President Trump has signed into law a sweeping tax reform package, permanently extending many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and adding new tax breaks for individuals and small businesses. Here’s how the changes may affect you:

Table of Contents

• Business Tax Highlights
• Individual Tax Highlights
• Energy & Other Provisions
• What We’re Doing For Our Clients NOW

IMMEDIATE DEDUCTION FOR R&D (SECTION 174)

• Domestic research & experimental (R&E) expenses are now fully deductible again.

• Small businesses (under $31M average receipts) can amend 2022, 2023, and 2024 returns to retroactively claim missed deductions.

100% BONUS DEPRECIATION REINSTATED

• Equipment, vehicles, and qualified improvements placed in service on or after Jan 19, 2025 can be fully expensed.

• Applies to qualified production property (manufacturing, agriculture, refining) through 2030.

SECTION 199A PASS-THROUGH DEDUCTION MADE PERMANENT

• The 20% deduction for qualified business income (QBI) from S-corps, partnerships, and sole proprietorships is now permanent.

• Phase-out threshold raised to $150K MFJ / $75K all others.

PEET DEDUCTION PRESERVED

• California’s pass-through entity (PTE) workaround remains intact — no federal limits imposed.

BUSINESS INTEREST DEDUCTION EXPANDED

• More generous rules for deducting interest by adding back depreciation, amortization, and depletion when calculating limits.

EXCESS BUSINESS LOSS LIMITATION (EBL) MADE PERMANENT

• EBL remains in place, but now excess losses convert to NOLs (net operating losses) for future use.

ERC CLAIMS RESTRICTED

• ERC (Employee Retention Credit) claims for Q3–Q4 2021 filed after Jan 31, 2024 will be disallowed. The statute of limitations for IRS assessment is extended to 6 years.

TAX BRACKETS MADE PERMANENT

• TCJA-era rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent.

STANDARD DEDUCTION INCREASED

• New standard deduction: $31,500 MFJ / $15,750 single (indexed for inflation starting 2025).

SALT DEDUCTION CAP INCREASED TO $40,000

• State and local tax (SALT) deduction cap rises to $40K through 2029, with income-based phaseouts over $500K MAGI.

• Reverts to $10K in 2030.

CHARITABLE DEDUCTIONS FOR NON-ITEMIZERS

• Up to $2,000 MFJ / $1,000 others in charitable contributions now deductible above the line.

TIP & OVERTIME DEDUCTION (NEW)

• Up to $25,000 in tips and $12,500 in overtime is deductible through 2028.

• Phased out at $150K single / $300K MFJ.

• IRS will define which “tip-earning” jobs qualify (e.g., servers, barbers).

ESTATE & GIFT TAX EXEMPTION INCREASED

• New lifetime exemption: $15M per person / $30M per couple, indexed for inflation.

SOCIAL SECURITY TAX CLAIMS MISREPORTED

• Despite some headlines, the law does not eliminate taxes on Social Security benefits — only expands the standard deduction for seniors.

GREEN ENERGY CREDITS ELIMINATED

• EV, solar, wind, and energy efficiency tax credits end between Sept 2025 and Dec 2027.

• Complete clean energy projects ASAP to claim remaining benefits.

CAR LOAN INTEREST DEDUCTION INTRODUCED

• A new, limited deduction applies to interest on certain car loans (subject to income phaseouts and reporting hurdles).

NEW RULES FOR GAMBLING LOSSES

• Starting 2026, gamblers may only deduct 90% of wagering losses, and only to the extent of winnings.

• Reviewing your 2022–2024 tax returns for missed R&D deductions (Section 174)

• Evaluating bonus depreciation & equipment purchases before year-end.

• Considering itemizing deductions again if affected by SALT cap increase.

• Reviewing PEET elections and entity structures, compensation plans, and estate strategies.

President Trump has signed into law a sweeping tax reform package, permanently extending many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and adding new tax breaks for individuals and small businesses. Here’s how the changes may affect you:

Table of Contents

• Business Tax Highlights
• Individual Tax Highlights
• Energy & Other Provisions
• What We’re Doing For Our Clients NOW

IMMEDIATE DEDUCTION FOR R&D (SECTION 174)

• Domestic research & experimental (R&E) expenses are now fully deductible again.

• Small businesses (under $31M average receipts) can amend 2022, 2023 and 2024 returns to retroactively claim missed deductions.

100% BONUS DEPRECIATION REINSTATED

• Equipment, vehicles, and qualified improvements placed in service on or after Jan 19, 2025 can be fully expensed.

• Applies to qualified production property (manufacturing, agriculture, refining) through 2030.

SECTION 199A PASS-THROUGH DEDUCTION MADE PERMANENT

• The 20% deduction for qualified business income (QBI) from S-corps, partnerships, and sole proprietorships is now permanent.

• Phase-out threshold raised to $150K MFJ / $75K all others.

PEET DEDUCTION PRESERVED

• California’s pass-through entity (PTE) workaround remains intact — no federal limits imposed.

BUSINESS INTEREST DEDUCTION EXPANDED

• More generous rules for deducting interest by adding back depreciation, amortization, and depletion when calculating limits.

EXCESS BUSINESS LOSS LIMITATION (EBL) MADE PERMANENT

• EBL remains in place, but now excess losses convert to NOLs (net operating losses) for future use.

ERC CLAIMS RESTRICTED

• ERC (Employee Retention Credit) claims for Q3–Q4 2021 filed after Jan 31, 2024 will be disallowed. The statute of limitations for IRS assessment is extended to 6 years.

Individual Tax Highlights

TAX BRACKETS MADE PERMANENT

• TCJA-era rates (10%, 12%, 22%, 24%, 32%, 35%, 37%) are now permanent.

STANDARD DEDUCTION INCREASED

• New standard deduction: $31,500 MFJ / $15,750 single (indexed for inflation starting 2025).

SALT DEDUCTION CAP INCREASED TO $40,000

• State and local tax (SALT) deduction cap rises to $40K through 2029, with income-based phaseouts over $500K MAGI.

• Reverts to $10K in 2030.

CHARITABLE DEDUCTIONS FOR NON-ITEMIZERS

• Up to $2,000 MFJ / $1,000 others in charitable contributions now deductible above the line.

TIP & OVERTIME DEDUCTION (NEW)

• Up to $25,000 in tips and $12,500 in overtime is deductible through 2028.

• Phased out at $150K single / $300K MFJ.

• IRS will define which “tip-earning” jobs qualify (e.g., servers, barbers).

ESTATE & GIFT TAX EXEMPTION INCREASED

• New lifetime exemption: $15M per person / $30M per couple, indexed for inflation.

SOCIAL SECURITY TAX CLAIMS MISREPORTED

• Despite some headlines, the law does not eliminate taxes on Social Security benefits — only expands the standard deduction for seniors.

GREEN ENERGY CREDITS ELIMINATED

• EV, solar, wind, and energy efficiency tax credits end between Sept 2025 and Dec 2027.

• Complete clean energy projects ASAP to claim remaining benefits.

CAR LOAN INTEREST DEDUCTION INTRODUCED

• A new, limited deduction applies to interest on certain car loans (subject to income phaseouts and reporting hurdles).

NEW RULES FOR GAMBLING LOSSES

• Starting 2026, gamblers may only deduct 90% of wagering losses, and only to the extent of winnings.

• Reviewing your 2022–2024 tax returns for missed R&D deductions (Section 174)

• Evaluating bonus depreciation & equipment purchases before year-end.

• Considering itemizing deductions again if affected by SALT cap increase.

• Reviewing PEET elections and entity structures, compensation plans, and estate strategies.