Tax Center

2025 Key Legislative Developments

The One Big Beautiful Act, “OBBA”, was signed into law on July 4, 2025. The law had a significant impact on business and personal taxes. Here are some key areas to look out for:

Important Federal Personal Updates

No Tax On Tips
Up to $25,000 deduction for qualified tips received in certain occupations where tips are customary.

No Tax On Overtime
No tax on qualified overtime premium, up to $12,500 could qualify as a deduction. The deduction is the premium portion of the 1.5x overtime, or just the .5x. The overtime must be FLSA qualified; overtime under other rules (union) or regulations may not be eligible.

Senior Bonus Deduction
Subject to income limits; individuals 65 and older are eligible for an additional $6,000 deduction on their tax return.

Interest on Car Loans
Subject to income limits; allows a deduction of up to $10,000 of interest on new car loans (2025-2028). Must be a US assembled vehicle.

Important Federal Business Updates

Bonus Depreciation
100% bonus depreciation allowed on property placed in service after Jan 19, 2025.

Sec. 179
Expensing increases – Increased the limit from $2.5 to $4.0 million. Use a combination of bonus depreciation and §179 expensing to fine-tune your deductions.

Research and Experimental Costs (R&E)
Allows for full expensing of costs incurred after January 1,2025. Additionally, for costs incurred between 2022-2024, taxpayers can elect to expense those costs through amended returns.

Form 1099 Reporting
Threshold for 1099 reporting remains at $600 for the 2025 tax year; this moves up to $2,000 for the 2026 tax year.

Section 163 (j) Business Interest
For tax years 2025 and after, the EBITDA method is used for calculating your limit on business interest expense.


General Reminders

Due Dates
The individual income filing due date is April 15, 2026. If you have a balance due the IRS expects payment by this date. You pay the government more if it’s not paid by this day. If they owe you, the date is less significant.

Business return due dates are as follows: Corporations are due April 15,2026, S-corporations and Partnerships are due March 15, 2026.

Virtual Currency
The IRS is not messing around with Virtual Currency transactions (BitCoin, Ethereum, Coinbase, etc). If you bought, sold, bartered, traded, or spent, any virtual currency during the year, we need to know. Heavy penalties await those who do not fully disclose or report their activity.

Itemized Deductions
You should continue to accumulate and provide information for 1) out of pocket medical 2) state/local income tax and property tax 3) mortgage interest 4) contributions. To the extent possible consider bunching contributions to maximize the itemized amount every other year.

RMDs (Required Minimum Distributions)
Retirement plan RMDs in 2025 are taxable in 2025.

Dependents
It may sound self-serving, but we recommend having us prepare your dependent children’s tax returns to help determine who should get the dependency exemption and maximize any additional benefits (eg, education credits). There could be thousands of tax dollars at stake.

Kiddie Tax
If your children have unearned income (interest, dividends, capital-gains for a brokerage account), it will be subjected to your tax rate if it exceeds $2,700.

Health Insurance
Provide all Forms 1095 for you and any dependents.

HSA contributions / Distributions Provide HSA contributions made directly at a financial institution and not reflected on a w-2. Qualifying distributions from an HSA while not taxable must be reflected in your tax return. Not reporting distributions will result in a letter from the IRS and will necessitate sending substantiation.

§529 Education Savings Distributions
Qualified distributions from a §529 plan (eg College Advantage) while not taxable still need to be reflected in your tax return. Not reporting distributions will result in a letter from the IRS and will necessitate sending substantiation.

Driver’s License
Driver’s License numbers or state ID numbers along with issue and expiration dates for the taxpayer and spouse (and kids if they have a tax return) are required for e-filing. Consider taking a picture of your license(s) and uploading it to your client portal.

Unfortunately, the IRS continues to expand the number of areas in which they require us to perform due diligence on their behalf. Many are related to identity verification, dependent and tax credit eligibility. Compliance with expanded governmental mandates is reflected in our fees.