Good news for homeowners: The SALT deduction gets a boost

The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, introduces one of the most significant tax updates of the year. It allows more taxpayers to fully deduct their state and local tax (SALT) expenses, including property taxes — providing meaningful relief to individuals and families in high-tax areas.

Under the Tax Cuts and Jobs Act (TCJA), the SALT deduction was capped at $10,000 ($5,000 for married filing separately) starting in 2018. This limit disproportionately affected homeowners in states with high property values or state income taxes — particularly those owning expensive homes or multiple properties.

The new OBBBA increases the SALT deduction limit for 2025 through 2029 to $40,000 ($20,000 for separate filers), with an annual 1% inflation adjustment. For example, in 2026, the cap rises to $40,400 ($20,200 for separate filers). However, unless extended, the limit will revert to $10,000 ($5,000 for separate filers) starting in 2030.

(Note: Certain states continue to offer SALT deduction workarounds for pass-through entities — unaffected by this law.)

While the expanded deduction offers significant relief, it phases out for higher earners. For 2025, the limit begins to shrink when a taxpayer’s modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 for separate filers, with thresholds increasing annually by 1%.

For example, a married couple with $550,000 MAGI and $60,000 in SALT expenses would see their deduction reduced to $25,000, due to the 30% reduction rule. The full benefit disappears at $600,000 MAGI ($300,000 for separate filers.

Taxpayers can still choose between deduction state and local income taxes or sales taxes (plus property tax). The IRS Sales Tax Calculator can help estimate allowable deductions — especially useful for those with minimal income tax or major purchases like vehicles.

To make the most of this expanded SALT deduction, start strategic year-end tax planning now. Consider managing your MAGI or accelerating property tax payments before year-end to optimize deductions.

What businesses need to know about the latest Tax Law changes

The One Big Beautiful Bill Act (OBBBA) introduces major 2025 tax changes for businesses, extending and making permanent several key provisions that were set to expire. These updates can significantly impact business tax planning in the final quarter of 2025 and beyond.

Under the Tax Cuts and Jobs Act (TCJA), companies were required to amortize Section 174 research and experimentation (R&E) expenses over five years for U.S. activities and 15 years for foreign expenses, effectively spreading deductions over six years. The OBBBA now allows full and immediate deductions for domestic R&E expenses beginning in the 2025 tax year, while foreign R&E costs must still be amortized over 15 years.

The law also provides retroactive benefits. Small businesses—those with average annual gross receipts of $31 million or less over the past three years—can now claim R&E deductions retroactively to 2022. Additionally, businesses of any size may accelerate remaining R&E deductions from 2022 through 2024 over a one- or two-year period, improving short-term cash flow and reducing taxable income.

For business interest deductions, the TCJA limited deductible interest to 30% of adjusted taxable income (ATI). The OBBBA revises this rule by excluding depreciation, amortization, and depletion from the ATI calculation, effectively increasing the deductible amount. This change applies to tax years beginning after December 31, 2024. Furthermore, businesses with average annual gross receipts below $31 million are fully exempt from the limitation in 2025.

Together, these changes offer increased flexibility, enhanced deductions, and improved cash flow opportunities for businesses. To understand how the OBBBA’s new provisions can optimize your company’s 2025 tax strategy and reduce liability, contact our office for professional guidance.

Don't miss out: Enhanced Tax break for Medical Expenses

Depending on your financial situation, you may be eligible to claim medical expense deductions on your tax return. To qualify, you must itemize deductions, and only unreimbursed expenses exceeding 7.5% of your adjusted gross income (AGI) are deductible. To maximize your tax benefits, consider “bunching” medical expenses into a single year to surpass the threshold.

Be sure to include health insurance and long-term care insurance premiums, as they can add up to thousands annually. However, confirm they’re not already deducted pretax from your paycheck. You can also claim travel costs for medical care, including taxi fares, public transit, or mileage at 21 cents per mile, plus tolls and parking, if you drive.

Timing purchases such as eyeglasses, hearing aids, dental work, or prescriptions can also increase deductible expenses, though over-the-counter items like aspirin and vitamins don’t qualify. Additionally, costs for smoking-cessation and weight-loss programs prescribed by a doctor are deductible, including program fees and prescribed medications.

For more information on qualifying medical deductions, refer to IRS Publication 502 or contact our office for expert guidance on maximizing your 2025 medical expense tax deductions.

Businesses may benefit from the WOTC program

Employers may qualify for a valuable federal tax credit under the Work Opportunity Tax Credit (WOTC) program, which rewards businesses for hiring individuals from targeted groups that face employment barriers. These include qualified veterans, recipients of government assistance, ex-felons, and long-term unemployment recipients.

The WOTC can significantly reduce an employer’s federal tax liability, but it’s important to act quickly — the credit is set to expire after 2025 unless Congress extends it.

To claim the credit, employers must file prescreening and certification forms with their state workforce agency before or shortly after hiring eligible workers. Failing to do so may result in losing the credit opportunity.

Businesses planning to expand their workforce should explore WOTC eligibility now. Contact our office for guidance on meeting certification requirements and maximizing available hiring tax benefits before the deadline.

Businesses bidding goodbye to paper checks

Starting September 30, 2025, the federal government will stop issuing paper checks for most payments, including tax refunds, Social Security benefits, and other federal disbursements. Additionally, agencies such as the IRS and the Department of Labor (DOL) will no longer accept payments made by paper check.

This change is part of a broader payment modernization initiative aimed at improving efficiency, reducing administrative costs, and minimizing risks of lost, stolen, or fraudulent checks. The Department of the Treasury has emphasized that electronic payments are faster, safer, and more reliable.

The IRS will release detailed guidance on how these changes will affect 2025 tax returns before the 2026 filing season. Until then, taxpayers should continue using existing forms and processes, including those filing 2024 returns on extension before December 31, 2025. For assistance or clarification, contact our office for professional support.

Dependent care FSAs gain importance for Employers

Employers looking to enhance family-friendly workplace benefits should consider offering Dependent Care Flexible Spending Accounts (FSAs). These accounts allow employees to make pre-tax contributions through payroll deductions to cover eligible dependent care expenses.

Under the major tax bill enacted on July 4, 2025, the annual Dependent Care FSA contribution limit will increase from $5,000 to $7,500 starting in 2026, providing greater savings opportunities for both employers and employees.

Contributions to FSAs reduce income and payroll taxes for employees while lowering employers’ payroll tax obligations. Funds withdrawn to pay qualified dependent care costs are tax-free, including expenses related to caring for children under age 13 or dependents unable to care for themselves due to physical or mental conditions.

For guidance on setting up or managing Dependent Care FSAs and understanding their tax advantages, contact our office for professional assistance.

Mark your calendar: Upcoming Tax deadlines ahead

October 10

● Individuals: Report September tips of $20 or more to employers (Form 4070).

October 15
● Employers – Deposit nonpayroll withheld income tax for September if you follow the monthly deposit schedule.
Employers – Deposit Social Security, Medicare, and withheld income taxes for September if on the monthly deposit rule.

● C Corporations (Calendar-Year) – File your 2024 income tax return (Form 1120) if you filed a six-month extension and pay any tax, interest, or penalties due. Make any 2024 retirement plan contributions if the return was extended.
● Individuals – File your 2024 income tax return (Form 1040 or Form 1040-SR) if you filed a six-month (or four-month abroad) extension and pay any remaining balance, interest, or penalties. File your 2024 gift tax return (Form 709) if extended and make 2024 SEP or retirement plan contributions if you filed an extension.
Bankruptcy Estates (Calendar-Year) – File Form 1041 for 2024 if extended and pay any balance due.

October 31
● Employers – File Form 941 for the third quarter of 2025 to report Social Security, Medicare, and withholding taxes. Pay any remaining tax if not already fully deposited.

November 10
● Individuals – Report October tip income of $20 or more to your employer (Form 4070).
● Employers – File Form 941 for Q3 2025 if all taxes were deposited on time and in full.

Do a 30-Minute “Vendor & Contractor Cleanup”

Take 30 minutes this month to complete a quick Vendor & Contractor Cleanup — a simple task that can save hours at year-end and prevent 1099 issues.

Here’s how to do it:

1. Export your vendor list from your accounting software (QuickBooks, Xero, etc.).

2. Review status: Mark each vendor as Active, Inactive, or One-time and archive inactive ones.

3. Update missing details: Add or confirm TIN/EIN, W-9, email address, and payment terms.

4. Check 1099 eligibility: Flag contractors paid $600 or more this year (excluding credit card payments).

5. Standardize vendor names and ensure each vendor is mapped to the correct expense or COGS category.

6. Attach documents: Upload the latest W-9, contracts, and relevant files to each vendor profile.

7. Automate with rules: Set up bank rules to automatically categorize recurring vendor transactions.
   
   

   Pro Tip:
   Set a monthly reminder titled “Vendor Health Check” — this 30-minute habit will make your year-end close faster, cleaner, and stress-free.