Extended Filing Season Deadline Reminders

By now, we have all been able to do a deep dive into the comprehensive One Big Beautiful Bill Act (OBBBA), which includes an array of tax provisions affecting individuals, businesses and international taxpayers. Though we do not have all of the regulatory guidance for each provision just yet, we want to provide a high-level overview of the key provisions and offer preliminary insights into how they may affect your tax planning.

Individual Income Tax Provisions

• Permanent extension of lower tax rates and brackets - The tax rates enacted in 2017 in the Tax Cuts and Jobs Act (TCJA) are now permanent. An additional year of inflation adjustment is added for determining the dollar amounts at which the 12% rate bracket ends and the 22% rate bracket begins.

• The nearly doubled standard deduction has been made permanent. Adjusted annually for inflation. For 2025, the amounts are as follows:

  • Single & Married Filing Separately (MFS): $15,750 (indexed)

  • Head of Household (HoH): $23,625 (indexed)

  • Married Filing Jointly (MFJ): $31,500 (indexed)

• The nonrefundable child tax credit increases to $2,200 per child beginning in 2025 and the credit amount is indexed for inflation.

• The increased estate & gift tax exemption is made permanent and raised to $15 million per individual ($30 million for married couples) in 2026, indexed for inflation.

• The state and local tax (SALT) deduction cap (itemized deductions) is increased to $40,000 per household and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000. In 2030, the deduction will revert to $10,000.

• Charitable deduction for non-itemizers - An above-the-line deduction is added for charitable contributions that will start in 2026 ($1,000 for single filers, $2,000 for joint filers).

• No tax on overtime - Effective for taxable years beginning after 12/31/2024 and before 1/1/2029, receive a temporary deduction, which is capped at $12,500 ($25,000 MFJ) and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $300,000 MFJ and $150,000 for all others. Deduction will begin inflation adjustments in 2026.

• No tax on cash or charge tips - Effective for taxable years beginning after 12/31/2024 and before 1/1/2029, receive a temporary deduction, which is capped at $25,000 and would be phased out for taxpayers with modified adjusted gross income (MAGI) over $300,000 MFJ and $150,000 for all others. Deduction will begin inflation adjustments in 2026.

• For 2025–2028, an additional deduction of $6,000 is available for seniors (age 65+). The deduction phases out for taxpayers with modified adjusted gross income  (MAGI) over $75,000 ($150,000 for joint filers).

• Car loan interest deduction - For 2025–2028, up to $10,000 of interest on loans originated after December 31, 2024 for new, U.S.-assembled personal use (not for business or commercial use) qualifying vehicles (car, minivan, van, SUV, pick-up truck or motorcycle less than 14,000 pounds) may be deductible, income phaseouts. Lease payments do not qualify. Used vehicles do not qualify. If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction.

• Moving expense deduction has been permanently terminated except for those in the Armed Forces.

• Home mortgage interest and insurance premiums: The $750,000 limit on the treatment of mortgage insurance premiums as qualified residence interest is made permanent. The exclusion of home-equity indebtedness from the definition of qualified residence interest is also now permanent.

• Casualty loss deduction for personal casualties: The limitation on personal casualty loss deductions is made permanent, however a provision is added to include state-declared disasters.

• Expands use of 529 plans to include certain postsecondary credentialing expenses (e.g., expenses to obtain and maintain CPA license). Also, increases the annual withdrawal of qualified K-12 tuition expenses to $20k, no annual withdrawal limit on other qualified expenses.

• Other deductions and credits: Several other deductions and credits, including the adoption credit, employer-provided childcare credit, paid family and medical leave credit, and education-related benefits are made permanent.

Business Income Tax Provisions

• The qualified business income (QBI) deduction is made permanent and the deductible amount for each qualified business would remain at 20%.

• State and local tax (SALT) deduction at the pass-through entity level will not be limited. Effective for taxable years beginning after 12/31/2024.

• Bonus depreciation (100% expensing) for qualified property is restored for property placed in service after Jan. 19, 2025.

• Sec. 179 Deduction - The maximum amount a business may expense for qualifying expenses is increased to $2.5 million, with the phaseout threshold raised to $4 million, both indexed for inflation after 2025.

• The excess business loss limitation is made permanent, and the existing treatment of loss carryforwards is maintained.

• The business interest expense limitation is calculated using earnings before interest, taxes, depreciation and amortization (EBITDA), rather than earnings before interest and taxes (EBIT).

• There was no change to the charitable contribution deduction of up to 10% of taxable income for Corporation. However, a floor of 1% of taxable income was created. Contributions over 10% ceiling may be carried forward to the next 5 taxable years and amounts disallowed under 1% floor may be carried forward if contributions > 10% ceiling. Applies to taxable years beginning after 12/31/2025.

• Form 1099-K, Payment Card and Third Party Network Transactions, reporting threshold reverts back to previous rules where reporting is required if transactions exceed $20,000 and the aggregate number of transactions exceeds 200.

• Form 1099 reporting threshold for payments for services increases to $2,000 in a calendar year (up from $600) in 2026, and the threshold amount will be indexed annually for inflation starting in 2027.

• Employee Retention Credit (ERC) - No payment of Q3 & Q4 2021 ERC claims filed after 1/31/2024, however, it extends the statute of limitations to 6 years for IRS and taxpayers. Also, defines COVID-ERTC promoter & increases penalties on them.

• Opportunity zones provisions are made permanent, but with several changes, including narrowing the definition of “low-income community.” The changes will generally take effect in 2027.

• Several clean energy and IRS credits from the Inflation Reduction Act (IRA) are terminated.

This is a very ROBUST tax bill and can indeed be overwhelming. It is very important that you do the proper research and start having conversations with your trusted advisors such as your CPA, financial advisor, and estate planner to ensure that you truly understand the impact of these changes on your tax position. It is never too early to start tax planning. If you have specific questions as it relates to your situation, please contact us at your earliest convenience so that we can assist you with developing a customized plan.

Our goal is to ensure you’re informed, prepared, and supported — every step of the way. Similar to the 2017 tax law overhaul, there will be a lot of guidance that will be coming down the pipeline — some timely and others may be delayed. We will continue to monitor developments closely and provide updates and guidance as new details become available.