Author: dsauder

Preface: “The precise point at which a tax deduction becomes a ‘loophole’ or a tax incentive becomes a ‘subsidy for special interests’ is one of the great mysteries of politics.” – John Sununu

Understanding IRS Schedule A Itemized Deductions Under the OBBB Act

When filing taxes, taxpayers can choose between the standard deduction or itemized deductions on IRS Schedule A. The One Big Beautiful Bill (OBBB) Act, signed into law in 2025, made several important updates that impact itemized deductions for individuals. Below is a breakdown of the key changes and how they may affect your tax return.

State and Local Tax (SALT) Deduction Limit

• • • From 2025 through 2029, the SALT deduction limit increases to $40,000 ($20,000 if married filing separately).
    • In 2025, the limit starts at $40,000 ($20,000 separate). It rises slightly each year by 1% until 2029.
    • However, the benefit phases out for high-income taxpayers:
      • If your modified adjusted gross income (AGI) exceeds $500,000 ($250,000 if separate), your deduction limit is reduced.
      • The reduction equals 30% of the excess income above the threshold, with at least a $10,000 ($5,000 if separate) reduction.
    • After 2029, the limit returns to $10,000 ($5,000 if separate) in 2030.

Home Mortgage Interest Deduction

• • • The home mortgage interest deduction rules from the Tax Cuts and Jobs Act (TCJA) are made permanent.
    • You can deduct interest on up to $750,000 of acquisition debt ($375,000 if married filing separately).
    • The suspension of interest deductions on home equity debt also remains permanent.

Car Loan Interest Deduction

• • • Typically, personal loan interest is not deductible.
    • Under the OBBB Act, for 2025–2028, you can deduct up to $10,000 per year of interest on loans for U.S.-assembled passenger vehicles.
    • The deduction phases out for taxpayers with AGI over $100,000 ($200,000 for joint filers).
    • Important: This deduction applies even if you don’t itemize.

Charitable Contribution Deductions

• • • Starting in 2026, non-itemizers can deduct up to $1,000 ($2,000 for joint filers) of cash charitable contributions.
    • For those who itemize, a new 0.5% floor applies: your allowable deduction is reduced by 0.5% of your contribution base.
    • Example: If your contribution base is $100,000, $500 would be subtracted from your allowable deduction.

Personal Casualty and Theft Loss Deduction

• • • Under the OBBB Act, the rules limiting deductions to federally declared disasters are made permanent.
    • The law expands this to include state-declared disasters such as floods, fires, or explosions recognized by a governor.
    • Losses tied to qualified disasters between 2019 and September 2025 are also covered.

Gambling Losses

• • • Gambling losses can only offset gambling winnings.
    • The OBBB Act introduces a new restriction: starting after 2025, only 90% of wagering losses are deductible, and this deduction is limited to the amount of gains.
    • Example: If you win $10,000 and have $12,000 in losses, you can deduct only $9,000.

Moving Expenses

• • • The TCJA suspended most moving expense deductions, and the OBBB Act makes this permanent.
    • Only active-duty military members and intelligence community employees (and their families) qualify for moving expense deductions or reimbursements.

Miscellaneous Itemized Deductions

• • • The suspension of miscellaneous itemized deductions (like unreimbursed employee expenses) is now permanent.
    • Exception: Educator expenses are allowed above the line up to $300 (increasing with inflation). Starting after 2025, teachers can also itemize classroom expenses above this limit.

Phaseout of Itemized Deductions

• • • A new overall limit applies to high-income taxpayers:
      • • Itemized deductions are reduced by 2/37 of the lesser of:
          1. Total itemized deductions, or
          2. Taxable income above the 37% bracket threshold.
    • This applies after other limits (such as the SALT cap) are calculated.

Planning Note: Standard Deduction vs. Itemizing

• • • The OBBB Act makes the standard deduction increase permanent:
      • $15,750 for single filers (2025)
      • $23,625 for heads of household
      • $31,500 for married filing jointly
    • The amounts adjust for inflation in future years.
    • You may still choose to itemize if your deductions (SALT, mortgage, charitable, etc.) are greater than the standard deduction.

Final Thoughts

The OBBB Act reshaped how taxpayers approach Schedule A deductions. For most, the higher standard deduction will remain the simpler choice. However, with changes such as the higher SALT cap, charitable deduction rules, and the new car loan interest deduction, some taxpayers may benefit from itemizing their deductions.

Careful planning is essential, especially for those near phase-out thresholds. Consider consulting a tax advisor to evaluate whether itemizing or taking the standard deduction will provide the best tax outcome under the new rules.

Preface: “Strategy is the hard work of choosing what to do today to improve our tomorrow.” ― Seth Godin, This Is Strategy: Make Better Plans

Book Report: This is Strategy by Seth Godin

Introduction

Seth Godin is a well-known writer and thinker on marketing, leadership, and innovation. In his book This is Strategy: Make Better Plans, Godin explains how people and organizations can make smarter choices that lead to long-term success.

The book isn’t about complicated charts or formulas. Instead, it’s about changing how we think about planning, taking action, and growing in a world that is always changing. Godin’s main message is that success doesn’t come from working harder or faster. It comes from working smarter, asking better questions, and being willing to face discomfort.

The Problem with Default Thinking

Godin begins by pointing out a common problem: many people rush from task to task without making real progress. This leads to stress and burnout. The issue, he says, is that people often know what they want, but they don’t have a real strategy to get there.

Repeating the same actions over and over won’t work if the world has changed. Old methods may feel safe, but sticking to them is a trap. Strategy requires adapting to new realities.

Character as the Foundation of Strategy

One of Godin’s strongest points is the importance of character. He defines character as choosing your values over your instincts. In other words, strategy works best when it’s guided by values, even when those choices are hard.

For example, a strong leader doesn’t avoid tough conversations. They face them because those talks build trust and a stronger team. Godin believes that growth often comes from discomfort. Instead of running from it, he tells readers to seek it out because it helps us grow faster.

Learning Myths and Growth

Godin also challenges the popular idea of “learning styles.” He says people don’t really learn better in just one style—they simply have preferences that make them feel comfortable. Real growth comes when we move out of our comfort zones and try new ways to learn.

This lesson connects to strategy. Businesses can’t just stick to what’s familiar. A company that has always used one kind of marketing might need to explore new platforms or creative methods to grow.

Procrastination and Discomfort

Godin takes another common issue—procrastination—and reframes it. He argues that procrastination usually isn’t laziness. Instead, it’s avoiding the uncomfortable feelings tied to the task. Good strategists recognize this and face the discomfort rather than delay.

He quotes Ted Lasso: “If you’re comfortable, you’re doin’ it wrong.”

Tactics vs. Strategy

A key message in the book is the difference between tactics and strategy.

• • • Tactics are small daily actions.
    • Strategy is the bigger picture—the “why” behind what you’re doing.

Without strategy, tactics are just busywork. Godin says many companies get caught up in tactics like running ads or chasing sales without answering bigger questions like:

• • • Why are we doing this?
    • Where are we going?
    • Who are we serving?

Examples from the Book

• • • Marketing a Product – Strategy is not about pushing out more ads. It’s about building trust and connection with customers. A loyal customer base is worth more than short-term sales.
    • Career Development – Strategy in your career may mean saying “no” to an easy job in order to grow skills in a harder one. Godin says we should look at our careers as a purposeful journey, not just a series of jobs.
    • Community Building – Strategy in a community is not about control. It’s about creating shared values and giving people a chance to be part of something bigger.

Practical Applications

Godin gives several ways to put his ideas into practice:

1. 1. 1. Set Clear Values – Decide what matters most to you before making a plan.
      2. Seek Discomfort – Choose the option that helps you grow, even if it’s harder.
      3. Separate Tactics from Strategy – Ask yourself if your daily actions connect to your bigger plan.
      4. Test and Adapt – Strategies must change as situations change.
      5. Think Long-Term – Focus on sustainability and lasting impact, not just quick wins.

Key Lessons for Everyone

• • • Growth Requires Change – Old methods won’t work forever.
    • Character Matters – Decisions guided by values build trust.
    • Comfort Can Hold You Back – Real growth happens in discomfort.
    • Keep It Simple – Strategy doesn’t need to be complicated, just clear.
    • Strategy Is for All – It’s not only for CEOs; anyone can use it in life or work.

Conclusion

Seth Godin’s This is Strategy is a powerful reminder that success isn’t about nonstop hustle. It’s about smart, values-based strategies that help us grow and make an impact.

For leaders, it’s a call to focus on long-term vision and culture instead of quick wins. For individuals, it’s encouragement to view life and career choices as part of a bigger picture.

In today’s world, where change is constant and distractions are everywhere, Godin’s advice is clear: strategy is more than a plan—it’s a way of living and leading.

Preface: “I am indeed rich, since my income is superior to my expenses, and my expense is equal to my wishes.” – Edward Gibbon

OBBB Act: What the New Section 179 Expensing Limits Mean for Your Business

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. Among many tax changes, one major update affects Section 179 expensing—a valuable tool for small and mid-sized businesses to write off equipment and property purchases.

What Is Section 179 Expensing?

Section 179 lets businesses deduct the cost of certain equipment, vehicles, and property right away, instead of depreciating it over many years. This makes it a powerful way to lower taxable income in the year you make a big investment.

Qualifying property generally includes:

• • New or used equipment
  • Business vehicles (with some limits, like SUVs)
  • Office furniture
  • Computers and software
  • Certain types of real property improvements

What Changed Under the OBBB Act?

Before the law, businesses could expense up to $1,250,000 in 2025, with deductions starting to phase out after $3,130,000 of total purchases.

The OBBB Act doubles those amounts starting in 2025:

• • New Section 179 Deduction Limit: $2.5 million
  • New Investment Cap: $4 million

These amounts will also be adjusted for inflation every year going forward.

The rules for SUVs didn’t change. For 2025, the maximum Section 179 deduction for an SUV is still $31,300.

Why This Matters

This change makes it much easier for businesses to deduct large investments. Whether you’re buying farm equipment, upgrading your factory machinery, or investing in technology, you may now expense the full cost up front.

Examples

Example 1 – A Small Business Upgrade
ABC Landscaping buys $150,000 of new trucks and mowers in 2025.

• • • • Before the law: Still fully deductible, because the old $1.25 million limit was plenty.
      • After the law: No change for them, but more room for growth if they expand further.

Example 2 – A Growing Manufacturer
XYZ Manufacturing spends $3.5 million on new machinery in 2025.

• • • • Before the law: They would have hit the $3.13 million investment cap, and their deduction would start phasing out.
      • After the law: With the new $4 million cap, they can deduct the entire $3.5 million under Section 179. This could save them over $700,000 in taxes (assuming a 20% tax rate).

Key Takeaway

The OBBB Act permanently raises Section 179 expensing limits, giving businesses greater ability to deduct equipment purchases up front. This is especially helpful for companies making multi-million-dollar investments.

Planning Note: If you’re considering large purchases of equipment or property, now is the time to plan ahead. The new limits make Section 179 one of the most powerful tax tools available for business growth.

Preface: “Over deliver in all you do and soon you will be rewarded for the extra effort”. — Zig Ziglar

New Tax Breaks Under the OBBB Act: Deductions for Tips and Overtime Pay

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. Among many tax changes, the Act introduces two new provisions designed to benefit employees in tip-based industries and those who regularly work overtime. Here’s what you need to know.

Qualified Tips Deduction

What It Is

Starting in 2025 and continuing through 2028, employees can claim a special deduction for qualified tips. This applies to anyone working in an occupation that customarily and regularly received tips on or before December 31, 2024 (for example, restaurant servers, bartenders, and hotel staff).

How Much Can You Deduct?

• • You can deduct up to $25,000 per year in qualified tips.
  • The deduction begins to phase out if your modified adjusted gross income (AGI) is above:
    • $150,000 (single filers)
    • $300,000 (married filing jointly)
  • It phases out completely at:
    • $400,000 (single filers)
    • $550,000 (joint filers).

• Key Requirements

• • Your Social Security number must appear on your tax return.
  • Married taxpayers must file a joint return to claim the deduction.
  • If you’re self-employed and receive tips, the deduction only applies if your gross receipts are greater than your related business deductions.

Reporting Tips

• • Employers will report qualified tips on your W-2.
  • If tips are not reported by your employer, you may need to use Form 4137 to report them.
  • For nonemployees, tips must be reported on Form 1099-NEC or Form 1099-K.

Important Caution

Even though you can deduct tips for income tax purposes, the amounts are still subject to Social Security and Medicare taxes (FICA) and may also be subject to unemployment taxes (FUTA) for employers.

Qualified Overtime Pay Deduction

What It Is

From 2025 through 2028, individuals can also deduct qualified overtime pay. This deduction benefits employees who regularly work more than 40 hours a week under the rules of the Fair Labor Standards Act (FLSA).

How Much Can You Deduct?

• • Up to $12,500 per year for single filers.
  • Up to $25,000 per year for joint filers.
  • Phase-outs begin when AGI exceeds:
    • $150,000 (single)
    • $300,000 (joint)
  • The deduction is completely phased out at:
    • $275,000 (single)
    • $550,000 (joint)

What Counts as Overtime Pay?

“Qualified overtime compensation” is overtime that must be paid under FLSA rules:

• • At least 1.5 times your regular pay rate.
  • Applies to non-exempt employees working over 40 hours in a week.
  • Your regular pay rate includes most types of pay, but certain payments are excluded.

Reporting Overtime Pay

• • Employers must include qualified overtime pay on your W-2.
  • Nonemployees must receive reporting on a 1099-NEC.
  • For overtime earned before January 1, 2026, the IRS allows “reasonable methods” to estimate and report.

• Eligibility Rules

• • The deduction is not allowed unless your Social Security number appears on your return.
  • Married couples filing separately are not eligible.

Why This Matters

These new deductions under the OBBB Act can create meaningful tax savings for employees in industries with significant tips or overtime. However, the rules are detailed, with income phase-outs and specific reporting requirements.

Need Help?

If you think you may qualify for the new tips or overtime deductions, or if you’d like to estimate the potential savings, please contact our office. We’d be glad to help you plan ahead and make the most of these new opportunities.

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!

Preface: “The chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing, and prospering in the world.” – Calvin Coolidge, January 25, 1925

Big Tax Changes Ahead: What You Should Know About the One Big Beautiful Bill (OBBB) and Bonus Depreciation

On July 4, 2025, President Trump signed a major new tax law called the One Big Beautiful Bill Act (OBBB). This law updates the U.S. tax code in big ways. It retains some tax breaks from past laws, ends or modifies others—especially green energy incentives—and introduces new benefits for both individuals and businesses.

One of the biggest changes affects bonus depreciation, a rule that allows businesses to immediately deduct the full cost of certain types of property and equipment. Let’s break down what bonus depreciation is, what’s changed under the OBBB, and how it may benefit you or your business.

What Is Bonus Depreciation?

Bonus depreciation allows a business to write off the full cost of certain assets in the year they are placed into use, rather than spreading the deduction over several years.

You can use bonus depreciation for:

• • Equipment and machinery (like trucks, tools, and factory machines)
  • Computers and software
  • Certain plants and trees
  • Water utility property

Both new and used property may qualify, as long as it was bought and put into service after September 27, 2017.

Under the older Tax Cuts and Jobs Act (TCJA), the bonus depreciation was:

• • 100% from 2017–2022
  • Then dropping by 20% each year until it reached 0% in 2027

What Did the OBBB Change?

The OBBB reverses the phase-out and makes 100% bonus depreciation permanent—but only for property bought after January 19, 2025.

That means if you buy and start using qualified property after that date, you can deduct the full cost right away, saving money on taxes upfront.

Here’s a quick summary of changes:

Property Type	Old Rate (2025)	New OBBB Rate
Regular Property	40%	100%
Long Production Property (like aircraft)	60%	100%

Transition Option for 2025

If you buy property in your first tax year after January 19, 2025, you can choose to use the older lower rate (like 40% or 60%) instead of the new 100% rate. This might be helpful if you want to spread out deductions or if you’ve already planned your taxes using the older rates.

Special Expensing for Sound Recordings 

The OBBB also adds a new tax break for music and audio production.

If you record music or sound in the U.S., you can now deduct up to $150,000 of those costs immediately.

But there’s a catch: this benefit expires after December 31, 2025. Also, if you claim the deduction but don’t start production before that date, the IRS may take the deduction back.

Tip: To be safe, make sure your sound recording starts before the end of 2025.

What About Qualified Production Property?

The OBBB creates another bonus depreciation option for something called qualified production property—basically, certain types of commercial real estate used for manufacturing.

Here’s how it works:

• • The building must be constructed after January 19, 2025, and before January 1, 2029
  • It must be placed in service by December 31, 2030
  • You must use the building yourself (you can’t rent it out and still claim this benefit)
  • The property must be used for manufacturing, refining, or producing physical products

Offices, software development, sales buildings, and parking garages do not qualify. But a new facility used to build furniture, machine parts, or packaged food would qualify.

If a natural disaster (an “Act of God”) delays your building, you may be allowed a little more time to place it in service.

Planning Tips

Here’s what all this means in simpler terms:

1. 1. Buy smart after January 19, 2025: If you’re thinking about buying new machinery, tools, or equipment, doing it after this date could mean a 100% tax deduction up front.
   2. Think beyond equipment: If you’re in the music industry, you could deduct up to $150,000 in sound recording costs—but you must act before 2026.
   3. Build for manufacturing: If you’re planning to build a new factory or production facility, this is a golden opportunity. You can write off the entire cost much faster, boosting cash flow.
   4. Watch the deadlines: The rules are strict about when property must be built and placed in service. Missing a date can cost you thousands in tax savings.

Final Thoughts

The One Big Beautiful Bill Act is full of significant changes, and bonus depreciation is one of the most effective tools businesses can use to lower their taxes.

Whether you run a construction company, own a factory, or produce music in a studio, this law could help you save money, but only if you plan ahead.

As always, consult a tax professional before making significant financial decisions. The new rules can be complex, and a CPA can help you determine what qualifies and how to report it accurately.

Want to explore whether your equipment, sound recordings, or new building project qualifies? Contact our office today to schedule a tax planning consultation.

Preface: “Personality is how you respond on a typical day, character is how you show up on a hard day.” ― Adam M. Grant, Hidden Potential: The Science of Achieving Greater Things

Book Report: Hidden Potential by Adam Grant

In Hidden Potential: The Science of Achieving Greater Things, organizational psychologist and bestselling author Adam Grant tackles a vital question: What does it take to unlock our fullest potential? In typical Grant fashion, the book is rich with psychological research, real-world examples, and storytelling that challenges long-standing assumptions about talent, intelligence, and success.

At the heart of Grant’s argument is the belief that greatness isn’t born—it’s grown. And one of the most overlooked yet essential ingredients in this growth is character.

Skills of Character: The Core Idea

Grant defines character not as a fixed trait or moral superiority, but as “your capacity to prioritize your values over your instincts.” It’s what enables a person to do the hard thing when the easy thing feels more natural. The good news, according to Grant, is that character is not innate—it’s malleable and can be intentionally developed.

Rather than placing success solely on intelligence or natural talent, Hidden Potential makes a compelling case that it’s the internal skills of character—like the ability to seek discomfort, persevere through awkwardness, and take initiative in unfamiliar territory—that truly set high achievers apart.

Embracing Discomfort

One of the standout messages of the book is that discomfort is essential for growth. Grant states, “The best way to accelerate growth is to embrace, seek, and amplify discomfort.”

He references situations where people voluntarily put themselves in uncomfortable environments—be it athletes training at higher altitudes or students grappling with unfamiliar topics—not because it’s pleasant, but because it stretches their capacity. This aligns with the psychological concept of “desirable difficulty”, where learning is deeper and more lasting when it feels hard.

This theme comes through most vividly when Grant quotes the fictional coach Ted Lasso: “If you’re comfortable, you’re doing it wrong.” In other words, comfort may be the enemy of growth.

The Myth of Learning Styles

Another crucial insight Grant explores is the myth of learning styles. Though widely accepted in popular culture and education, the idea that people learn best in their preferred mode (visual, auditory, kinesthetic, etc.) doesn’t hold up under scientific scrutiny.

According to Grant, people may have learning preferences, but those preferences do not correlate with better outcomes. Often, they are simply a reflection of what feels most comfortable. Grant argues that learning effectively often requires doing what is uncomfortable, which circles back to his core message.

He encourages readers to challenge their assumptions about how they best absorb knowledge and to experiment with unfamiliar modes of learning. For example, a person who thinks they are a visual learner may actually retain more by teaching others or engaging in active discussion.

Procrastination: A Matter of Emotion, Not Laziness

In a clear take on procrastination, Grant challenges the common misconception that it stems from laziness or poor time management. Instead, he frames procrastination as an emotional avoidance strategy—a way to sidestep the discomfort tied to a task.

This builds on psychologist Tim Pychyl’s research that suggests we don’t procrastinate to avoid work—we do it to avoid negative emotions like anxiety, self-doubt, or boredom. The implication: if we want to stop procrastinating, we need to stop avoiding discomfort and start embracing it.

Again, this aligns with Grant’s broader argument: the ability to tolerate and even seek out discomfort is a cornerstone of character development and long-term achievement.

From Theory to Practice

Grant’s ideas are more than theoretical. Throughout the book, he backs up his points with practical strategies, stories of real people who overcame odds by building character-based skills, and guidance on how readers can do the same.

For example, he recommends:

• • Deliberate discomfort: Put yourself in situations that stretch your limits.
  • Reflective journaling: Document moments when you acted against your values—and how to improve next time.
  • Accountability partnerships: Surround yourself with people who remind you of your values when instincts push you elsewhere.

Conclusion

Hidden Potential is a powerful reminder that who we become is less about who we are now and more about how we choose to grow. Through his discussion of character as a set of learnable skills, Grant offers an optimistic and evidence-based path to self-improvement.

In a world obsessed with talent and quick wins, Grant shifts the focus to the slow, often uncomfortable work of building the inner skills that sustain true success. For students, professionals, and lifelong learners alike, this book offers a clear and deeply motivating lens through which to understand growth, challenge, and the pursuit of excellence.

The Big Beautiful Bill Act (BBB): What Taxpayers Should Know

Welcome to our latest tax blog post, where we delve into the “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025. This legislation introduces significant changes to the U.S. tax code, particularly affecting individual taxpayers and businesses. Building upon the 2017 Tax Cuts and Jobs Act (TCJA), the OBBBA makes several tax provisions permanent and introduces new tax benefits. Now let’s explore the key tax provisions and their implications.

Key Tax Provisions for Individual Taxpayers:

Permanent Extension of 2017 Tax Cuts: The OBBBA solidifies the individual tax rates established under the TCJA, which were previously set to expire at the end of 2025. This includes maintaining lower marginal tax rates and increasing standard deduction amounts, providing long-term tax planning certainty for individuals.

Increased Standard Deduction: For tax years beginning after 2024, the standard deduction amounts are increased to:

• • $15,750 for single filers
  • $23,625 for heads of household
  • $31,500 for married individuals filing jointly.

These amounts will be adjusted for inflation in subsequent years, simplifying tax filing for many and potentially reducing taxable income.

Social Security Taxation: While the OBBBA does not eliminate federal income taxes on Social Security benefits, it introduces a new tax deduction specifically for seniors

A deduction amount of $6,000 for individuals aged 65 and older; $12,000 for married couples filing jointly.  Available to individuals with a modified adjusted gross income (MAGI) up to $75,000, and married couples with MAGI up to $150,000, the deduction phases out for individuals with MAGI between $75,000 and $175,000, and for married couples between $150,000 and $250,000 and applies to tax years 2025 through 2028.

This deduction is designed to reduce or eliminate the tax liability on Social Security benefits for approximately 88% of recipients, particularly benefiting middle-income seniors.

Many low-income seniors already do not pay federal income taxes on their Social Security benefits. Therefore, the new deduction is likely to have a minimal impact on this group. Seniors with incomes above the phase-out thresholds will not benefit from the new deduction and will continue to pay taxes on their Social Security benefits as they do now.

The senior tax deduction is set to expire after the 2028 tax year. Unless Congress enacts further legislation to extend or make this provision permanent, the tax treatment of Social Security benefits will revert to the previous law starting in 2029.

Tax planning considerations: First, senior taxpayers should assess their income levels to determine eligibility for the new deduction and plan accordingly to maximize tax benefits during the effective years. Secondly, given the temporary nature of the deduction, staying informed about potential legislative extensions or modifications is crucial for long-term financial planning. Finally, engaging with tax advisors can help seniors navigate the complexities of the new provisions and optimize their tax situations.

Enhanced Child Tax Credit: Beginning in tax year 2025, the child tax credit increases to $2,200 (non-refundable) per qualifying child, with the refundable portion set at $1,700. (This is reduced from the House-passed credit of $2500.) These amounts will be adjusted for inflation, beginning in 2026. The income phaseout thresholds are set at $200,000 for single filers and $400,000 for joint filers.

Temporary Increase in SALT Deduction Cap: The state and local tax (SALT) deduction cap is temporarily increased to $40,000 for taxpayers with modified adjusted gross income (MAGI) under $500,000, effective through 2029. The cap will revert to $10,000 starting in 2030.

Deductions for Tips and Overtime Pay: A temporary deduction introduced for qualified tips and overtime compensation received by individuals earning less than $150,000 annually:

• • Tips: up to $25,000 (unchanged)
  • Overtime: up to $12,500 (single) / $25,000 (MFJ)

This provision is set to expire in 2028 and aims to provide tax relief to workers in industries where tips and overtime are significant components of their income.

Auto Loan Interest Deduction: Buyers of U.S.-assembled vehicles can deduct up to $10,000 per year in auto loan interest for purchases made between 2025 and 2028. The deduction phases out for individuals earning over $100,000 or couples earning over $200,000, encouraging domestic vehicle purchases.

Introduction of “Trump Accounts” for Children: The OBBBA establishes “Trump Accounts,” allowing parents to create tax-deferred accounts for their children. Each account receives a one-time $1,000 credit per child, with annual contribution limits set at $5,000 per child. These accounts are designed to promote long-term savings for children’s future expenses.

Above-the-Line Charitable Deductions: Beginning in 2026, non-itemizing taxpayers can claim an above-the-line deduction for charitable contributions. The deduction amounts are:

1. • Up to $1,000 for single filers
   • Up to $2,000 for married couples filing jointly

This provision aims to encourage charitable giving among taxpayers who do not itemize their deductions.

The OBBBA also introduces a temporary, nonrefundable tax credit for donations to organizations that primarily grant scholarships to private or religious elementary and secondary schools. The credit is for 100% of the gift, up to the lesser of $5,000 or 10% of the taxpayer’s adjusted gross income (AGI). This provision is effective until 2029.

The above-the-line deduction provides a direct tax benefit to non-itemizers, potentially encouraging more taxpayers to make charitable contributions. This tax credit for scholarship contributions is designed to bolster funding for private and religious schools, aligning with certain educational policy objectives. While these provisions offer new opportunities for tax savings, they also add complexity to tax planning. Taxpayers should carefully document their contributions and consult with tax professionals to maximize benefits and ensure compliance.

Charitable deductions of Itemizers must meet a floor of 0.5% of AGI to qualify.

Residential Solar Tax Credit Changes:

Accelerated Phase-Out of the 30% Residential Clean Energy Credit: The OBBBA accelerates the expiration of the 30% Residential Clean Energy Credit for solar installations. Previously extended through 2034 under the IRA, this credit will now expire on December 31, 2025. Homeowners must install and place their solar systems in service by this date to qualify.

Elimination of Tax Credits for Leased Solar Systems: The legislation removes eligibility for tax credits on leased residential solar systems, beginning in 2028. This change affects homeowners who opt for leasing arrangements, a common financing method that previously allowed access to tax benefits without upfront costs. Leased and PPA solar systems remain eligible for the credit if installed and in service by December 31, 2027.

Impact on Battery Storage Incentives: Tax credits for residential battery storage systems, which were previously eligible under the IRA, are also set to expire at the end of 2025. This affects homeowners looking to enhance energy resilience through storage solutions. Commercial/grid-scale battery storage remains eligible if in service by December 31, 2027.

Commercial Solar and Clean Energy Incentives:

Revised Timelines for Investment and Production Tax Credits: Commercial solar projects must now begin construction within 60 days of the bill’s enactment and be placed in service by December 31, 2028, to qualify for the Investment Tax Credit (ITC) and Production Tax Credit (PTC). This accelerates the timeline compared to previous provisions.

Restrictions on Foreign Entities of Concern (FEOCs): The OBBBA introduces limitations on projects involving materials or components sourced from entities identified as FEOCs, particularly those from China. Projects utilizing such components may be disqualified from receiving tax credits, which could impact supply chains and project planning.

Changes to Transferability of Tax Credits: The bill restricts, but does not repeal, the ability to transfer certain clean energy tax credits. The timelines are now shorter and there are FEOC-related exclusions.

Implications and Considerations:

• • • For Homeowners:
      • To benefit from existing tax credits, homeowners should aim to complete solar installations by the end of 2025.
      • Those considering leasing options should be aware that the associated tax benefits are being eliminated after 2027.

• • • For Businesses:
      • Commercial entities planning solar projects need to adhere to the new construction and service timelines to qualify for tax incentives.
      • Supply chain assessments are crucial to ensure compliance with FEOC-related restrictions.

Key Tax Provisions for Business Taxpayers:

Qualified Business Income (QBI) Deduction Made Permanent:  The BBB tax bill makes permanent the 20% §199A deduction for eligible pass-through businesses such as sole proprietorships, partnerships, S corporations, and some trusts and estates. It also expands the SSTB phase-out band to $75,000 (single)/ $150,000 (joint), indexed.

1. • Example: If you operate an LLC generating $200,000 in qualified business income, your deduction of $40,000 is now available permanently.

Bonus Depreciation Reinstated to 100%: The BBB bill reinstates 100% bonus depreciation for qualified property acquired and placed in service between January 20, 2025, and January 1, 2030. This allows businesses to immediately expense the entire cost of new (and eligible used) equipment, technology, and machinery in the year they’re placed in service.

1. • Example: If your business purchases $500,000 in machinery in 2025, you can write off the full amount that year, rather than depreciating it over 5 to 7 years.

Immediate Expensing of Research & Experimental (R&E) Costs: The BBB bill repeals the requirement to amortize R&E expenses over 5 years—a rule that began in 2022 under prior law—and allows immediate expensing of such costs for a temporary period.

1. • Benefits for Innovative Businesses: Boosts cash flow for businesses heavily engaged in R&D, encourages innovation by reducing the after-tax cost of experimentation and development, and is a critical win for startups, software firms, biotech companies, and engineering-driven industries.

Paid Family and Medical Leave Credit Made Permanent: The Section 45S tax credit, originally temporary, is now permanent under the BBB bill. This provision allows employers to receive a credit of up to 25% of wages paid during periods of qualified family and medical leave.

1. • Why This Matters: Encourages businesses to offer or continue offering paid leave programs, helps employers compete in tight labor markets with family-friendly policies, and reduces the effective cost of paid leave benefits.

Expanded Employer-Provided Child Care Credit: The BBB bill significantly expands the tax credit for employer-sponsored childcare.

1. • Credit rate increased from 25% to 40%.
   • Maximum credit raised from $150,000 to $500,000 for general businesses, and up to $600,000 for eligible small businesses.
   • Indexed for inflation in future years.
   • Benefits: Supports working parents, especially in dual-income households, positions companies as family-focused employers, and offers significant relief in industries hit hardest by the childcare shortage.

Final Thoughts: Strategy and Compliance: The BBB Tax Bill presents business taxpayers with significant opportunities, but these opportunities also come with corresponding responsibilities.

Key Action Steps:

• • Tax Planning: Review your depreciation strategies and capital expenditure plans to align with the return of 100% bonus depreciation.
  • Entity Review: Reassess whether your business structure is optimized to benefit from the enhanced QBI deduction.
  • R&D Audit: Document all eligible research expenses carefully to ensure full expensing and IRS compliance.
  • HR Policies: Update leave and childcare policies to ensure they qualify for new and enhanced credits.
  • Long-Term Investment: Evaluate manufacturing and infrastructure projects to benefit from the new 35% credit.

As always, consult your tax advisor to help tailor a proactive strategy that aligns your business goals with the latest federal tax benefits.

Bottom Line: The BBB Tax Bill is a powerful package of incentives for American businesses. Whether you’re a startup innovator, an established manufacturer, or a small service-based S corporation, the time to plan is now.