Name: Live Webinar: Unpacking the 2025 Tax Law: What it Means for You, Your Business and Your Mission
Uploaded: 2025-07-22T16:30:14.748Z
Duration: 1 h 29 min 20 s
Description: Live Webinar: Unpacking the 2025 Tax Law: What it Means for You, Your Business and Your Mission

Transcript for "Live Webinar: Unpacking the 2025 Tax Law: What it Means for You, Your Business and Your Mission": Good morning, and welcome to our live webinar, unpacking the 2025 tax law, what it means for you, your business, and your mission, hosted by PKF OConnor Davies. Before we get started, I'd like to go over a few housekeeping items so you know how to participate in today's call. We're pleased to offer live closed captioning throughout the webinar. To access the captions, please use the stream text link located in the chats in the chat section of your attendee panel. You will have the opportunity to submit text questions to today's presenters by clicking on the q and a tab on the right hand panel. You may send in your questions at any time during the webcast. We do have a lot of material to cover, and if time permits, we'll make an effort to respond. If we cannot get to your questions, a response will be sent post event. A copy of the PowerPoint slides and a recording of today's webinar will be made available to you via email four business days post event. As we near the end of the webinar, we do have a very short survey which will be prompted, and your response is greatly appreciated. At this time, I would like to introduce Christopher Mignliaccio, partner with our transaction advisory services. Good morning. Thank you, Alana. Pleasure to see everyone. I've been leading our firm's efforts on sort of tackling the, the one big beautiful bill. What we'll generally call OVA, as part of this just for simplicity and shortening, I guess it's just a lot of words, and and we've got a lot to cover. I'm gonna be joined by Thomas Kinder and Alicia Brestovanski. They will be, going through, slides with you and talking about them specifically. Actually, do we have the slides up? There we are. So and and just to kinda give, an overview on on what we're gonna see here today. Right? So the OPA was passed on on July 4. So very recent. We're also kinda still unpacking and working through it. It's worth sort of noting as just sort of stepping back and taking a sort of big kind of an overview look at what happened. Many of the provisions are extensions of prior law that was set to expire. So the way the in the prior major legislation, the Tax Cuts and Jobs Act in 2017, a lot of those provisions such as, certain tax rates for individuals and and a variety of other things were set to expire at the end of 2025. And so many of those were extended. What that means is that in a lot of ways, your 2026 from a tax perspective will look the same as your 2025. So there was a lot of change, and it obviously is big news and a big change that there these provisions were extended. But in a certain sense, for for a lot of, from a lot of perspectives, there won't be a lot there won't be a ton that's new to unpack. Further, there were just a lot of the most controversial proposals. The things that were making headlines did not end up making it into the final bill. So, for example, section eight ninety nine, which was a tax on, non US, companies and individuals in certain circumstances, what people are calling the revenge tax, that was generating a lot of pen lines. That did not make it into the bill. Limitations on the past due entity tax, either a percentage of the amount paid, or for certain types of businesses, that did not make it into the final bill. And there's a variety of things. We I could I mean, there's questions about that. We're we're happy to cover those things too. Right? There were, certain private foundation excise taxes that were very much concerning. Again, did not make it into the final bill. And so there are, you know, again, there there there's it it's important to level set that as we talk through if you and, again, appropriate to ask questions if you're like, hey. Did I remember this headline. Did that did that make it in? And and a lot of cases, the biggest headlines did not end up in the final bill. We'll be spending, again, the majority of our time here with the key changes. There's a lot in this bill. So, again, there may be things that we do not cover. And so feel free to ask questions. We've produced a, a a pretty extensive sort of summary that is available on the firm's website. So if you have questions about things that we don't end up getting to at our hour today, please let us know. And we'll also be kind of highlighting areas where, you know obviously, I said this is very new. And so there are some interesting areas and some areas that I think are going to be of of interest to people where our answer on some of the more, in-depth questions maybe we're still waiting for IRS guidance, where we don't have the final answer in terms of how certain things are gonna be played out because, you know, we need an IRS, either regulation or notice or other guidance to really say, okay. When when there's a question here, what interpretation are we taking? Or is the IRS going to give us certain belief in terms of the the practicalities of things? So with that, I'm gonna turn it over to Alicia. She's gonna walk you through some of the key business provisions, and we'll take it from there. K. Thanks, Chris. Alright. So let's jump into these business provisions. And, again, these are only you know, we're only covering the most impactful business provisions. This isn't all of them. Just the ones that we found will impact, you know, our clients, you know, and prospects, most significantly. So first, right off the bat, we have research and development expensing. So under prior law, businesses are are required to capitalize and amortize r and d expenditures over five years for domestic expenses and fifteen years for foreign, r and d expenses. So, so for the new law, now we can go back to full expensing of r and d costs for domestic expenses, and the treatment for foreign expenses has not changed. Now here, some taxpayers will be permitted to elect to accelerate remaining deductions over a one year or two year period. Those are for small taxpayers. Generally, with those that have average annual gross receipts of $31,000,000 or less in the years 2022 to 2024, can make those elections and amend those prior year returns. So some observations here. There are going to be several planning points around small taxpayers with these elections to accelerate the past deductions over either one, two years versus going back to amend prior year returns, along with, you know, some other, some other, you know, planning points such as, you know, passive activity loss limitations, excess business loss limitations. You know? Doing our planning, you know, as CPAs is, you know, you know, takes a lot of time, you know, as it is, but adding these additional nuances in, you know, will definitely take the cake. Chris, any additional comments? Yeah. This is one I think this is gonna be one of the the biggest focuses and the biggest topics for a lot of businesses because this is both a big change and the way the IRS is the I know the IRS is addressing this year. We does leave a lot of questions for the IRS, in terms of the nitty gritty of of how this is actually going to play out. And it's really just to, like, pick on what Lisa's saying here and add to it. Right? That there's real, planning to be done regarding if you even if you do qualify to go backwards and amend your returns, does it make sense? Are there other consequences of amending versus taking everything in one year versus taking it in two years? I think in some cases, it's gonna be an easy question where we're gonna say, yep. Okay. Makes sense just to go back. There's no other impacts to it. But a lot of times, again, filing amended returns creates, IRS bureaucracy that you have to deal with, which is a potential downside too. So a lot of things are gonna have to get weighed. It's not quite as simple, I think, as, you know, sometimes I think I think people would want it to be with this sort of fix. But I do think it is at the end of the day, it's a very, very positive thing, and it does give businesses an opportunity to kind of reclaim those deductions, which I think is gonna be a a big part of tax planning going forward is understanding that that shift now. Right. And another important point is that we are still waiting on IRS guidance to come out, which will hopefully be within, you know, forty five days of bill passage. But we're still waiting on what the IRS pronouncements are going to be and whether or not, formal account, you know, change in accounting method is required for thirty one fifteen or if there'll be other procedures. Alright. So moving on. Next, we have, changes to bonus depreciation. So under prior law, bonus appreciation, accelerated depreciation was 40% for 2025. 2026 was down to 20% with a full phase up to zero percent in 2027. So under the new law, we personally ex we've permanently extended and modified bonus depreciation to a 100% for property placed in service on or after January 19. And there is a limited transitional election available to apply the prelaw phase down rates instead of the 100%. So here, it's gonna be really important to analyze, you know, the place in service date to, you know, make sure that the property was in fact in service after on or after, January 19. Okay. So moving on to the next slide, we have section one seventy nine. Under prior law, the expense was limited to a million dollars for 2025, and it's reduced dollar for dollar when total of qualifying property placed in service exceeded $2,500,000. Under the new law, the one seventy nine expense has been increased to $2,500,000 beginning in 2025, an index for inflation annual annually. The section one seventy nine expense is reduced dollar for dollar when total qualifying property is placed in service exceeding $4,000,000. So, again, this is a great win for businesses. The increased deduction and, and qualifying property threshold allow for businesses to deduct a larger portion of their capital investments. So, again, very helpful. Just, one word between bonus and section one seventy nine. Just pay attention to your states of operation as well because not all states allow for section one seventy nine of bonus depreciation. So for example, for New York state, New York state does not allow bonus depreciation, and that's an add back for New York state purposes. So going on, next, we have business interest deduction, section one sixty three j. Under prior law, business expense deduction, under one sixty three j was calculated using an earnings before interest and taxes approach, excluding depreciation and amortization deductions. So under the new law, the rest there's a restoration of the business interest deduction, to include an add back for depreciation and amortization expense, which is an a bit duh approach. This is effective for tax years beginning after 12/3124. So, again, you know, we were seeing a lot of clients having their interest expense being disallowed, because we lost that depreciation and amortization add back. So we're very thankful to see that come back, and we're expecting a lot of our clients to be able to utilize more of their interest expense. Next, we're going on to energy tax credits. So most of the energy tax credits were expiring in 2032. We're seeing, many, if not all, of these energy credits sunset so much earlier. And there are several different dates in which the energy credits end, but the most significant ones, the commercial clean vehicle credits and the related clean vehicle credits, those end September 30. So if you have any, you know, electric vehicles that you're currently in contract for, you know, make you know, contact your dealers, any providers to see if those can be expedited because that is a hard date, and those credits will not be available after to take after September 30. For dealers, we're still waiting for the IRS to come out with their announcements, but I'm thinking that your, your reporting to the IRS for those, electric vehicles will likely cease. So less record keeping for you. Some other credits that we're seeing changes are, with the residential clean energy credits. Those are ending after 12/31/2025. So solar panel credits on the residential side, those are disappearing. On the commercial side, the let's see. The one seventy nine d, the efficient commercial buildings deduction, also the, like, the commercial solar panels credits, those are also disappearing. But if your construction begins, usually within one year of, passing. Also, by July 4, you're in the safe zone As long as your entire, you know, construction is completed by, by 12/31/2027, you're typically in the safe zone there. Let's see. There's solar and wind credits. Those are disappearing. So, you know, there's definite definite some, limitations here in terms of the clean energy credits. There's also some additional limitations with foreign entities of concern restrictions. So, clean energy credits are now ineligible if a project is owned by, controlled, receives material assistance from entities linked to, say, other foreign entities of concern like China, Russia, Iran, North Korea, etcetera. So, you know, as we know, a lot of solar panels are, you know, manufactured overseas, so that may be that may be an issue that limits those, those energy credits. And, again, we're still waiting for IRS pronouncements to be released. So more information, to come later on. K. And then as I mentioned before, the clean vehicle credits, these are for individuals. These are going to, expire for vehicles after, acquired after September 30. Okay. And then we have ten ninety nine reporting. So, ten ninety nines were, were required to be filed, with a reporting threshold of $600. There's an increase in this threshold of $2,000, and increases going forward will be indexed for inflation. There's also an increased threshold for issuing of ten ninety nine k's by payment processors back up to $20,000 or 200 transactions. So this is a great win. It's reducing the reporting requirements for businesses. And then we have, there's now a floor on tradable contribution deductions for corporations under current law, 10% adjusted gross income limitation for cash gifts. There was no minimum limitation or floor on charitable gifts. So now, for tax use beginning after December 31, there is going to be a 1% floor on charitable contributions for taxpayers who elect to itemize their deductions. Right? So and only a portion of charitable contributions exceeding the 1% of an itemized taxpayer's AGI would be deductible. Chris, did you wanna add anything else? Yeah. I think this is it's interesting. For not for profits, again, a lot of the things that were in some of the early versions came out. This is maybe the most impactful, that's in there. Although, talking to our not for profit team, if you if you know, Mark Pisco, you know, his take has been that, you know, for a lot of people, the the goal of donating is to support a cause. Right? And so, he's sort of hopeful that this will not lead to a significant shift in in the amounts that are are donated. But it is something that can keep an eye on as if you have some tax motivated donors. This will change things on the margin. By creating this floor, it will take a chunk out of the deduction, and it's going to have it could have an impact. I I think it could be something that isn't this is something that's gonna have to be watched because, really, ultimately, the question here is gonna be from a not for profit's perspective about taxpayer behavior. Does it does that change anything? Thanks, Chris. Alright. And now we're going to be moving on to our individual versions, presented by Tom Kinder. Yeah. Let's there's one question I wanna take before, we get we get on to that individual section. There was a a good question about the difference between bonus depreciation and section one seventy nine. In a lot of ways, they do overlap. There there are things that are eligible for both. One seventy nine has that there a that there are categories to what qualifies for both that sometimes do not overlap, although much property will. The other big difference is that as talked about one seventy nine, although those limits on that went up, they do have a cap on what is qual qualifies for one seventy nine. That does not that does not have that same cap for bonus depreciation. So it's something where the two of them are overlapping but do work separately and together. So if you have questions, I think it's worth working with your tax adviser to understand if it's does something fit into one versus the other. Turn to you, Thomas. Hello. Alright. We're gonna be talking about some internet or individual provisions. International is coming later. So I will jump right in. The first thing that I want to bring up is the tax rates. And, really, there's not a lot here. They stay the same. The Tax Cuts and Jobs Act reduced the tax rates amongst individuals and corporates corporations, and the individual rates were set to sunset and go back to what they were before with the top marginal rate being, I think, 39.6%. However, OBA has extended these indefinitely. So these are the tax rates for individuals and corporations, and so it does not look to be changing anytime soon. Here and and you'll find that a lot of the individual provisions and really a lot of provisions at OVA, I think as Chris mentioned earlier, is status quo. We're we're staying the same. We extended a lot of the provisions that were set to sunset under the TCJA, and now and now they're more permanent or extend to a longer period. But there are some new ones, which we'll get to. The qualified business income deductions or QBI deductions. This was enacted in TCJA, and it was scheduled to come to leave after 2025, Oba just extended it. They took what was supposed to go away and added it forever or yeah. Forever. And they've changed the phase in range to 75,000 and a 150,000 for joint filers. So they just made it applicable to a little bit more, broad of a group. So it really the key is, as it says on the slide, more people will be able to use the QBI deduction. So that's a good thing, a good win for small businesses. Here's the big one that was hotly contested and held up the bill the most, and that's the state and local tax deductions. Prior to OVA, the SALT deductions were capped at $5,000 for individuals or 10,000 if you're married, filing jointly. And OVA increased that limit to 40,000 for 2025. It goes up by 1% over the next, couple years, but that's not a huge number. The important thing to note with these soft deductions is one, the PTEQ did not go away. You are still able to claim a PTEQ deduction. And two, these SALT deductions are only the increased SALT deductions are only for a few years. You can see that it's between from 2025 to 2029 for this increased SALT cap. So it is not permanent. And for some of the people who are already making P TECH elections to pay taxes at the entity level, it may be beneficial to just continue doing that if the plan is to switch back whenever the, rules change back because then you'll have the prior work papers. It's just, it might be it's something you need to consider. Hi, Chris. I know you would come in on this one. I think this is gonna be one to really keep an eye on. Again, this is also, I think, one where really there was so much thrown out there that it's important to understand sort of what that final version was, which was that we've got this $40,000 cap here again with no other limits on TTEC. It it really so this is sort of impactful for businesses between in that sort of where where the where the owner's profits on the past two were sort of in that 100 to $400,000 range. The question of, do I need PTEC versus do I need the state and local cap? And it is also worth noting again as you mentioned in the slide, but the state and local cap, goes back down very quickly once you hit that $500,000 in income. You you will actually hit that $10,000 minimum at 600,000. So, you know, depending on where you are, in the income range, there's a sort of a wide range of impact from this additional, state and local cap. It's an interesting, way that this has been done. And, again, this I come back to you as you point out, but just to really reemphasize that. This is only for a few years, and so this thing reverts. So while many things in this bill one of the features of this bill was that many things were made permanent. Right? The state and gift tax we'll get to and a bunch of these other things. We got rid of this sense from the TCJA that we had this guillotine coming. Oh, at the end of this year, it all reverts back, and we're gonna have to deal with something. This is one where that's not the case, and we're gonna have to, in a few years, deal with a change again. Yeah. It's, it's definitely a weird one, especially because this is one that a lot of people fought over. So I would have thought that this would be one that would have been a permanent one. Alright. I think we can go to the next one. I think we we covered the state and local deductions. This one, qualified bit small business stock gain exclusion. Here, what we did here is I think I wanna hit the key point here. What originally the law was, you had to meet the minimum holding period of five years to get a 100% exclusion on on the sales. Here, in the new law, what they did, amongst other things, is they have a sliding scale. Now after three years, you get 50% of the bonus, four years is 75%, and then five years, you get the whole 100%. So allowing business people that form these new businesses, usually startups, it allows them to sell before the five year period and still qualify for some exclusion, which is a very different change. It's now no longer an all or nothing. So it is a good thing for that. But this is generally used by startups because the rules are hard to fall into if you're not a startup. And, they really just extended the, the application. Oh, hi, Chris. Yeah. It's worth kinda noting talking to, you know, our firm 12 o two expert, Laura Barushian, who you'll I'm sure you'll be seeing content from soon. You know, her her take has really been that there's no this does not change who section 12 o two is interesting to. Right? Generally speaking, the the group of people looking at section 12 o two are gonna be the same, and the biggest benefit here is that change on when it applies because it removes the sort of all or nothing of it used to be. If you sold at four years and three hundred and sixty four days, zero exclusion. And if you sell on year five, potentially a 100% exclusion, that's a pretty big dramatic difference. Obviously, that's no longer the case. I think that's just sort of helpful and allows anyone who's in this position to make better deals and and work through transactions without having this sort of guillotine over their head of, like, well, I have to wait for that extra day. Awesome. Now we're gonna get into another big one. No tax on tips. And I'm gonna group this with no tax on overtime as well because they're similar provisions. This is another one that is scheduled to expire after 12/31/2028. So here's another one where, as Chris mentioned, you know, Oba was good for extending these benefits that we got under TCJA and kind of getting rid of these sunsets or guillotines that are set to hit you at the end of the the life cycle of them. And here's another one along with the no tax on overtime that is set to expire, you know, within a couple of years. And and really what this does is it allows, you know, your tips to not be taxed. There is a, again, a phase out period. If you're making over the cap, which is a $150,000, every thousand dollars over that for single taxpayers, every thousand dollars over that reduces the benefit of the $25,000 deduction is what it really is. Let me clarify on that too because this is not no tax on tips. It's you don't get something on your w two that says here's my tip income. I'm not paying tax on that. What it is is it allows you to take a deduction for the amount that you receive this tip income. And this is not an this is for anyone. You do not have to be an itemized deduction, user. You can be anybody. You can take the standard deduction and you still qualify for the no tax on tips and the no tax on overtime. So it is a benefit for, lower, you know, lower class, lower middle class servers, beauty beauticians, things like that where tips are substitute a main portion of their income. Now the thing that we want to bring up here, because I think it's important for the folks on this call, is how are the businesses going to record this and track this for for their employees? And I think that's where we need to start and think about, you know, tips generally are tracked separately. I I know that, you know, a lot of people have to enter their tips in their system at the end of the at the end of the week so that they or at the end of the shift so that they know how much they made. And, and with a lot of the swiping software when you just use your card, that goes right into the system. But for for more cash based and credit card based, businesses outside of that, you know, really tracking this so they know how much they're get they're deducting and you know how much is going towards tips. Alright, Chris. I think you're on mute if you wanted to say something. Oh, I was gonna add I was gonna add what what would Vikram, but, like, the that this it's the question of how, you know, a you know, payroll companies and things like that are going to track this, I think, is gonna be very important for businesses. But just they're gonna need to understand if you're a business owner and you work in a tip business or you work in overtime business, what are your employees going to be getting in terms of reporting? Do your employees are they gonna have questions about the fact that, you know, FICA and, Medicare tax still applies to these amounts? It's just that there's an income tax deduction. I think there's gonna be some, it's it's one area where we're gonna need guidance and, again, we're gonna need to work with, again, what is a w two gonna look like, what are payroll reporting gonna look like? I think it's something that business owners are gonna need to be on top of because I think they're going to get those questions. Yeah. And especially with the overtime. Tips are are generally more separated, but overtime, very often, it just you just get lumped in. You just have, you know, forty four hours worked in a week, and your pay is what your pay is. So I do wanna clarify. There's a question here that I wanna clarify. Someone said that this may only apply to cash tips and not credit card tips. This is a sort of a linguistic issue with the way some of the the code is written. Cash tips is defined very broadly. So the term is cash tips. The cash tips includes amounts paid via credit card and and other ways. It's really just, again, a mechanism of how that gets translated into the payroll tax reporting. So, yes, if if someone gets paid on a credit card, that still absolutely applies there. Also, I note, you know, we have an article out, about our for some of our private club clients. It's worth noting that this applies to amounts that are not that are are fully gratuitous, right, that are not added. So if you're regularly adding a service charge to a bill to sort of replace a tip, right, that, you know, normally, I I'm there's a a large party. Maybe there's a a an event where you say I I add a 20% service charge to essentially cover what would be tips. That would not, technically, the least as, again, as as as this is read so far, that would not qualify. So that's gonna be an important thing, I think, for our especially for our private club clients to sort of keep track of. So and there's another and and, Tom, can you talk about, like, sort of, basically, what our understanding here is of what does qualify as overtime, here? Because there's some questions about that. Maybe we'll dive into that a little bit deeper. Yeah. I think one of the big things with overtime and what qualifies as overtime and one of the questions is and I think that I I wanna spend a little bit more time before I give a firm answer on this is what qualifies what part is qualifying for the deduction? Is it the entire amount paid for your overtime worked, or is it just the amount that is above and beyond your normal hourly wage? So if you make $20 an hour and overtime is time and a half, you work one hour of overtime. You get a deduction for the whole $30 you got paid for that, or is it just the $10 that's over your normal $20 an hour? I'm not I'm not sure if that's a 100% clear yet, and, I think that it'll take a little bit more digging, maybe some IRS guidance to really clarify that point. But that's one of the things that we're we're working through understanding a little bit better on the overtime. Yeah. I think, again, I think the the I feel like the better reading there again, this is this is where it's all new. The the better reading is it seems to be based on length. It's it is the amount above. But, again, this is where, to your point, IRS guidance is really necessary. There's questions here about, what about a holiday week? How does that work? How does that, how does that play out? And I think we are gonna need IRS guidance of of all these scenarios, right, of, well, you know, what count what counts as overtime because they are trying to apply that these fair labor standards rules, which aren't meant they're not built for tax law. Anytime you're you're taking standards from another area and building them into tax law, that's never, something that is done easily. And so I that's really one where that these provisions I think the biggest takeaway on these provisions is they sound very straightforward. And, oh, so there's just no tax on overtime. The answer is gonna be a lot more complicated on that. Already, again, there's these caps and thresholds, but the bigger thing is that we're gonna need deeper guidance to really make sure that we're clear on what is qualifying as what. Yeah. Alright. Well, let's hit next and see where we go. Oh, estate tax exemption. This one's a a pretty simple one. TCJA increased the ex estate and gift exemptions by actually a lot back then, but it was set to sunset again very soon. I think at the end of this year, it was set to revert back. And one of the things we were doing before OVA is planning, you know, how can we utilize this increased exemption. But then OVA came through and not only extended the the exemptions, but also increased the base from, you know, 13.99 to about I think it's a little bit more 50 or a little bit under 15. But 15,000,000. So it's it's and that's indexed for inflation. So that'll go up every year as inflation goes up. And it was before, but that's I think that's a big thing because now one thing that I just mentioned, right, we were planning seeing that the big exemption was going away after 2025. So there was planning that was being done to, you know, utilize that. Now there's not so much stress on rushing planning. You can get to the correct estate and gift exemptions in the time that makes sense rather than just rushing for tax planning, which is nice. I'm going to add to what Alicia spoke about earlier on charitable contribution deductions because there's been a floor also on individuals. So before there was a a limit where you cannot get you had a 60% of your adjusted gross income on cash gifts, and there was no floor. 60% permanently extended, and now there's a floor. And this floor, it it kinda makes sense. Right? It's a point 5% rather than a 1% on corporations. And so only the portion that exceeds the point 5% would be an itemizable deduction. And so if you think about that in terms of numbers, right, that's saying if you made a million dollars, your AGI is a million dollars, anything under $5,000 of charitable contributions is not deductible. So you have to exceed that $5,000, which probably makes sense. Right? It it allows people with lower AGI to benefit from these charitable contributions as well, but it also stops, you know, high net worth people from just giving a little bit to try and get a deduction. Again, as Chris said, a lot of times these charitable contributions aren't for tax purposes. So this probably isn't really gonna slow down or hurt people from, donating to charities, but it is a thing that makes sense in in today's world, I think. Opportunity zones. So here, you were able to you know, as part of TCJA, they added opportunity zones that basically gave you a tax benefit. It deferred your tax if you, invested in these opportunity zones or qualified opportunity zone funds. So they were able to either defer or get rid of some potential tax. All this law does is it permanently has permanent opportunity zones that, you know, build on the prior legislation. So nothing has changed majorly. This the people that were investing in opportunity zones are still going to be interested in opportunity zones. It's just now it's extended permanently, which is, a good thing. Again, the things that are extended allow us to know how to plan for the future. And so if things are extended permanently, we have an understanding of how the tax law works, and we can help our clients plan more appropriately. This is another small one. No tax on car loan interest. You know, previously car loan interest was considered a personal interest and you aren't allowed to take deductions. They added a rule. Again, this is a short one. It's only around from 2024 to 2029. They have a rule that allows you to take a deduction up to $10,000 for auto loans. And these auto loans have to be for qualified passenger vehicles, which has a long definition in the code. And the final assembly of these vehicles has to be in The US. So similarly to the consult deductions though, there's a pretty big cliff here. If your income is a $100,000, you're good. But if it goes up to under $50,000, you're no longer able to take this deduction. So the the phase in and phase out is very, very quick. It it's only a $50,000. So if you're below a $100,000, you're perfectly okay. Once you get to a $100,000 or 200,000 if you're married, it's it's sliding scale is very quick. It goes from a 100 to a 150 and then you're done. No no deduction after a 150,000. And so I think there's going to be a little bit of hiccups at first with with this one, especially because of the what qualifies as a passenger vehicle, was it assembled in The US. But I think once car dealerships get on, like, on this, it'll be very quick to, work itself out. And as I I mentioned, which I think Chris is gonna pop in here. Before we get on the international side, I just wanted to pick up one or two things. There was a question on, whether there's a charitable deduction for those who are not itemizing. The answer is yes. It's up to a thousand for an individual, 2,000 for for married. And there was also a question on whether sort of when some of those ten ten ninety nine rules go into effect. The October missile, ADS, NEC rules go into effect next year, '26. The ten ninety nine k rules apply retroactively to this year in '25. Just wanna hit a couple of small ones, but let's let's move on to the international space where there's a lot happening again as well. International. This is this is my bread and butter. The big one here is the section two fifty deduction. So I'm sure many of you dealing in the international space have heard of GILTI or FDII, the the the dreaded acronyms, which I will mention later that OVA got rid of. There is no longer a GILTI, or FDII. I think they're both changed now. But as part of, you know, the previously named GILTI and FDII regimes, taxpayers were entitled to a deduction under section two fifty. And from 2017 till the end of 2025, the deduction was 37 and a half percent for FDII and 50% for GILTI. Next year, they were scheduled to reduce to 21.875% to for FIDI and 37 and a half percent for GILTI. The tax rates originally were 10 and a half to 13.125% on GILTI and FDII. FDII was just 131.125%, but GILTI had a range. And then they were scheduled to increase next year to for GILTI, it was 13.125 to 16.4%, and FIDI was 16.4%. What OVA did was it met somewhere in the middle. Rather than rather than, go all the way down to these weird 21.87537 and a half percent, they said no. It is permanently set at 33.34% for FITI and 40% for GILTI, which GILTI is now called net net CFC tested income rather than GILTI. These are in place forever. There's no more sunset. So now people with international operations understand this is what my like, they can project here. This is what it's gonna be forever. I don't have to worry about it reducing. And what this does is that it drops the rate for guilty to between twelve point six and fourteen percent, and the FIDI is 14%. As part of this sweeping change, they also increase the FTC haircut from 80% to 90%. This seems to be more in line with what they were intending anyway because there's a high tax election, which allows you to take, make the election if the tax rate at the foreign jurisdiction is 90% of The US corporate tax rate. So, you know, the corporate tax rate is 21%. So I think the high tax election was available for anyone making 18.9% taxes in in low in foreign jurisdictions. The thing that I think we need to mention here is really not a lot is changing. Many jurisdictions have tax rates that exceed that 18.9%, especially when you're thinking European or Asian jurisdictions. A lot of times, their tax rates are already in the 20 percents. So you're already not paying a ton of top up tax on GILTI or and then FDII. Again, similarly, this is just increasing the benefit or decreasing it from what it was gonna what it was, but increasing it to what it was supposed to be. So I think that, really, this is just a nice thing for the people who are investing in, like, Ireland in in countries like that where there's a slightly lower tax rate, and so you don't really have the benefit of the of the high tax election or the foreign taxes being paid. Alright. I think yeah. So I will turn it over to Chris for I think this is the last slide that we really wanted to discuss and got people here. So I will turn it over to you, Chris. Well, I think there's a we'll work there, I think, a few more answers. The employee retention credits, I was our firm's employee retention credit leader, so it calls to me to talk about this. He, OBAA, what it did, it was a very interesting it limited So there was a bill that was, passed by the house and not actually sort of taken up by the senate in 2024 that would have ended the ERC for, any returns filed after 01/31/2024 and also extended the statute of limitations for basically all for all quarters out six years. So a significant extension of the statute of limitations. That language made it into the various sort of draft versions of this bill. And then in the final version, we ended up with this slightly tweaked thing where it what it appears is that again, that's the way everyone has has read this, although, potentially, IRS may say this was an error or or provides additional guidance. But it appears that the only quarter that this was impacted, that where where the returns are no good after 01/31/2024 and where the statute of limitations is extended is the 2021 as well as the fourth quarter twenty twenty one. Although the way those rules work, almost no one qualified for that. So, kind of an interesting adjustment there, and, it's an interesting change. But, again, the ERC is something where if you are still wait if you applied, for an ERC and you're still waiting for it, we have actually seen the IRS processing quite a number of them recently. So so keep an eye out because, we've seen a lot more movement over the last couple of months than we have, frankly, over the last year or so prior to that. So it's been an interesting area in space. And if you have any questions, feel free to reach out to myself or Alicia or whoever, you worked with on that at, PKF OConnor Davies. We have a a a couple of provisions here that I think, worth talking about. Alicia, do you wanna cover a couple we have a couple of these that are up here. We have a a few minutes here. Yep. Sure. So there were some section five twenty nine plan changes. So under prior loss, k through 12 expenses, only for tuition up to $10,000 per year, we're eligible for distributions from five to nine plans. And for college expenses, tuition fees, room and board, books, and equipment were eligible expenses. So under the new law, additional elementary, secondary, and homeschool expenses are treated as eligible education expenses, and there's now a creation of a federal program called Trump accounts that are similar to five two nine state plans. So, overall, additional expenses are eligible for five two nine plan distributions, but it'll be important to check your state rules for eligible distribution, expenses as they may differ from federal rules. K. And, Tom? Yep. Yeah. I'll jump back in here for the international stuff. So as I mentioned, September, this is GILTI, nine fifty one CAFE. It was changed. It's no longer called GILTI. Now it's net CFC tested income, and they've removed the ability to take a QBI deduction that's qualified business asset investment. Essentially, that was a deduction available for, you know, real property, real business property overseas. So, you know, imagine you have a factory overseas in your in your controlled foreign corporation. You were able to take a deduction for 10% of the value of that, and it would reduce your your guilty impact. Here, removing it doesn't hurt a lot of people, but the people that it will hurt are like hotel clients where they make they have huge investments in real property overseas. They have hotels. They have, you know, golf clubs, whatever that they're, you know, really benefiting from these, QBI deductions, but only to the extent they're in jurisdictions where you're not already paying 18.9% tax. That's the big part. Because if you're already paying that, then you're likely not having a top top of tax anyway. Other CFC rules here. Downward attribution is the big one, but let me talk about the CFC look through rule. So the CFC look through rule has been something that has been set to expire, I don't know, since I started practicing. And every year where when it's set to expire, everybody's worried about, oh, is CFC look through gonna be extended? And it's been extended, I don't know, 20 times. I I the real number is probably less than that, but you get the picture. And now finally, OPA says, we're done playing around with this. We're extending it permanently. So to the extent you have, you know, multiple controlled foreign corporations that are that intercompany transactions that would have qualified for look through and not be taxable under subpart f or guilty, that is no longer a worry. You you are permanently in the clear. And then the downward attribution rules as part of TCGA TCJA, they got rid of nine fifty eight b four, which caused a bunch of headaches nobody expected because the downward attribution basically said if you had a US subsidiary anywhere in your foreign group, every foreign subsidiary was considered a CFC. They've brought nine fifty eight b four back and replaced it with nine fifty one cap b. It's to get the trans the structures that they were intending to get, not everybody. So these these rules, it's still downward attribution, but it is less broadly applicable. And then beat, I'm not gonna spend a lot of time here. There weren't a lot of changes to beat. But the the annual grosser fee, 500,000,000 is still there. The tax rate was 10%. Now it's 10 and a half percent. Hi, Chris. If you're going through us about that. Yeah. And I think we're happy I mean, we we have a few again, there's a bunch more provisions, that we're we're not covering. I wanna just point out, because I've gotten a couple questions about are we covering this, are we covering that? This is again, with a bunch more we could spend multiple hours. I do wanna hit maybe a couple of the questions here that we can answer on on what we have discussed. There's a good question about the ERC that I'm happy to end. So for ERC, do you have to amend the return for 2021 or can it be included on the 2025 return? What that means is if I've, if I've received a check-in 2025, do I have to go back and amend the returns? It used to be the position of the IRS that you had to amend those returns, but the IRS in guidance in March changed that and basically said, you can pick up the income when received, instead of reducing your deductions for the the prior year. And and just, again, really for simplicity because we had gone literally out of this has taken this process has taken so long that we had gone out of the period in which you could amend a return. So I I I think from a simplicity perspective, the IRS kind of finally came and said, yeah. Just pick it up this year. And the IRS does pay interest, pays interest to that. The IRS again, if you're not going back, they won't charge you interest. They have charged interest when you had to amend the returns. Although that was kinda only fair in the sense the IRS is paying you interest on the money, that they were, they were paying you as well. There were one question about the, the, not when nonitemized charitable deductions kind of come into place. That that pro that does begin in 2026. So that's something that does go to next year. And that's one thing. Again, we try to cover it all here. There's a lot. Happy to answer questions once or applicability of some of these things because there is a, I think, really interesting questions about to follow out about the the the the effective dates of a lot of this is somewhere between some of it's retroactive, some of it's this year, some of it's next year. It's really worth keeping an eye on that. There's a good question and a good comment about, you know, we've we've talked a lot, I think, in this because of the nature of OVA, we've talked a lot about whether something is a permanent you know, it's a it's permanent. That means we don't have to worry about it in the future. Say, well, laws can be changed, which is a a great point. Right? Obviously, Congress always has the ability to change the law, and they did so, frankly, retroactively on a bunch of different things here. However, I think what we're what we're getting at, what I think is really important about the way OVA implements a lot of these things, is that it doesn't create a a specific time frame. And that changes the context. Right? One of the reasons why we knew that there was going to be tax legislation this year, I would have, gambled fairly strongly that there would be some level of tax legislation this year, was because all of these things were expiring. And that was creating a real conversation around these issues that say, okay. All of these things are happening at once. We're we're gonna have to consider them. We have to do something now or else our our tax law will, a, our tax law will look like it did essentially in a lot of ways in prior to 2017 with some a bunch of different changes. But more importantly, congress would have essentially kind of lost control of that. Right? They would have made a choice by indecision. And what this is doing is it says, well, now there's no, you know, there's no sunset here. There's no, drop here that's going to happen at a specific time. And so I think that's a really big change. I think it allows businesses and taxpayers in a lot of these areas to plan with better certainty, than they otherwise would have had. Although, again, you always have to keep an eye on that. Again, as as Congress changes, as, there's as the world changes, there's likely to be other changes, and this is not gonna be the last tax bill. And many of these things will be changed in the future, but we do have to kind of it does give us a a different kind of perspective on these things. Any other comments? Any any questions? I I we have a a lot of questions. Alicia, Thomas, anything you guys wanna pick up on and answer in in in what's sort of in this batch of questions so far? Yep. I saw a question on five two nine plans. Someone had asked if the $10,000 limit on the five two nine plans was staying in place. So it actually increased to $20,000 for tax years beginning after 12/31/2025. So I just wanted to address that. It's a good change, positive change for those of us planning for college. There was a question in about the SALT rules about the you know, does the 40 is the $40,000 sort of flat, or how does that apply with different types of taxpayers? The separation there, married filing separately does have a separate category there of 40,000. So that's where that, that is the impact there. Someone asked about the AMT in relation to that. I think that's gonna be an interesting question as well. You're gonna have to sort of work through those numbers and how that AMT kind of plays out there. There's a lot and, again, we're we're still very early on. You know, we've got a lot of questions. There's been questions about sort of overtime in specific industries, and I think that's one where I don't think it's prudent to sort of try to address anything other than the industries where overtime is already being sort of cataloged and and charged right now. Because without that, you're essentially the quick question is, does something fit into the the way overtime is calculated under the Fair Labor Standards Act? And that's gonna be a question of the IRS reading those rules and and hopefully giving some guidance in specific areas. So I think the answer is that there's a very specific rule in the no tax on tips, right, that says this is only going to apply to areas that are customary tipping areas. I think with overtime, even though that's not there explicitly, that's somewhat implied. And there's the question of, again, what how will this fit into, areas where normally overtime has not been charged? Again, that's gonna be, I think, a question of the IRS reading those rules under the labors standards. Lana will turn it over. I think we have some some a bit to wrap up here. Thanks, Chris. Thanks, to all of our speakers, and thanks everyone for attending. If you have not completed it already, we do, have a quick survey that we launched. If you can answer that, that would be great. A copy of the PowerPoint slides and a recording of today's webinar will be made available to all attendees via email for business days post event. Thank you again, and have a great rest of your day.