Month: August 2025

Preface: “Agriculture is our wisest pursuit, because it will in the end contribute most to real wealth, good morals, and happiness.” – Thomas Jefferson

New Tax Option for Selling Farmland Under the OBBB Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. Among its many changes, the OBBB Act includes a new tax break for farmers and landowners: if you sell qualified farmland to a qualified farmer, you can now choose to spread your tax payments over four years instead of paying the full amount all at once.

What This Means

If you qualify, you can pay the taxes from the sale in four equal annual installments—making it easier to manage cash flow after selling your farmland. This applies to sales or exchanges that happen in tax years starting after July 4, 2025.

How It Works

1. 1. You make an election on your tax return for the year you sell the land.
   2. The installment option only applies to the part of your tax bill related to the gain from the sale.
   3. The first payment is due on the normal due date of your return for that year (no extensions).
   4. The other three payments are due on the regular tax return due dates for the next three years.

What Counts as “Qualified Farmland”

The land must:

• • Be located in the United States.
  • Have been used by you for farming—or leased by you to a farmer—for almost all of the last 10 years before the sale.
  • Come with a legal agreement that it will stay as farmland for at least 10 years after the sale.
  • Tip: This election must be made when you file your return for the year of the sale—if you miss it, you can’t go back and choose it later. If you’re thinking about selling farmland, talk with your tax advisor well before the sale to see if you qualify and to plan ahead.

Who is a “Qualified Farmer”

• The buyer must be an individual who is actively engaged in farming.

Selling farmland can lead to a large tax bill in one year for farming land owners. This new legislation lets you spread out that tax cost, giving you more flexibility to reinvest, save, or manage your cash flows.

Preface: “To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.” – Thomas Jefferson

Qualified Business Income Deduction Changes Under the OBBB Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. One major change in the bill is that it makes the Qualified Business Income (QBI) deduction permanent. The bill also adjusts how the wage and investment limitation and the “specified service trade or business” (SSTB) limitation phase in, changes how the threshold amount is calculated, and—starting in 2026—adds a new inflation-adjusted minimum deduction.

Background

The QBI deduction was first created under the Tax Cuts and Jobs Act (TCJA) for tax years starting after December 31, 2017, and ending before January 1, 2026. It allows certain individuals, trusts, and estates to deduct 20% of qualified business income from:

• • A partnership
  • An S corporation
  • A sole proprietorship

It also applies to 20% of qualified REIT dividends and qualified publicly traded partnership income. Special rules apply for specified agricultural or horticultural cooperatives.

This deduction:

• • Is taken when calculating taxable income, not adjusted gross income.
  • Is available whether or not you itemize deductions.
  • Cannot exceed 20% of taxable income (reduced by net capital gains).

Limitations

There are income thresholds where limits begin to phase in:

• • For 2025 joint filers: threshold is $394,600; phase-in ceiling is $544,600.
  • For 2025 married filing separately: threshold is $197,300; ceiling is $247,300.
  • For 2025 single and head of household: threshold is $197,300; ceiling is $247,300.

Limits are based on W-2 wages paid and capital investment amounts. There is also a gradual phase-out for SSTB income over the thresholds.

Changes Under the OBBB Act

• • QBI deduction is now permanent—it will not expire in 2026 as originally planned.
  • The phase-in range for the W-2 wage and investment limit is increased:
    • Non-joint returns: from $50,000 to $75,000.
    • Joint returns: from $100,000 to $150,000.
  • New Minimum Deduction:
    • Starting with tax years after December 31, 2025, taxpayers with at least $1,000 in qualified business income from one or more active businesses they materially participate in will receive a minimum $400 QBI deduction (indexed for inflation in future years).

Qualified Business Income Deduction — Old Law vs. OBBB Act

Feature	TCJA Rules (Pre-OBBB)	OBBB Act Changes (Effective 2025)
Expiration Date	Set to expire after 2025	Permanent — no sunset date
Base Deduction Rate	20% of qualified business income	20% rate retained
Phase-In Range for Wage & Investment Limit	$50,000 for non-joint filers, $100,000 for joint filers	$75,000 for non-joint filers, $150,000 for joint filers
Threshold Amounts (2025)	Joint: $394,600 Single/HOH: $197,300 MFS: $197,300	Same thresholds retained
Specified Service Trade or Business (SSTB) Phase-Out	Begins above threshold + $50k/$100k range	Begins above threshold + $75k/$150k range
Minimum Deduction	None	$400 minimum deduction (indexed for inflation) for taxpayers with $1,000+ QBI and material participation
Applies to	Sole proprietors, partnerships, S corps, certain trusts & estates	Same coverage — plus permanent certainty for long-term planning

Example — Joint Filers with $200,000 QBI

Scenario	Old TCJA Rule (Pre-OBBB)	OBBB Act Rule (2025 onward)
Qualified Business Income	$200,000	$200,000
Deduction Rate	20%	20%
Deduction Amount	$40,000	$40,000 (same rate, but now permanent)
Phase-In Impact	No change below threshold	No change below threshold — but higher phase-in range helps higher earners

Key Takeaways for Business Owners

1. 1. 1. Long-term certainty — The deduction no longer expires, allowing stable multi-year tax planning.
      2. Higher phase-in ranges — Helps more high-income taxpayers avoid full deduction phase-outs.
      3. New minimum deduction — Ensures small business owners with modest QBI still get a benefit.

Action Steps for Business Owners

• • • Review Entity Structure — Ensure you’re maximizing eligibility for the QBI deduction.
    • Plan for Income Management — Stay within favorable phase-in thresholds when possible.
    • Document Material Participation — Especially for small business owners relying on the minimum deduction.

Bottom Line: The OBBB Act cements the QBI deduction as a powerful tax savings tool for qualified business owners, providing stability and improved access for both small and high-income earners.

Preface; “For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”–Winston Churchill

What You Need to Know About the Child Tax Credit Changes in the OBBB Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. This new law includes many updates to the tax code for both individuals and businesses. One of the major changes in the bill is how it affects the Child Tax Credit (CTC) — including how much you can claim and who qualifies.

Let’s simplify it.

What Is the Child Tax Credit?

The Child Tax Credit is a tax break given to families with children. If you have a qualifying child under age 17, you can reduce your tax bill by claiming this credit.

• • Before 2025, you could claim up to $2,000 per child.
  • After 2025, that amount was going to drop to $1,000.
  • Under the OBBB Act, this has increased to $2,200.

There are 2 parts to the CTC, one is refundable and the other isn’t. The refundable portion has risen to $1,700 for 2025. In addition, there is a separate $500 credit for other dependents (like an elderly parent or college student you support). This second credit is non-refundable.

To qualify, the child must be a U.S. citizen, national, or resident, and you must list their Social Security number on your tax return.

Who Can Claim the Credit?

There are income limits that determine whether you can claim the full credit:

• • For 2025, the credit starts to phase out (gradually decrease) when your adjusted gross income (AGI) is over:
    • $400,000 for married couples filing jointly
    • $200,000 for all other taxpayers

These income limits are now permanent under the OBBB Act.

What’s Changed Under the OBBB Act?

Here’s how the Child Tax Credit has changed with the new law:

1. Bigger Credit

• • • The credit goes up to $2,200 per child starting in 2025.
    • This amount will increase over time to keep up with inflation.

2. Refundable Portion (ACTC)

• • • If the credit is more than what you owe in taxes, part of it can be refunded to you as a check from the IRS. This is called the Additional Child Tax Credit (ACTC).
    • The refundable portion is $1,700 in 2025 and will increase with inflation beginning in 2026.
    • To qualify for the ACTC, you need to have at least $2,500 in earned income.

3. Other Dependent Credit (ODC)

• • The $500 credit for non-child dependents (such as aging parents or students over 17) stays in place, but it does not increase with inflation.

Important Reminder: Social Security Numbers Are Required

You must include valid Social Security numbers (SSNs) for your child (and for yourself or at least one spouse if filing jointly) to claim the child tax credit. These SSNs must be employment-eligible.

Summary

Feature	Old Rule	OBBB Act Update
Max Child Tax Credit	$2,000	$2,200 (2025, inflation-adjusted)
ACTC Refundable Amount	$1,400	$1,700 in 2025 and growing with inflation
Other Dependent Credit	$500	$500 (no change, not inflation-adjusted)
Income Phaseout	$400,000 (MFJ), $200,000 (others)	Made permanent
SSN Requirement	Yes	Continues to apply

Final Thoughts

The OBBB Act provides families with additional support starting in 2025 by increasing the Child Tax Credit and maintaining some generous income limits. But like all tax benefits, you’ll need to meet certain rules — like listing SSNs and filing correctly — to take full advantage.

If you’re unsure whether you qualify or how much of a credit you might get, talk to your tax advisor. Planning ahead can make a big difference in your refund or tax bill.

Let us know if you’d like help with tax planning for your family in light of these new rules!