Tax Talk & Business Tips

As you prepare your 2024 tax return, it’s also time to look ahead to 2025, a year of major tax changes. Many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire, meaning higher taxes for individuals and businesses unless Congress takes action.

Key Tax Changes Set to Expire

For Individuals

• Top Tax Rate: Increases from 37% to 39.6% for individuals, estates, and trusts.
• Standard Deduction: Drops from $15,000 to $8,300 (individuals) and $30,000 to $16,600 (joint filers), meaning more taxpayers may need to itemize.
• State & Local Tax (SALT) Deduction: The current $10,000 cap expires, allowing for larger deductions.
• Child Tax Credit: Decreases from $2,000 to $1,000 per child, with income limits lowering to $75,000 (individuals) and $110,000 (joint filers) (down from $200,000/$400,000).
  
  

For Businesses & Business Owners

• Bonus Depreciation: Drops from 60% in 2024 to 40% in 2025, then 20% in 2026, reducing tax benefits for asset purchases.
• Qualified Business Income Deduction (QBID): The 20% deduction for pass-through businesses (LLCs, S-Corps, sole proprietors) will no longer be available.
• Estate & Gift Tax Exemption: Cuts in half from $13.61 million per person to pre-TCJA levels of $6.8 million, impacting high-net-worth families.
  
  

What’s Next? Will Congress Act?

Congress has until December 31, 2025, to take action. With Republican control of both chambers and the presidency, many industry experts anticipate a tax reform bill could pass by May 2025. Possible changes under discussion include:

For Individuals

• Permanently higher standard deduction
• Elimination of taxes on:
  • Tips
  • Certain Social Security benefits
  • Overtime pay
  • Americans living abroad
• Increased tax credits for family caregivers
• Deduction for auto loan interest payments
• Repeal of the SALT deduction cap

For Businesses & Business Owners

• Corporate tax rate cut from 21% to 15%
• Reinstatement of 100% bonus depreciation for asset purchases
• Permanent Qualified Business Income Deduction (QBID)
• Restoration of Research & Development (R&D) tax credits under Sec. 174

How Certus is Preparing You

These changes could significantly impact your tax liability, deductions, and overall financial strategy. Certus is actively monitoring legislative developments, so you don’t have to.

• Regular Updates: Expect newsletters and emails on the latest tax changes.
• Tax Planning Meetings: Proactive planning to maximize deductions and minimize tax burdens.
• Compliance & Strategy: Helping you navigate new tax laws and stay optimized.

Take Action Now

For now, let’s focus on your 2024 tax return. If you haven’t already:

• Sign your engagement letter
• Upload your tax documents
• Schedule an appointment with your tax preparer|

Questions? We’re here to help! Thanks for trusting Certus with your tax needs—we’ll keep you informed every step of the way.