Tax Law Shake-Up
Key Policy Changes on the Horizon
Big changes are coming with the new administration, and if you're a tax pro or small business owner, you'll want to stay ahead of the curve. With a strong push for deregulation and pro-business policies, we're looking at some key tax shifts that could seriously impact how we plan and comply.
This was the topic of a session I recently moderated at the ADP Accountant Connect Summit, and I’m breaking down what I learned from the panelists: Taxgirl Kelly Phillips Erb and Ron Ulrich, retirement services executive, and Amy Miller, senior director of government affairs, both with ADP.
1. Key Political Appointments and Their Influence
Scott Bessent is the new Treasury Secretary, so brace yourself for some big pro-business moves. He’s all about fiscal conservatism and cutting red tape, which means the Tax Cuts and Jobs Act (TCJA) provisions are likely sticking around.
2. TCJA Provisions: What’s Staying and What’s Changing?
The administration wants to extend and even expand some major TCJA perks. Here’s what’s on the table:
Section 199A Qualified Business Income Deduction: There’s talk of expanding it to cover more professionals, like attorneys and physicians.
Immediate Expensing of R&D Costs: They’re looking to reverse the amortization requirement, which is a win for businesses focused on innovation.
Corporate Tax Rates: No cuts are expected yet, but there’s no push to raise them either. Business-friendly vibes all around.
3. IRS Enforcement: What to Expect
The IRS might ease up on audits for big corporations and wealthy individuals, but small businesses can’t relax just yet. Make sure your client’s records are tight and compliance is up-to-date because things could change. Heads up for:
Audit Prioritization: Small businesses are still in the spotlight.
Secure 2.0 Act Compliance: New rules like automatic retirement plan enrollment are here.
4. What’s Happening with the Inflation Reduction Act?
Big shakeups could be coming. The administration wants to roll back parts of the Inflation Reduction Act, especially tax credits for green energy. If a client was counting on those incentives, stay tuned.
5. The Direct File Program: A Game Changer?
The IRS’s Direct File program — where folks can file their taxes for free — has been a hit. Will it expand? That’s up in the air, but if it does, CPAs might need to rethink how they offer value. Time to lean into advisory services!
6. Disaster Relief: What’s Next?
Natural disasters keep hitting us hard, and there’s a push to make tax relief more predictable and consistent. Those in a disaster-prone area should be ready to take advantage of upcoming relief measures.
7. Remote Work and Tax Challenges
Remote work isn’t going anywhere, and tax rules are getting messier by the minute. Here's what to look out for:
Home Office Deductions: Employees are still out of luck, but businesses can offer reimbursement programs.
State Tax Nexus: Make sure you know where employees are working — multi-state tax liabilities are no joke.
Stay in the Know and Stay Ahead!
The tax world is always evolving, and this year’s no exception. Staying informed and proactive is the name of the game. Keep talking to your clients, stay updated on legislation and look for ways to provide value beyond compliance.
By staying on top of these changes, you’ll be ready to crush it no matter what comes your way. Let’s go make tax season awesome!