Congress is pushing a major tax overhaul – here’s what’s in it, what’s changing, and how you can get ahead with tax planning.
You may have heard of this little thing – nicknamed the “One Big Beautiful Bill”, making its way through Congress (little is sarcastic, it lives up to its name as a major piece of legislation). Or maybe you have at least heard about the public break up between Musk and Trump – and how Elon is now urging lawmakers to reject Trump’s bill.
The break-up is not our area of expertise, nor do we want to get involved in that. The tax bill, however, is. So, let’s break down some of the highlights.
- 2017 Tax Cuts
This bill aims to extend the lower tax rates and deductions that came from the 2017 Tax Cuts and Jobs Act. This includes lower personal and corporate tax rates, 100% bonus depreciation, and a 20% deduction for pass-through income through Section 199A.
What does this mean to you? If you’re running an LLC or S-Corp, this is prime time to revisit your entity structure to ensure you’re taking full advantage of the pass-through deduction.
- Service Industry Listen Up – Tax-Free Tips and Overtime
One eye-catching detail – tip income and overtime pay could become tax exempt. Restaurants, salons, hospitality, really anyone in the service industry, could see a major impact on how your staff is paid and incentivized.
What does this mean to you? Review how you’re tracking and reporting tips. There might be room to rework pay structures in a way that benefits both your team and your bottom line.
- Tax Relief Retirees and Near-Retirees
There is language within the bill aimed to help older Americans reduce their tax burden – especially those who are retirees or near-retirees. Near-retiree business owners should start thinking about their exit strategy – especially with some of the proposed extensions within the bill (such as estate and gift tax exemptions and capital gain deferment strategies). The timing of your exit or transition could make a difference.
- Boosts for US Manufacturing
We’ve all heard about the tariffs, but this bill doesn’t exclusively address tariffs, although it could be a supportive tool for future tariffs. The bill does include tax incentives to encourage companies to produce goods domestically. The key here is the fine print. Eligibility and compliance will matter.
- Renewable Energy Tax Credits
This one pains us. Some green energy incentives – like credits for solar installations, electric vehicles, *new construction homes*, are set to be phased out. This includes the Section 45L tax credit for homes acquired after 2025, unless construction began before May 12, 2025.
- Immediate Expensing of R&D Costs
One big change that businesses could see is the immediate expensing for R&D expenses from the beginning of 2025 through the end of 2029. Currently, businesses are required to amortize (spread out) their R&D expenses over 5 years, but this bill could require businesses to fully expense R&D costs in the year they occurred.
Bottom Line: It’s Time to Be Proactive
This bill isn’t set in stone yet, and there’s always opposition and revisions, but lawmakers fully expect it to pass the Senate in some shape or form. If we tried to outline every potential change, this post would never end. But there are some things we can do in the meantime to cover the expected changes coming:
- Review of Business Structures – If you are not currently taking advantage of the Pass-Through deduction, reach out to us to discuss potential changes!
- Start Tax Planning EARLY – We are offering quarterly tax planning projections, so contact your team or our admin team to set-up an early tax projection!
- Talk about Exit Planning if that’s in your near future – We are certified in Exit Planning so click here for more information!
Contact our team today to get started!
