Tax Newsletter - March 2025

UPDATE: BOI Reporting Deadline Now March 21

On Feb. 18, a Texas district court lifted the last remaining nationwide block against enforcing the Corporate Transparency Act (CTA), restoring beneficial ownership information (BOI) reporting requirements.

To allow businesses additional time to comply, FinCEN has extended the BOI filing deadline by 30 days for most companies. The new filing deadline is March 21, 2025, unless a later date applies to businesses in a federally declared disaster area. FinCEN is also considering further modifications to reporting requirements and deadlines, particularly for lower-risk small businesses.

FIN-2025-CTA1

February 18, 2025 - FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days; Announces Intention to Revise Reporting Rule

With the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect. However, because the Department of the Treasury (Treasury) recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.

Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.

FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.

UPDATED DEADLINES

For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.

Reporting companies that were previously given a reporting deadline later than March 21, 2025, must file their initial BOI report by that later deadline.

For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.

As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv 01448 (N.D. Ala.) - namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024) - are not currently required to report their beneficial ownership information to FinCEN at this time.

FINCEN NOTICE

Reporting companies can report their beneficial ownership information directly to FinCEN, free of charge, using FinCEN’s E-Filing system available at https://boiefiling.fincen.gov.

Also, the U.S. Court of Appeals for the 5th Circuit will hear oral arguments on April 1 regarding an injunction in Texas Top Cop Shop, a case that could further impact CTA enforcement.

The Treasury Department is still pushing for eventual enforcement of the Corporate Transparency Act's (CTA) beneficial ownership reporting provisions - filing a notice of appeal Wednesday in a case that is currently preventing the filing requirement from going into effect.

It is important to note that on Feb. 10, the U.S. House of Representatives voted 408-0 to postpone the CTA’s reporting deadline to Jan. 1, 2026. The measure is now pending in the Senate.

On February 10, the House passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736) unanimously, with a 408-0 vote. Under the bill, existing entities that are "a small business concern" as defined under 15 U.S.C. 632 would have until January 1, 2026, to submit reports about their beneficial owners to Treasury's Financial Crimes Enforcement Network (FinCEN).

If Congress does not act quickly enough, the requirements could go into effect depending on the outcome of Smith and the several other pending cases that challenge the reporting requirements. FinCEN has, however, said it will provide a 30-day extension if and when the injunction in Smith is stayed.

Tax season is always a stressful time, but you can keep the impact to a minimum and avoid the negative consequences of burnout by taking a proactive approach. A recent survey revealed that 82% of tax professionals identify as feeling burned out. It’s a significant issue for tax professionals and accountants.

People experiencing burnout may find it hard to get their days started and even harder to keep going. Productivity tends to go down as their focus wanes. Eventually, that lack of concentration turns into minor mistakes and omissions.

3 Steps to Avoid Burning Out During Tax Season

• Set boundaries

There is no shortage of guidance on how to avoid burnout. Most will tell you to set boundaries, and that is good advice. People, in general, have a hard time saying no or taking breaks when the work is piling up (like in the first two weeks of April). If you are guilty of those behaviors or notice those tendencies in your coworkers, begin combatting burnout by establishing some boundaries.

• Dig deeper

The problem is that boundaries are only a tiny piece of the problem. Many people experience burnout because of systemic issues, meaning that the structure of their workplaces (maybe even lives) is inherently flawed. Take the time to set up a company culture that helps people do their best work and do fewer tasks that they could easily hand off.

• Delegate and automate

Most people do more than they need to. They spend a fair chunk of time doing tasks that could be delegated or automated somehow, and then they wonder why they don’t have enough hours in the day.

You can avoid burnout and take control of your life by focusing on the activities that mean the most to you (professionally or otherwise) and outsourcing the rest.

1. Prioritize
2. Assess staffing needs
3. Be proactive, not reactive
4. Establish order
5. Manage expectations
6. Clear your desk
7. Bundle tax responsibilities
8. Anticipate complex issues
9. Stay focused
10. Learn to say no
11. Set reasonable, achievable, daily goals
12. Take care of yourself
13. Recognize your team’s hard work
14. Be flexible
15. Plan a vacation for the end of tax season

From January 2023 through March 2024, the IRS processed over 1.5 million dishonored (or bounced) checks submitted as subsequent payments (e.g., payments received after a return is filed) totaling nearly $4.7 billion. 

The IRS does not have a computer program that delays refund issuance for sufficient time to allow it to receive dishonored check information from financial institutions. Therefore, the IRS is at risk of generating millions of dollars in erroneous refunds.

TIGTA identified 7,765 individual taxpayers who may have received approximately $43.7 million in erroneous refunds based on dishonored checks that posted to their tax accounts from January 2023 through March 2024. TIGTA recommended the IRS should ensure a computer programming change is completed to delay these types of refunds for two cycles to provide the IRS time to receive dishonored check information from financial institutions. IRS management agreed.

While the reason the evaluation was initiated is redacted, TIGTA made clear that the IRS must not delay acting on the matter. TIGTA's evaluation was designed to assess the IRS' processes and procedures to identify and prevent erroneous refunds from dishonored checks that were submitted as subsequent payment. A subsequent payment is defined as "a payment on an account for a filed, but not full paid tax return."

 Issue 3: Revenue Procedure 2025-16

Provides: (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year 2025; and (2) a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2025. The tables detailing these depreciation limitations and amounts used to determine lessee income inclusions reflect the automobile price inflation adjustments required by section 280F(d)(7). For purposes of this revenue procedure, the term “passenger automobiles” includes trucks and vans.

Individuals with Social Security numbers or Individual Taxpayer Identification Numbers (ITIN) can create or securely access their Individual Online Account and get the latest information about their federal tax account.

With an IRS online account, taxpayers can:

• Access their tax records, including their Adjusted Gross Income from their most recently filed tax return.
• View, approve and sign authorizations from their tax professional.
• Request and view their Identity Protection PIN (IP PIN), a six-digit number known only to the taxpayer and the IRS that prevents someone else from filing a tax return using their information.
  • Check the refund status.
  • Validate and save bank accounts.
  • View balance and payment history and create a payment plan.
  • Make a payment and schedule or cancel future payments.
  • Get virtual assistance for balance due and payment-related questions.
  • Manage their communication preferences. 

➡️ Skip the wondering: Check refund status online 

The popular Where’s My Refund? tool on IRS.gov has the most up-to-date information available about a taxpayer’s refund status. Recent improvements to Where’s My Refund? allow taxpayers to see more detailed refund status messages in plain language, reducing the need for taxpayers to call the IRS.

Most Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) related refunds should be available in bank accounts or on debit cards by March 3 if taxpayers chose direct deposit and there are no other issues with their tax return.

➡️ Skip the phone: Get answers to tax questions online 

The Interactive Tax Assistant (ITA) tool on IRS.gov provides answers to several tax questions specific to individual circumstances. Based on input, ITA determines a person’s filing status, whether they should file a tax return, if someone is an eligible dependent, if a type of income is taxable, if a filer is eligible to claim a credit, if an expense is deductible and more.

➡️ Skip the worry: Use an IP PIN to protect against tax-related identity theft

An Identity Protection PIN (IP PIN) is a proactive way to protect against tax-related identity theft. Tax-related identity theft occurs when someone uses stolen personal information, including Social Security numbers, to file a tax return claiming a fraudulent refund. If a person suspects they are a victim of identity theft, they should continue to pay their taxes and file their tax return, even if they must file a paper return.

An Identity Protection PIN (IP PIN) is a six-digit number known only to the taxpayer and the IRS that prevents someone else from filing a tax return using their Social Security number or Individual Taxpayer Identification Number. It helps the IRS verify a person’s identity when they file their electronic or paper tax return. The fastest way to request and receive an IP PIN is by creating an Individual Online Account. If someone wishes to get an IP PIN and they don’t already have an account on IRS.gov, they must register to validate their identity.

The Department of the Treasury and the Internal Revenue Service issued proposed regulations today addressing several SECURE 2.0 Act provisions relating to catch-up contributions, which are additional contributions under a 401(k) or similar workplace retirement plan that generally are allowed with respect to employees who are age 50 or older.

This includes proposed rules related to a provision requiring that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions.

The proposed regulations provide guidance for plan administrators to implement and comply with the new Roth catch-up rule and reflect comments received in response to Notice 2023-62, issued in August 2023.

The proposed regulations also provide guidance relating to the increased contribution limit under the SECURE 2.0 Act for certain retirement plan participants. Affected participants include employees between the ages of 60-63 and employees in newly established SIMPLE plans.

The IRS needs your help in identifying practitioners who fail to meet their obligations under Circular 230, including misconduct in the preparation of taxpayers’ federal tax returns. Use Form 14157, Return Preparer Complaint, to report suspected misconduct by practitioners and check the appropriate box if the preparer is an attorney, certified public accountant or enrolled agent.

➡️ Reminder: Review your IRS e-file Application to ensure the information on the application is current.

Publication 3112, IRS e-file Application & Participation states that you must revise your e-file application within 30 days of any change. Providers must review and update their IRS e-file application information electronically via e-services.

Update your application with changes to:

• Principals
• Responsible Officials
• Personal Credential
• Address
• Phone numbers
• URL information

Some updates may require you to re-submit the application. If the Application Status, located in the upper right-hand corner of the summary page, is in “Resubmission Required” status, the application must be signed and resubmitted.

ATTN: Authorized IRS e-file Providers/EROs

As a reminder, Authorized IRS e-file Providers are required to follow the safeguarding and unauthorized use policies set forth in Publication 3112, IRS e-file Application & Participation, and Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns.

Providers must protect their EFINs and passwords from unauthorized use and never share them. Prohibited actions include:

• Accepting payment for the use of an EFIN (e.g., renting/ leasing/ selling to someone).
• Transferring EFINs to another entity when transferring the business by sale, gift or other disposition.
• Renting, leasing or purchasing an EFIN from someone else.
• Reselling or rebranding software with embedded EFINs.

Only the IRS has the authority to issue EFINs.

An Electronic Return Originator (ERO) may only initiate the electronic submission of returns that the ERO prepared or collected from a taxpayer or an Authorized IRS e-file Provider.

With many provisions of the 2017 Tax Cuts and Jobs Act (TCJA P.L. 115-97) set to expire at year end and a push for fiscal responsibility in any tax reform, lawmakers are making their priorities known. But questions remain about where lawmakers stand on the future of the Child Tax Credit (CTC) set to be halved in 2026 under current law.

Under § 24, taxpayers can claim credit for each "qualifying child," with phaseouts for taxpayers at certain income levels. Under the TCJA, for the 2018-2025 tax years (other than 2021), the CTC is $2,000 per qualifying child. After 2025, it is set to drop back down to $1,000 per qualifying child.

A "qualifying child" is one who is under age 17 at the end of the tax year and for whom a taxpayer is allowed a dependency deduction under §151

The TCJA added a requirement that a Social Security number be provided for each qualifying child for whom the CTC is claimed - that requirement expires at year end.

The CTC is also partially refundable for certain taxpayers. For tax years 2018-2025, the refundable credit per qualifying child can't exceed $1,400, as adjusted for inflation. After 2025, the $1,400 limit and inflation adjustment won't apply.

In addition, refundability is currently limited to 15% of a taxpayer's earned income over $2,500, with an alternate calculation for families with three or more children. In 2026, the earned income threshold will be $3,000 regardless of the number of children for which the CTC is claimed.

For 2021, the CTC was temporarily increased to $3,600 per child under six and $3,000 per child aged six to 17. It also was provided via monthly payments and made fully refundable.

This year's legislative proposals.  A recent House listing of tax options contains just one proposal specifically on the CTC - making permanent the requirement for taxpayers to provide a Social Security number for each child for which the CTC is claimed. That requirement went into effect for 2018-2025 under the TCJA but is set to expire next year. Extending it comes with $27.7 billion in savings over 10 years, according to the menu.

Other related proposals on the menu include eliminating head of household status and restructuring the Earned Income Tax Credit into “worker credit" and "child credit."

Many provisions of the Tax Cut and Jobs Act (TCJA, P.L. 115-97) expire in 2025, others in 2026 and beyond. Below is a look at all expiring provisions; what happens if Congress does not extend them; and what the House, Senate, and the Administration are proposing.

Note that the CBO Budgetary Estimate assumes the TCJA changes are extended permanently. A (negative number) generally indicates reduced revenues and hence an increase in the deficit. A positive number generally indicates increased revenues and hence a reduction in the deficit.

INDIVIDUALS AND FAMILIES

➡️ Individual income tax rates : Code Sec. 1(j)

Current Law: Seven brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%. Income thresholds are indexed annually to chained CPI. Expires at the end of 2025.

If TCJA Expires: Marginal rates will revert to their permanent pre-TCJA levels of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. Aside from the first two brackets (10% and 15%) these rates apply over different ranges of taxable income than the TCJA rates. These income ranges are annually adjusted for inflation.

CBO Budget Estimate: ($2.2 trillion)

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Increased standard deduction amounts: Code Sec. 63(c)(7)

Current Law: Under the TCJA, basic standard deduction amounts in 2018 nearly doubled to $12,000 for single filers, $18,000 for head of household filers, and $24,000 for married joint filers. These amounts were annually adjusted for inflation after 2018. In 2024, these amounts are $14,600, $21,900, and $29,200, respectively. Expires at the end of 2025.

If TCJA Expires: The basic standard deduction amounts will revert to their TCJA levels and then be adjusted for inflation. For 2018, prior to the TCJA, the basic standard deduction amounts for 2018 would have been $6,500 for single filers, $9,550 for head of household filers, and $13,000 for married taxpayers filing jointly.

CBO Budget Estimate: ($1.3 trillion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Suspension of personal exemptions/dependency exemptions: Code Sec. 151(d)(5)

Current Law: Under the TCJA, the personal exemption amount was temporarily reduced to $0, effectively suspending the provision. Expires at the end of 2025.

If TCJA Expires: Personal exemptions will revert to their pre-TCJA levels and then be adjusted for inflation.

CBO Budget Estimate: $1.7 trillion.

Suspended Deduction for Personal Exemptions - 2018–2025.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Enhanced child tax credit: Code Sec. 24(h)

Current Law: The child tax credit allows a taxpayer to reduce their federal income tax liability by up to $2,000 per qualifying child. Lower-income taxpayers with little or no federal income tax liability may be eligible to receive some or all of the credit as the refundable portion of the credit - the additional child tax credit, or ACTC. For higher-income taxpayers, the credit amount phases down if income exceeds the phaseout threshold. Maximum credit: $2,000 per child Maximum ACTC: $1,400 per child (The ACTC is adjusted for inflation and equals $1,700 in 2024.) Formula for the ACTC: 15% of earned income above $2,500, up to the maximum credit Phaseout threshold: $200,000 unmarried taxpayers / $400,000 married taxpayers. Aside from the max ACTC amount, none of the parameters are adjusted for inflation.

If TCJA Expires: The child credit will revert to its pre-TCJA structure. Maximum credit: $1,000 per child. Maximum ACTC: $1,000 per child. Formula for the ACTC: 15% of earned income above $3,000, up to the maximum credit. Phaseout threshold: $75,000 unmarried taxpayers/$110,000 married taxpayers. None of the parameters are adjusted for inflation.

CBO Budget Estimate: ($735 billion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Credit for other dependents: Code Sec. 24(h)(4)

Current Law: The “credit for other dependents” or “other dependent credit” (ODC) allows taxpayers to reduce their income tax liability by $500 for each dependent that is ineligible for the child credit.

If TCJA Expires: The credit will expire.

CBO Budget Estimate: Included in cost of child tax credit, above.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

ABOVE-THE-LINE DEDUCTIONS

➡️ Limitation of moving expense deduction to Armed Forces personnel: Code Sec. 217(k)

Current Law: Only members of the Armed Forces can claim an above-the-line deduction for moving expenses incurred as a result of work at a new location (effectively repealing this deduction for other taxpayers). Other taxpayers are not eligible to claim this deduction. Expires at the end of 2025.

If TCJA Expires: All eligible taxpayers will be able to claim an above-the-line deduction for moving expenses incurred as a result of work at a new location, subject to certain conditions dealing with the individual's employment status as well as the distance of the move. (These conditions will not apply to members of the Armed Forces.)

CBO Budget Estimate: $10 billion.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ 60% AGI limit for cash donations to public charities: Code Sec. 170(b)(1)(G)

Current Law: The TCJA temporarily increased the AGI limit for cash donations made to public charities from 50% to 60%. Other limitations based on the form of the donation and the recipient organization were unchanged by the TCJA. Expires at the end of 2025.

If TCJA Expires: Cash contributions to public charities will generally be limited to 50% of the taxpayer's AGI.

CBO Budget Estimate: $1.244 billion. This is the budget estimate for all itemized deductions.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ $10,000 limit on state and local tax deduction: Code Sec. 164(b)(6)

Current Law: Taxpayers who itemize their deductions can deduct up to $10,000 in state and local income, sales (in lieu of income), and property taxes, as well as foreign income taxes (but not foreign real property taxes). Property taxes associated with carrying on a trade or business are fully deductible (i.e., not subject to a cap). Expires at the end of 2025.

If TCJA Expires: The $10,000 cap on this deduction will not apply and hence taxpayers will be able to deduct all eligible state and local income, sales (in lieu of income), and property taxes, as well as foreign income taxes. Taxpayers will be also able to deduct foreign real property taxes.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ $750,000 limit on home mortgage debt on which interest may be deducted, and disallowance of deduction for interest on home equity debt: Code Sec. 163(h)(3)(F)

Current Law: Taxpayers who itemize their deductions may deduct interest paid on the first $750,000 ($375,000 for married filing separately) of mortgage debt (combined for first and second homes). The limitation applies to new loans incurred after December 15, 2017. Expires at the end of 2025.

Taxpayers with mortgage debt incurred on or before December 15, 2017, who itemize their deductions, may deduct interest on the first $1 million ($500,000 for married filing separately) of combined mortgage debt.

No deduction is allowed for interest payments made for new or existing home equity debt if such debt is used for purposes unrelated to the property securing the loan.

If TCJA Expires: The $750,000 limitation will increase to $1 million of combined (first and second home) acquisition debt regardless of when the debt was incurred. The interest on the first $100,000 of home equity debt will also be deductible, regardless of whether or not the taxpayer incurred the debt to finance costs associated with the home.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Nondeducibility of personal casualty and theft losses other than those resulting from disasters: Code Sec. 165(h)(5)

Current Law: Taxpayers who itemize their deductions can generally claim a deduction only for non-compensated personal casualty and theft losses associated with a disaster declared by the President under Section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Casualty losses are generally deductible if they exceed $100 per casualty, and to the extent aggregate net casualty losses exceed 10% of adjusted gross income (AGI). Expires at the end of 2025.

If TCJA Expires: Taxpayers will be able to claim an itemized deduction for non-compensated personal casualty and theft losses regardless of whether the losses result from a federally declared disaster.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: Insurance, home repairs and construction, emergency services and disaster relief, retail, and legal and financial services.

➡️ Gambling losses, deductibility: Code Sec. 165(d)

Current Law: Taxpayers who itemize their deductions can deduct gambling losses, provided those losses do not exceed gambling winnings included in gross income. Gambling losses include deductible expenses incurred in carrying on the gambling activity, for both recreational and professional gamblers. Expires at the end of 2025.

If TCJA Expires: Gambling losses will no longer include expenses incurred in carrying on the gambling activity. Professional gamblers will be able to deduct ordinary and necessary non-wagering business expenses.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Suspension of miscellaneous itemized deductions: Code Sec. 67(g)

Current Law: There is no itemized deduction for certain miscellaneous expenses such as unreimbursed employee expenses or tax preparation fees. Expires at the end of 2025.

If TCJA Expires: Individual taxpayers who itemize their deductions will be able to deduct miscellaneous expenses to the extent that such expenses collectively exceed 2% of their AGI. Expenses subject to the 2% floor will include unreimbursed employee expenses, tax preparation fees, and certain other expenses.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Suspension of overall limitation on itemized deductions: Code Sec. 68(f)

Current Law: The total amount of itemized deductions that can be claimed by a taxpayer is the sum of all allowable itemized deductions and there is no overall limitation on itemized deductions. Expires at the end of 2025.

If TCJA Expires: For taxpayers with AGI above certain thresholds, the total amount of itemized deductions will be reduced by 3% of the amount by which their AGI exceeds the threshold. (For 2018, before the TCJA, the thresholds once adjusted for inflation would have been $320,000 for married taxpayers filing jointly and $267,700 for singles.)

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

EXCLUSIONS

➡️ No employee exclusion for “qualified bicycle commuting reimbursement” qualified transportation fringe: Code Sec. 132(f)(8)

Current Law: Employer reimbursements for bicycle commuting expenses are considered wage income and therefore subject to income and employment (i.e., “payroll”) taxes. Expires at the end of 2025.

If TCJA Expires: Up to $20 per month of qualified employer reimbursements for bicycle commuting expenses will be excludible from wage income, and hence not subject to either income or employment (i.e., “payroll”) taxes.

CBO Budget Estimate: $160 million.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: Bicycle and sporting goods retailers, commuter and transportation services, corporate wellness programs, urban planning and infrastructure, and environmental and advocacy groups.

➡️ Limitation of moving expense reimbursement exclusion to Armed Forces personnel: Code Sec. 132(g)(2)

Current Law: Employer reimbursements for moving expenses are only excludible from income and wages for members of the Armed Forces and pursuant to a military order for a permanent change of station. For all other employees, such benefits are considered wage income and hence subject to income and employment (i.e., “payroll”) taxes. Expires at the end of 2025.

If TCJA Expires: Qualified moving expense reimbursements from an employer will be excludible from an employee's wage income, and hence not subject to either income or employment (i.e., “payroll”) taxes.

CBO Budget Estimate: $7 billion.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Combat zone tax benefits for members of Armed Forces in Sinai Peninsula: Code Section Affected: [Various]

Current Law: Members of the Armed Forces serving in a combat zone (and their families) are entitled to several tax benefits, including:

(1) an exemption from income and employment (“payroll”) taxes on certain military pay received during any month in which the member served in a combat zone (Code Sec. 112 and Code Sec. 3401(a)(1));

(2) an exemption from income taxes during the year that the member dies and the year prior while serving in a combat zone (Code Sec. 692);

(3) special estate tax rules where death occurs in a combat zone (Code Sec. 2201);

(4) special benefits to surviving spouses (Code Sec. 2(a)(3) and Code Sec. 6013(f)(1));

(5) an extension of tax deadlines, including for filing returns, making payments, claiming credits or refunds, and certain other deadlines (Code Sec. 7508);

(6) an exclusion of telephone excise taxes (Code Sec. 4253(d)).

Typically, combat zones are designated by the President in an Executive Order as an area where the Armed Forces are or have engaged in combat. Under the TCJA, the Sinai Peninsula is statutorily presumed to be a combat zone. Expires at the end of 2025.

If TCJA Expires: The Sinai Peninsula will not be statutorily presumed to be a combat zone. Unless the Sinai Peninsula is designated as a combat zone under the usual process (Code Sec. 112), members of the Armed Forces serving in this area will not be eligible for combat zone tax benefits.

CBO Budget Estimate: ($7 million).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

ALTERNATIVE MINIMUM TAX

➡️ Increased AMT exemption amounts and more favorable exemption phase-out rules: Code Sec. 55

Current Law: For 2024 the AMT exemption amounts are $85,700 for singles/heads of households and $133,300 for married couples. The AMT exemption amount phases down when a taxpayer's income exceeds a phaseout level. These levels are $578,150 for singles/head of households and $1,156,300 for married couples. Expires at the end of 2025.

If TCJA Expires: The AMT exemption and exemption phaseout will revert to pre-TCJA levels and then both will be adjusted for inflation.

For 2018, prior to the TCJA, the higher 28% rate applied to incomes above $191,500 for married couples.

For 2018, prior to the TCJA, the exemption amounts were $55,400 for singles/heads of households and $86,200 for married couples and the exemption phaseouts were $123,100 for singles/heads of households and $164,100 for married couples in 2018.

(Note: Personal exemptions will again be in effect upon the expiration of the TCJA. See “Personal exemptions.”)

CBO Budget Estimate: ($1.4 trillion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

ABLE ACCOUNTS

➡️ Increase in ABLE account contribution limit: Code Sec. 529A(b)(2)(B)

Current Law: Under the TCJA, a designated beneficiary who is employed can contribute an additional amount to their ABLE account (above the annual gift-tax exclusion amount). The additional amount is equal to the lesser of (1) the applicable federal poverty level for a one-person household in the prior year, or (2) the beneficiary's compensation for the year. A beneficiary cannot contribute this additional amount for the year if any contribution is made on their behalf to certain defined contribution plans. Expires at the end of 2025.

If TCJA Expires: Designated beneficiaries won't be able to contribute an additional amount.

CBO Budget Estimate: less than $500,000.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Pre-2027 saver's credit allowed for contributions to ABLE accounts: Code Sec. 25B(d)(1)(D)

Current Law: Designated beneficiaries who make qualified contributions to their ABLE account can qualify for a nonrefundable (pre-2027) saver's credit of up to $1,000. Expires at the end of 2025.

If TCJA Expires: Designated beneficiaries will not be able to claim the saver's credit for their contributions. Note: The SECURE 2.0 Act of 2022 (Section 103 of P.L. 117-328) included a provision aimed at promoting retirement savings among low-income households, that effectively repeals the saver's credit under IRC Section 25B and replaces it with a saver's match under IRC Section 6433, effective 1/1/2027.

CBO Budget Estimate: ($2 million).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ 529-to-ABLE account rollover: Code Sec. 529(c)(3)(C)(i)(III)

Current Law: Rollovers from a 529 account to an ABLE account (plus any other contributions to the account for the year) that are less than or equal to the annual ABLE contribution limit are not subject to income taxation, provided that the accounts have the same designated beneficiary (or the designated beneficiaries of the two accounts are members of the same family). The portion of the rollover (plus any other contributions to the account) in excess of the annual contribution limit is taxable. Expires at the end of 2025.

If TCJA Expires: All rollovers from 529 accounts to ABLE accounts will be subject to taxation.

CBO Budget Estimate: ($4 million).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

BUSINESS PROVISIONS

➡️ Qualified business income deduction: Code Sec. 199A

Current Law: Pass-through business income is taxed according to ordinary individual income tax rates. The TCJA created a deduction equal to 20% of qualified business income. Expires at the end of 2025.

If TCJA Expires: The Code Sec. 199A deduction will expire. Hence pass-through business income will generally be taxed according to ordinary individual income tax rates without a deduction for qualified business income.

CBO Budget Estimate: ($684 billion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: Small businesses, professional services, real estate, healthcare, retail and wholesale.

➡️ Limitation on losses of noncorporate taxpayers: Code Sec. 461(l)

Current Law: For taxpayers other than C corporations, a deduction in the current year for excess business losses is temporarily disallowed, originally through 2026 by the TCJA and subsequently extended to 2028 by the Inflation Reduction Act (P.L. 117-169, IRA). In addition, such losses are treated as a NOL carryover to the following year. Expires at the end of 2028.

If TCJA Expires: Businesses will generally be permitted to carry over a net operating loss (NOL) to certain past and future years. Under the passive loss rules, individuals and certain other taxpayers will be limited in their ability to claim deductions and credits from passive trade and business activities, although unused deductions and credits can generally be carried forward to the next year. Similarly, certain farm losses may not be deducted, in the current year, but can be carried forward to the next year.

CBO Budget Estimate: $22 billion.

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Expensing of property/bonus depreciation: Code Sec. 168(k)

Current Law: The TCJA temporarily allowed full expensing (i.e., 100% bonus depreciation) through 2022, before phasing down ratably through the end of 2026. For long-production-period property, the phasedown period begins after 2024. Expires at the end of 2026.

If TCJA Expires: Businesses will generally capitalize the cost of property used in a trade or business or held for the production of income and recover such cost over time through annual deductions for depreciation or amortization.

CBO Budget Estimate: ($378 billion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: Manufacturing, construction, technology, retail, and agriculture.

➡️ Citrus plants lost by casualty: Code Sec. 263A(d)(2)(C)(ii)

Current Law: The uniform capitalization (UNICAP) rules address the method for determining costs that taxpayers are required to capitalize or treat as inventory. They generally apply to property produced in a trade or business or acquired for resale. One exception is for edible citrus plants lost or damaged by reason of a casualty or similar event. The exception may apply to temporarily through the TCJA to third parties if certain requirements are met. Expires at the end of 2027.

If TCJA Expires: The exception for third parties would no longer apply.

CBO Budget Estimate: ($31 million).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: Citrus Farming, Agricultural Supply and Equipment, Insurance and Risk Management, and Agricultural Services.

OTHER PROVISIONS

➡️ Increased estate and gift tax exclusion amount: Code Sec. 2010(c)(3)(C)

Current Law: Estate and gift taxes are levied at a rate of 40% on transfers after excluding a fixed amount from taxation. For decedents who die in 2024, the exclusion amount is $13,610,000 per decedent ($10 million per decedent statutorily adjusted annually for inflation). Expires at the end of 2025.

If TCJA Expires: The estate and gift tax exclusion amount will be reduced from $10 million per decedent to $5 million per decedent statutorily and then adjusted annually for inflation.

CBO Budget Estimate: ($167 billion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a

➡️ Employer credit for paid family and medical leave: Code Sec. 45S

Current Law: In general, a 12.5% credit on eligible wages paid to qualifying employees while they are on family and medical leave. Under TCJA, this credit originally expired on Dec. 31, 2019. The Taxpayer Certainty and Disaster Relief Act of 2019 (Division Q of P.L. 116-94) extended the credit through 2020, while the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Division EE of P.L. 116-260) extended it through 2025.

If TCJA Expires: No credit will be available for employer-provided paid family and medical leave.

CBO Budget Estimate: ($5 billion).

• Administration Proposal: TBD
• House Proposal: TBD
• Senate Proposal: TBD
• Industry Affected: n/a