Other Dependents (COD)

The Child Tax Credit is now permanently set at $2,200 per child, starting in 2025, with annual inflation adjustments. Additionally:

• The $1,400 refundable portion is made permanent (increased to $1,700 in 2025).
• The $500 COD for non-qualifying dependents is also permanent.
• Income phaseouts remain at $400,000 for joint filers and $200,000 for others.

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Education-Related Tax Breaks

OBBBA expands the scope of 529 plans:

• Tax-free distributions can now be used for credentialing programs and a wider range of K–12 expenses (books, tutoring, materials, testing fees).
• The annual K–12 distribution cap doubles from $10,000 to $20,000 in 2026.

A new tax credit of up to $1,700 is available for contributions to scholarship organizations for K–12 students in households earning up to 300% of the area median income.

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Student Loan Benefits

Employer-paid student loan repayment remains excluded from income (up to $5,250/year), with inflation adjustments starting in 2026.

However, from 2026 on, only forgiven loans due to death or permanent disability will qualify for tax-free treatment. Other forgiven student loans will be taxable — unless Congress extends current relief. Be aware: some states may tax forgiven debt, even if federally excluded.

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Charitable Contribution Deductions

Starting in 2026:

• A new nonitemized charitable deduction of up to $1,000 ($2,000 for joint filers) is available.
• A 0.5% AGI floor will apply to itemized charitable deductions. For example, with $100,000 AGI, only donations above $500 will be deductible.

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Qualified Small Business Stock (QSBS)

OBBBA introduces partial exclusions for shorter QSBS holding periods:

• 75% exclusion for 4-year holdings
• 50% exclusion for 3-year holdings

The asset cap for QSBS eligibility also increases to $75 million, adjusted for inflation. These changes apply to stock acquired after July 4, 2025.

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Premium Tax Credit (PTC) Changes

Beginning in 2026, if you receive excess PTCs, you’ll need to repay the full amount unless your actual income is under 100% of the poverty level.

From 2028 on, recipients must annually verify eligibility factors like income, immigration status, and residence — automatic re-enrollment ends.

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Temporary Deductions for 2025–2028

These apply whether you itemize or not:

Tips Deduction

Deduct up to $25,000 in reported tips if you work in an occupation with customary tipping. Starts phasing out at $150,000 MAGI ($300,000 joint).

Overtime Pay Deduction

Deduct the “overtime premium” (extra pay beyond regular rate) up to $12,500 or $25,000 for joint filers. Phaseouts match the tips deduction.

Auto Loan Interest Deduction

Deduct up to $10,000 of interest on new vehicle loans (U.S.-assembled, under 14,000 lbs., post-2024 loans). Begins phasing out at $100,000 MAGI ($200,000 joint).

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“Senior” Deduction

Taxpayers age 65+ can deduct $6,000 starting in 2025. This is independent of whether they receive Social Security. The deduction begins to phase out at $75,000 MAGI ($150,000 joint).

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Trump Accounts for Children

Launching in 2026, Trump Accounts are savings accounts for children under 18 with Social Security numbers.

• Annual contribution limit: $5,000 per child
• Initial $1,000 federal contribution available for U.S.-born citizens (2025–2028)
• Funds grow tax-deferred, and accounts must remain invested in approved index funds
• Withdrawals permitted after age 18

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Permanent TCJA Provisions Made Law

The OBBBA makes permanent many key Tax Cuts and Jobs Act (TCJA) measures:

• Individual tax rates of 10%, 12%, 22%, 24%, 32%, 35%, 37%
• Increased standard deduction
• Repeal of personal exemptions
• Limit on SALT deduction
• AMT exemption increases
• Mortgage interest deduction cap at $750,000
• Deductibility of mortgage insurance premiums resumes after 2025
• Repeal of home equity loan interest unless used for home improvement
• Casualty loss deduction limited to federally and certain state-declared disasters
• Elimination of miscellaneous itemized deductions
• Elimination of moving expense deduction (with narrow exceptions)

While labeled “permanent,” Congress could still amend these provisions in the future.

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Time to Reassess Your Tax Strategy

These updates — plus other changes like limits on itemized deductions for high earners and gambling loss restrictions — make it more important than ever to review your personal tax plan.

Whether you’re a wage earner, investor, retiree, or parent, we can help you adjust your strategy and take full advantage of the new provisions under OBBBA.

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Let’s Talk Tax Strategy

Want to know how OBBBA will impact your 2025 return?
Our team is here to help you navigate the changes and uncover opportunities. Contact us today to schedule your personalized tax planning session.

 

© 2025

With its broad overhaul of the tax code, the newly passed One, Big, Beautiful Bill Act (OBBBA) introduces a mix of changes for businesses. While a few prior incentives are scaled back, many provisions open the door to new planning advantages—particularly for those in manufacturing, small business ownership, and real estate. Strategic planning will be key to navigating the new rules and maximizing potential benefits.

Below, we highlight key areas of the law that may affect your 2025 tax planning and beyond.

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Qualified Business Income (QBI) Deduction

Section 199A is here to stay. The OBBBA makes the QBI deduction for pass-through businesses and sole proprietors permanent.

• Expands the phase-in thresholds to $75,000 (single) and $150,000 (joint)
• Adds a minimum $400 QBI deduction starting in 2025 (indexed for inflation)
• Applies to taxpayers with at least $1,000 of QBI from active businesses in which they materially participate

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100% Bonus Depreciation Made Permanent

Businesses can now permanently deduct 100% of qualified property placed into service after January 19, 2025. That includes used assets.

• Qualified production property placed in service between July 4, 2025, and 2031 also qualifies
• Section 179 limits raised to $2.5 million with a $4 million phaseout threshold (indexed annually)

This is a major incentive for capital investment and equipment purchases.

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Research & Experimentation (R&E) Expenses

Starting in 2025, businesses may again deduct domestic R&E costs in the year incurred.

• Reverses the TCJA amortization rule
• Applies retroactively (2022–2024) for small businesses (avg. receipts < $31 million)
• Accelerated deductions over one or two years available for prior expenses

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Rollbacks to Clean Energy Incentives

The OBBBA repeals or accelerates the expiration of several business clean energy credits:

• Commercial clean vehicle credit ends after Sept. 30, 2025
• Alternative fuel vehicle refueling property credit ends after June 30, 2026
• Sec. 179D deduction for energy-efficient buildings is eliminated

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Qualified Opportunity Zones (QOZs)

OBBBA makes the QOZ program permanent and enhances investor benefits:

• Step-up in basis now begins after year 1
• Initial gains must be realized in year 7
• New rural-focused QOFs receive triple step-up in basis

First round of new QOFs launches January 1, 2027.

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International Tax Changes

Key international provisions from the TCJA are now permanent:

• FDII and GILTI deductions stay, now taxed at an effective rate of 14%
• BEAT minimum tax raised to 10.5% starting in 2026

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Employer Tax Incentives

Several employee-related credits and exclusions are now permanent:

• Student loan payment exclusion: Adjusted annually after 2026
• Child care credit: 40% for large businesses, 50% for small, up to $500K–$600K annually
• Paid FML credit: Permanently extended to include premiums for FML insurance

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Employee Retention Tax Credit (ERTC)

Important update for late filers:

• No refunds will be issued for ERTC claims filed after January 31, 2024
• The IRS now has 6 years to examine and challenge these claims

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Other Notable Provisions

• Business interest deduction: Expanded by excluding depreciation, amortization, and depletion from ATI
• Excess business loss limitation: Made permanent
• New Markets Tax Credit: Permanently extended

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How Will the OBBBA Affect Your Business?

The OBBBA delivers long-term clarity to several areas of business tax planning. While the law doesn’t create major structural overhauls, the permanence of many popular incentives provides planning opportunities for years to come.

Ready to plan ahead? Contact our team today to discuss how these changes impact your specific situation. We’re here to help you navigate the road ahead.

 

© 2025

On July 4, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law — an 870-page piece of legislation with major implications for individuals and businesses alike. This landmark bill builds on the 2017 Tax Cuts and Jobs Act (TCJA), making many of its provisions permanent, while introducing a wave of new deductions and adjustments — some temporary, others long-term.

Below is a summary of the most impactful provisions, effective for tax years beginning in 2025, unless otherwise noted.

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Key Tax Changes for Individuals

Income Tax & Standard Deduction

• Permanently retains TCJA tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%
• Permanently increases the standard deduction, with annual inflation adjustments:
  • $15,750 for single filers
  • $23,625 for heads of households
  • $31,500 for joint filers
• Personal exemptions permanently eliminated

Family & Child Benefits

• Child Tax Credit increased to $2,200, with inflation indexing
• Adoption Tax Credit becomes partially refundable up to $5,000 (no carryforwards)
• “Trump Accounts”: Eligible newborns receive $1,000 seed funding (beginning in 2026)

Temporary Deductions (2025–2028)

• Tip income deduction: Above-the-line deduction up to $25,000 for qualifying industries (with income-based phaseouts)
• Overtime pay deduction: Up to $12,500 (single) or $25,000 (joint)
• American-made vehicle loan interest: Up to $10,000 deductible
• Senior bonus deduction: Up to $6,000 for taxpayers age 65+, with phaseouts

Housing & Mortgage

• Mortgage interest deduction capped at $750,000 of debt (includes mortgage insurance premiums)
• Home equity loan interest deduction eliminated
• Personal casualty loss deduction limited to federally or certain state-declared disasters

Other Itemized & Above-the-Line Changes

• SALT cap raised: Temporarily increases to $40,000 in 2025, growing 1% per year through 2029, then returns to $10,000
• Miscellaneous itemized deductions eliminated, except for unreimbursed educator expenses
• Moving expense deduction eliminated, except for active-duty military
• Clean energy tax incentives eliminated, including:
  • Clean vehicle credits
  • Residential clean energy and energy efficiency credits
• Charitable contributions:
  • Above-the-line deduction for non-itemizers: $1,000 (single) / $2,000 (joint)
  • New 0.5% floor on itemized charitable deductions (starting in 2026)

Education & Estate Planning

• Section 529 plans expanded to cover additional qualified expenses
• Federal gift and estate tax exemption increased to $15M (individual) / $30M (joint) beginning in 2026, with annual inflation adjustments
• Alternative Minimum Tax (AMT) exemption levels permanently increased

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Key Tax Changes for Businesses

Deductions & Depreciation

• Qualified Business Income (QBI) deduction for pass-through entities (20%) made permanent and expanded
• 100% bonus depreciation made permanent for new and used assets acquired after Jan. 19, 2025
• Sec. 179 expensing limit raised to $2.5M, with $4M phaseout
• New deduction for “qualified production property” (100%) for property placed in service after July 4, 2025, and before 2031
• Cap on interest deductions eased by excluding depreciation, amortization, and depletion from “adjusted taxable income” (ATI) calculation
• Domestic R&D expenses permanently deductible for eligible small businesses (retroactive to 2022)
• Excess business loss limitation made permanent

Eliminations & Phaseouts

• Employee Retention Credit (ERC) refunds denied for claims filed after Jan. 31, 2024
• Clean energy tax incentives eliminated, including:
  • Commercial clean vehicle credit
  • Alternative fuel refueling property credit
  • Sec. 179D energy-efficient building deduction

Incentives & Credits

• Qualified Opportunity Zone program made permanent
• New Markets Tax Credit permanently extended
• Employer-provided child care credit permanently increased to $500,000 ($600,000 for small businesses), with annual inflation adjustments
• Paid family & medical leave credit made permanent and modified
• Employer student loan payment exclusion made permanent, with inflation adjustments beginning in 2027

International & Investment Incentives

• Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI) deductions made permanent
• Base Erosion and Anti-Abuse Tax (BEAT) made permanent
• Qualified small business stock exclusion expanded for new stock issuances

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What’s Next?

This summary highlights some of the major changes — but there are dozens of additional provisions, caveats, and phaseouts that could impact your 2025 tax strategy. Many of these changes will require new regulations and IRS guidance, and some may be subject to legal or political challenges.

Our team is closely monitoring developments and will help you navigate the new tax landscape.

Need help planning ahead? Contact us today to schedule a personalized tax strategy session.

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© 2025

The U.S. Senate has passed a major 2025 tax reform package known as the “One Big Beautiful Bill” (OBBB). If enacted, it would extend key provisions of the Tax Cuts and Jobs Act (TCJA), increase popular deductions, and introduce new tax breaks for working Americans and seniors. Here’s what’s inside and how it could impact individuals and businesses.

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Senate Passage and Legislative Background

The U.S. Senate passed its version of the One Big Beautiful Bill on July 1 by a narrow vote of 51 to 50, with Vice President J.D. Vance casting the tiebreaker. The bill closely mirrors the version passed by the U.S. House of Representatives in May and is now back in the House for final consideration.

At its core, the legislation includes extensions of key TCJA provisions currently set to expire on December 31, 2025, along with several new and enhanced tax breaks.

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New Tax Breaks for Individuals

Both the House and Senate bills align with campaign promises from President Trump to reduce the tax burden on workers:

• Tip and Overtime Income Exemption: Certain tips and overtime pay would be exempt from income tax for eligible taxpayers. Specific eligibility criteria will be defined if the bill becomes law.
• Senior Deduction for Social Security Recipients: While full elimination of tax on Social Security benefits did not make it into either version of the bill, the Senate version includes a $6,000 deduction for those age 65 and older from 2025 through 2028, for taxpayers with modified adjusted gross income (MAGI) under $75,000 ($150,000 for married couples filing jointly). The House version proposes a similar deduction, but caps it at $4,000.

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SALT Deduction Cap Changes in 2025 Tax Bill

A long-standing point of contention, the state and local tax (SALT) deduction cap, remains a major focus of the bill:

• Current law: Limits SALT deductions to $10,000, as enacted by the TCJA.
• Senate Proposal:
  • Increases the cap to $40,000 for 2025
  • Adds a 1% annual increase through 2029
  • Reverts back to $10,000 in 2030
  • Phases out the deduction for individuals earning over $500,000 in 2025, with the income threshold increasing 1% annually through 2029
• House Proposal: Also increases the cap to $40,000, but proposes to make the change permanent for those earning under $500,000.

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Child Tax Credit (CTC) Updates Under the Senate Bill

The current Child Tax Credit of $2,000 per child is set to drop to $1,000 after 2025, and key eligibility requirements would loosen unless Congress acts.

Both bills aim to enhance and extend the CTC, with differences in structure:

• Senate Version:
  • Makes the CTC permanent
  • Increases it to $2,200 per child, indexed for inflation
  • Requires Social Security Numbers (SSNs) for both the child and the parent claiming the credit
• House Version:
  • Increases CTC to $2,500 per child for 2025–2028
  • Retains the higher income phaseout thresholds
  • Requires SSNs for both the child and the taxpayer
  • Reverts to $2,000 per child after 2028, with annual inflation adjustments

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What’s Next?

The proposed legislation is now back in the House of Representatives for further debate and a final vote. President Trump has expressed urgency in getting the bill signed into law by July 4, though it remains uncertain whether the House will meet that timeline.

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What This Means for You

This bill includes significant potential changes for taxpayers, including increased deductions, credits, and special provisions for seniors and workers. While not yet law, it could have a major impact on your 2025 tax planning and beyond.

Our team is closely tracking the bill’s progress. Contact our office if you have questions or want to prepare for possible changes that may affect your tax return.

© 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.

Stay Informed

As the legislative process unfolds, we’ll continue to monitor the latest developments. Subscribe to our newsletter or contact us directly to see how potential changes may impact your personal or business tax situation.

 

© 2025

The U.S. House of Representatives has passed its budget reconciliation bill, dubbed The One, Big, Beautiful Bill. Among other things, the sweeping bill would eliminate clean vehicle credits by the end of 2025 in most cases.

 

If you’re planning to take advantage of the federal electric vehicle tax credit, the new House GOP bill may impact your decision. Here’s what you need to know.

The Current Credit

The Inflation Reduction Act (IRA) significantly expanded the Section 30D credit for qualifying clean vehicles placed in service after April 17, 2023. For eligible taxpayers, it extended the credit to any “clean vehicle,” including EVs, hydrogen fuel cell cars and plug-in hybrids, through 2032. It also created a new credit, Sec. 25E, for eligible taxpayers who buy used clean vehicles from dealers. That credit equals the lesser of $4,000 or 30% of the sale price.

The maximum credit for new vehicles is $7,500, based on meeting certain sourcing requirements for 1) critical minerals and 2) battery components. Clean vehicles that satisfy only one of the two requirements qualify for a $3,750 credit.

The Sec. 30D and Sec. 25E credits aren’t refundable, meaning you can’t receive a refund if you don’t have any tax liability. In addition, any excess credit can’t be carried forward if it’s claimed as an individual credit. A credit can be carried forward only if it’s claimed as a general business credit.

If you’re eligible for either credit (see below), you have two options for applying it. First, you can transfer the credit to the dealer to reduce the amount you pay for the vehicle (assuming you’re purchasing the vehicle for personal use). You’re limited to making two transfer elections in a tax year. Alternatively, you can claim the credit when you file your tax return for the year you take possession of the vehicle.

Buyer Requirements

To qualify for the Sec. 30D credit, you must purchase the vehicle for your own use (not resale) and use it primarily in the United States. The credit is also subject to an income limitation. Your modified adjusted gross income (MAGI) can’t exceed:

• $300,000 for married couples filing jointly or a surviving spouse,
• $225,000 for heads of household, or
• $150,000 for all other filers.

If your MAGI was less in the preceding tax year than in the year you take delivery of the vehicle, you can apply that amount for purposes of the income limit.

Note: As initially drafted, the GOP proposal would retain the Sec. 30D credit through 2026 for vehicles from manufacturers that have sold fewer than 200,000 clean vehicles.

For used vehicles, you similarly must buy the vehicle for your own use, primarily in the United States. You also must not:

• Be the vehicle’s original owner,
• Be claimed as a dependent on another person’s tax return, and
• Have claimed another used clean vehicle credit in the preceding three years.

A MAGI limit applies for the Sec. 25E credit, but with different amounts than those for the Sec. 30D credit:

• $150,000 for married couples filing jointly or a surviving spouse,
• $112,500 for heads of household, or
• $75,000 for all other filers.

You can choose to apply your MAGI from the previous tax year if it’s lower.

Vehicle Requirements

You can take advantage of the Sec. 30D credit only if the vehicle you purchase:

• Has a battery capacity of at least seven kilowatt hours,
• Has a gross vehicle weight rating of less than 14,000 pounds,
• Was made by a qualified manufacturer,
• Underwent final assembly in North America, and
• Meets critical mineral and battery component requirements.

In addition, the manufacturer suggested retail price (MSRP) can’t exceed $80,000 for vans, sport utility vehicles and pickup trucks, or $55,000 for other vehicles. The MSRP for this purpose isn’t necessarily the price you paid. It includes manufacturer-installed options, accessories and trim but excludes destination fees.

To qualify for the 25E used car credit, the vehicle must:

• Have a sale price of $25,000 or less, including all dealer-imposed costs or fees not required by law (legally required costs and fees, such as taxes, title or registration fees, don’t count toward the sale price),
• Be a model year at least two years before the year of purchase,
• Not have already been transferred after August 16, 2022, to a qualified buyer,
• Have a gross vehicle weight rating of less than 14,000 pounds, and
• Have a battery capacity of at least seven kilowatt hours.

The sale price for a used vehicle is determined after the application of any incentives — but before the application of any trade-in value.

Don’t Forget the Paperwork

Form 8936, “Clean Vehicle Credits,” must be filed with your tax return for the year you take delivery. The form is required regardless of whether you transferred the credit or chose to claim it on your tax return. Contact us if you have questions regarding the clean vehicle tax credits and their availability.

 

Need help claiming the EV tax credit? Contact us today to ensure you don’t miss out.

 

© 2025

Victims of presidentially declared disasters in recent years who couldn’t previously claim a casualty loss deduction may now be able to claim a refund. Additional tax relief also might be available. 

Loosened restrictions for casualty losses

The tax relief comes via the Federal Disaster Tax Relief Act (FDTRA), which was signed into law by former President Biden in December 2024. Among other things, the law makes it easier to claim a deduction for qualified disaster-related personal casualty losses during a specific time period.

Previously, you could claim such a deduction only if you itemized your deductions. It was further limited by a $100 reduction per loss, and you were allowed to deduct only the amount of the loss that exceeded 10% of your adjusted gross income. The so-called 10% rule was applied after the $100 reduction.

Under the FDTRA, those restrictions no longer apply if you suffered a casualty loss attributable to a presidentially declared disaster (referred to as a “qualified disaster loss”) that began on or after December 28, 2019, and on or before December 12, 2024, and ended no later than January 11, 2025. (Note that this relief doesn’t apply to the 2025 California wildfires. See “Wildfire relief” below for information on other relief available to the victims of those and other more recent fires.)

In addition, the president must have made the disaster declaration between January 1, 2020, and February 10, 2025. The limit for such losses is that each separate casualty loss is deductible only after it exceeds $500.

Be aware that casualty losses are generally deductible in the year the loss is incurred. For example, if a qualified disaster occurred in 2022, but your insurance company didn’t deny your related claim until 2024, you’d deduct the loss for 2024. But you now have the option to deduct any loss attributable to a presidentially declared disaster in the tax year prior to the occurrence.

Wildfire relief

The FDTRA provides that “qualified wildfire relief payments” — including those made to Los Angeles County taxpayers affected by the 2025 California wildfires — can be excluded from gross income for tax purposes. It’s been estimated that this provision will return $512 million in taxes to wildfire victims. And it’ll protect payment recipients from losing certain income-based benefits, such as health insurance premium subsidies, Veterans Administration co-pay assistance and federal student aid.

The exclusion applies to any amount received by, or on behalf of, an individual as compensation for losses, expenses or damages, including for:

• Additional living expenses,
• Lost wages, other than compensation for lost wages paid by the employer which otherwise would have paid those wages,
• Personal injury,
• Death, and
• Emotional distress.

The compensation must have been granted for a federally declared disaster that was declared after December 31, 2014, as the result of a forest or range fire. The payments must be received during tax years beginning after December 31, 2019, and before January 1, 2026. Compensation from insurance and other reimbursements doesn’t qualify for the exclusion.

The law prohibits double-dipping. You can’t claim a deduction or credit for any expense excluded from income under the provision. And, if you use excluded qualified payments to purchase or improve property, you may not increase your basis or adjusted basis in the property by the excluded amount.

The IRS is also providing some relief related to filing deadlines for individuals and households that reside or have a business in Los Angeles County and were affected by wildfires and straight-line winds that began on January 7, 2025. These taxpayers have until October 15, 2025, to file various federal individual and business tax returns and make tax payments.

The new deadline applies to individual income tax returns and payments normally due on April 15, 2025. This relief also applies to the 2024 estimated tax payment that was due on January 15, 2025, and estimated tax payments normally due on April 15, June 16, and September 15, 2025.

It also applies to:

• Quarterly payroll and excise tax returns normally due on January 31, April 30, and July 31, 2025,
• Calendar-year partnership and S corporation returns normally due on March 17, 2025,
• Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025, and
• Calendar-year tax-exempt organization returns normally due on May 15, 2025.

East Palestine train derailment relief

The FDTRA also extends relief to victims of the train derailment on February 3, 2023, in East Palestine, Ohio. “East Palestine Train Derailment Payments” can be excluded from gross income.

The payments include any amount received by, or on behalf of, an individual as derailment-related compensation for:

• Loss,
• Damages,
• Expenses,
• Loss in real property value,
• Closing costs related to real property (including realtor commissions), and
• Inconvenience (including access to real property).

The compensation must have come from a federal, state or local government agency, Norfolk Southern Railway, or any subsidiary, insurer or agent of Norfolk Southern Railway.

Next steps for taxpayers

If you’re claiming any of the benefits under the FDTRA for a tax year for which you’ve already filed a tax return without claiming the benefits, you’ll need to file an amended return. We can file your amended return electronically if you’re amending a return for the current or prior two tax periods.

You must file Form 1040-X, Amended U.S. Individual Income Tax Return, on paper to amend your return if 1) the amended return is for earlier years, or 2) your prior year return was originally filed on paper during the current processing year. If you file your amended return electronically, you can elect to have any refund directly deposited into a U.S. financial institution account. Contact us with any questions and to prepare an amended return for you.

 

© 2025

President Trump and the Republican Congress plan to act swiftly to make broad changes to the United States — including its federal tax system. Congress is already working on legislation that would extend and expand provisions of the sweeping Tax Cuts and Jobs Act (TCJA), as well as incorporate some of Trump’s tax-related campaign promises.

 

To that end, GOP lawmakers in the U.S. House of Representatives have compiled a 50-page document that identifies potential avenues they may take, as well as how much these tax and other fiscal changes would cost or save. Here’s a preview of potential changes that might be on the horizon.

Big Plans

The TCJA is the signature tax legislation from Trump’s first term in office, and it cut income tax rates for many taxpayers. Some provisions — including the majority affecting individuals — are slated to expire at the end of 2025. The nonpartisan Congressional Budget Office estimates that extending the temporary TCJA provisions would cost $4.6 trillion over 10 years. For context, the federal debt currently rings in at more than $35 trillion, and the budget deficit is $711 billion.

In addition to supporting the continuation of the TCJA, the president has pushed to reduce the 21% corporate tax rate to 20% or 15%, with the goal of generating growth. He also supports eliminating the 15% corporate alternative minimum tax imposed by the Inflation Reduction Act (IRA), signed into law during the previous administration. It applies only to the largest C corporations.

Regarding tax cuts for individuals beyond TCJA extensions, Trump has expressed that he’s in favor of:

• Eliminating the estate tax (which currently applies only to estates worth more than $13.99 million),
• Repealing or raising the $10,000 cap on the deduction for state and local taxes,
• Creating a deduction for auto loan interest, and
• Eliminating income taxes on tips, overtime and Social Security benefits.

Finally, he wants to cut IRS funding, which would reduce expenditures but also reduce revenues. Without offsets, these plans would drive up the deficit significantly.

Possible Offsets

The House GOP document outlines numerous possibilities beyond just spending reductions to pay for these tax cuts. For example, tariffs — a major plank in Trump’s campaign platform — may play a role.

The GOP document suggests a 10% across-the-board import tariff. Trump, however, has discussed and imposed various tariff amounts, depending on the exporting country. The 25% tariffs on Canadian and Mexican products, which were imposed earlier, have been paused until March 4. An additional 10% tariff on Chinese imports took effect on February 4.

In addition, Trump said tariffs on goods from other countries, including the 27-member European Union, could happen soon. While he maintains that those countries will pay the tariffs, it’s generally the U.S. importer of record that’s responsible for paying tariffs. Economists generally agree that at least part of the cost would then be passed on to consumers.

The House GOP document also examines generating savings through changes to various tax breaks. Here are some of the options:

The mortgage interest deduction. Suggestions include eliminating the deduction or lowering the current $750,000 limit to $500,000.

Head of household status. The document looks at eliminating this status, which provides a higher standard deduction and certain other tax benefits to unmarried taxpayers with children compared to single filers.

The child and dependent care tax credit. The document considers eliminating the credit for qualified child and dependent care expenses.

Renewable energy tax credits. The IRA created or expanded various tax credits encouraging renewable energy use, including tax credits for electric vehicles and residential clean energy improvements, such as solar panels and heat pumps. The GOP has proposed changes ranging from a full repeal of the IRA to more limited deductions.

Employer-provided benefits. Revenue could be raised by eliminating taxable income exclusions for transportation benefits and on-site gyms.

Health insurance subsidies. Premium tax credits are currently available for households with income above 400% of the federal poverty line (the amounts phase out as income increases). Revenue could be raised by limiting such subsidies to the “most needy Americans.”

Education-related breaks are also being assessed. The House GOP document looks at how much revenue could be generated by eliminating credits for qualified education expenses, the deduction for student loan interest and federal income-driven repayment plans. The GOP is also weighing the elimination of interest subsidies for federal loans while borrowers are still in school and imposing taxes on scholarships and fellowships, which currently are exempt.

The Hurdles

Republican lawmakers plan on passing tax legislation using the reconciliation process, which requires only a simple majority in both houses of Congress. However, the GOP holds the majority in the House by only three votes.

That gives potential holdouts within their own caucus a lot of leverage. For example, deficit hawks might oppose certain proposals, while centrist members may prove reluctant to eliminate popular tax breaks and programs.

Republican representatives of all stripes are likely to oppose moves that would hurt industries in their districts, such as the reduction or elimination of certain clean energy incentives. And, of course, lobbyists will make their voices heard.

Stay Tuned

The GOP hopes to enact tax legislation within President Trump’s first 100 days in office, but that may be challenging. We’ll keep you apprised of important developments.

© 2025

A federal district court judge has struck down the Biden administration’s new rule regarding the salary threshold for determining whether certain employees are exempt from federal overtime pay requirements. The first phase of the rule took effect for most employers in July 2024 and affects executive, administrative and professional (EAP) employees.

With a Republican administration poised to take control of the U.S. Department of Labor (DOL), the court’s ruling may sound the death knell for the rule. Here’s what the ruling means for employers.

The rejected rule

Under the Fair Labor Standards Act (FLSA), nonexempt workers are entitled to overtime pay at 1.5 times their regular pay rate for hours worked per week that exceed 40. EAP employees are exempt from the overtime requirement if they satisfy three tests:

Salary basis test. An employee is paid a predetermined and fixed salary that isn’t subject to reduction due to variations in the quality or quantity of his or her work.

Salary level test. The salary isn’t less than a specific amount or threshold.

Duties test. An employee primarily performs executive, administrative or professional duties.

The new rule focused on the salary level test and increased the threshold in two steps. The first step occurred on July 1, 2024, when most salaried workers earning less than $844 per week or $43,888 per year became eligible for overtime (up from $684 per week or $35,568 per year). The second step was scheduled to kick in on January 1, 2025, when the salary threshold would have increased to $1,128 per week or $58,656 per year.

In addition, the rule raised the total compensation requirement for highly compensated employees (HCEs), who are subject to a more relaxed duties test than employees earning less. HCEs need only “customarily and regularly” perform at least one of the duties of an exempt EAP employee instead of primarily performing such duties.

As of July 1, 2024, this less restrictive test applied to HCEs who perform office or nonmanual work and earn total compensation (including bonuses, commissions and certain benefits) of at least $132,964 per year (up from $107,432). It would have risen to $151,164 on January 1, 2025.

The rule also established a mechanism to update the salary thresholds every three years, based on current earnings data from the most recent available four quarters of data from the U.S. Bureau of Labor Statistics. However, the DOL could temporarily delay a scheduled update when warranted by unforeseen economic or other conditions.

The court’s ruling

In June 2024, the U.S. District Court for the Eastern District of Texas temporarily blocked the rule as far as its application to the State of Texas as an employer — so on an extremely limited basis — while it considered the state’s underlying legal challenge to the rules (State of Texas v. U.S. Dep’t of Labor). Multiple business groups joined Texas and asked the court to vacate the rule entirely.

On November 15, 2024, the court did just that. It found that the new rule exceeded the DOL’s authority to define terms because the EAP exemption requires that an employee’s status turn on duties, not salary — and the new rule impermissibly made salary predominate over duties. The court also found the automatic updating mechanism exceeded the DOL’s authority.

Notably, the court cited the U.S. Supreme Court’s recent decision overturning the doctrine known as “Chevron deference.” Under the doctrine, which had been in effect for decades, courts deferred to “permissible” agency interpretations of the laws they administer. The high court’s ruling empowers courts to reject agency rules more easily.

Employer response

As a result of the court’s ruling, the salary thresholds for EAP employees and HCEs return to their earlier levels: $684 per week or $35,568 per year for the former and $107,432 for the latter. On its face, that’s good news for employers. However, many businesses have started making moves in response to the new rule. For example, employers may have reclassified some employees as nonexempt, increased salaries to retain exempt status for others or reduced salaries to offset new overtime pay. Now what?

Of course, the DOL could appeal the ruling, which could make employers reluctant to institute any immediate changes. An appeal would be heard by the conservative Fifth Circuit Court of Appeals, which has repeatedly ruled against the Biden administration.

The best predictor of what’s to come may be the treatment of a similar DOL rule issued by President Obama’s administration. A court invalidated the rule in November 2016 in a ruling that was appealed while Obama was still in office. The DOL under President Trump’s first administration withdrew the appeal and issued the revised and less expansive rule that took effect in 2019.

Regardless, bear in mind that exempt employees also must satisfy the applicable duties test, whatever the salary threshold. An employee whose salary exceeds the threshold but doesn’t primarily engage in the applicable duties isn’t exempt from the overtime requirements.

Proceed with caution

Employers that roll back changes in status or salary increases that were implemented in anticipation of the new rule may find that employees — or their attorneys — begin to question whether their duties warrant an exemption. Even if they don’t pursue litigation, rollbacks must be weighed against the impact on employee morale in a competitive job market. The best course will vary by employer, and legal advice is strongly encouraged. We’ll keep you updated on the latest news regarding the ruling.

© 2025

The IRS has issued its 2025 inflation-adjusted contribution amounts for retirement plans in Notice 2024-80. Many retirement-plan-related limits will increase for 2025 — but less than in prior years. Thus, depending on the type of plan you have, you may have limited opportunities to increase your retirement savings.

Type of limitation	2024 limit	2025 limit
Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans	$23,000	$23,500
Annual benefit limit for defined benefit plans	$275,000	$280,000
Contributions to defined contribution plans	$69,000	$70,000
Contributions to SIMPLEs	$16,000	$16,500
Contributions to traditional and Roth IRAs	$7,000	$7,000
Catch-up contributions to 401(k), 403(b) and 457 plans for those age 50 or older	$7,500	$7,500
Catch-up contributions to 401(k), 403(b) and 457 plans for those age 60, 61, 62 or 63*	N/A	$11,250
Catch-up contributions to SIMPLE plans for those age 50 or older	$3,500	$3,500
Catch-up contributions to SIMPLE plans for those age 60, 61, 62 or 63*	N/A	$5,250
Catch-up contributions to IRAs for those age 50 or older	$1,000	$1,000
Compensation for benefit purposes for qualified plans and SEPs	$345,000	$350,000
Minimum compensation for SEP coverage	$750	$750
Highly compensated employee threshold	$155,000	$160,000

* A change that takes effect in 2025 under SECURE 2.0

Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits all will increase for 2025:

Traditional IRAs

MAGI phaseout ranges apply to the deductibility of contributions if a taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:

• For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
  • For a spouse who participates, the 2025 phaseout range limits will increase by $3,000, to $126,000–$146,000.
  • For a spouse who doesn’t participate, the 2025 phaseout range limits will increase by $6,000, to $236,000–$246,000.
• For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2025 phaseout range limits will increase by $2,000, to $79,000–$89,000.

Taxpayers with MAGIs in the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $7,000 contribution limit for 2025 (plus $1,000 catch-up, if applicable, and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may also be beneficial if your MAGI is too high for you to contribute (or fully contribute) to a Roth IRA.

Roth IRAs

Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:

• For married taxpayers filing jointly, the 2025 phaseout range limits will increase by $6,000, to $236,000–$246,000.
• For single and head-of-household taxpayers, the 2025 phaseout range limits will increase by $4,000, to $150,000–$165,000.

You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.

(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for traditional and Roth IRAs.)

Revisit your retirement plan

To better ensure that your retirement plans remain on track, consider these 2025 inflation-adjusted contribution limits. We can help you review your plans and make any necessary modifications.

 

© 2025