Name: jeff kuzmich - Migrate_2025_Tax_Bill_07232025_4991780
Uploaded: 2026-02-26T05:53:14.615Z
Duration: 54 min 36 s
Description: jeff kuzmich - Migrate_2025_Tax_Bill_07232025_4991780

Transcript for "jeff kuzmich - Migrate_2025_Tax_Bill_07232025_4991780": Hello, and welcome to today's webinar. Today's audio is through your computer speakers only. There is no call in number. To refresh or reload your webinar browser session, for a PC, press the F5 key or Mac, press command R. To download and print today's content and to access additional resources, refer to the Files and Resources window. If you have questions during today's webinar, you can notify us through the Ask Us a Question window. Please note that it may not be possible for us to address each question submitted individually. However, all questions are valuable in helping us develop additional resources for your business. Calls will pop up on your screen along with a ringtone. Be sure to click submit to record your choice. And to ensure you see the pop up polls, be sure you have disabled all pop up blockers on your device. Please note, this presentation does not constitute legal advice and is for informational purposes only. Thank you again for joining us. We will now transition into today's topic. Hey everybody, thank you so much for joining us. My name is Gene Marks and welcome. I'm glad that you are here. We have a really great discussion planned for today. This webinar is really designed and targeted at you, the small business owner, person that is running the small business, because I don't know if you guys have heard this or not, but there's kind of been a few tax changes that's happened. Just a few. Just a few in the past couple of weeks. We want to go through them all. This is a webinar that is going to be bringing you up to date on all what's hot and what changed as part of the big beautiful tax bill. Like we said before, this is not legal advice or anything like this, but it's advice from a couple of our experts. I will be chiming in as well. And really what this is designed to do is for you to take notes and to think about it and to take some of these questions back to your accountant or to your financial experts. You can learn more and make sure the information that you're getting gets tailored to your specific circumstance in your business. But you really want to leverage it because I got news, taxes are what, 15% to 20 even more of our income when you're running a business. A big deal. And my smartest clients are the ones that are keeping track of this stuff, leveraging these benefits and making sure they are minimizing the tax impact that we all face as business owners. So without further ado, let's talk about who I'm going to be talking with. I have Zachary Keep that's here with me to my side here in Rochester, New York. Zachary is the Compliance Risk Manager for Paychex. And all the way from sunny Florida, Barbara Welman, who is an attorney and small business advocate. Her company, Big Ideas for Small Business Inc. Barbara is also the author of the JK Lasser Tax Guide, which is fantastic. I've known Barbara for a number of years and you're not going to get better tax advice from a better tax expert than both Zachary and Barbara. So a few things that we'll also want to make sure that you're aware of what you're going to learn from here. Right? We're going to go through the key changes and what they mean for your business. We're going to talk about tips that you can take away to simplify your tax compliance and avoid any common pitfalls. We're going to talk about strategies to position your business under these new regulations as well. So all of these different things we're going to do, and we're going to start with capital investments. This is an area that Zach is going to talk about and it all involves SAC, purchasing assets and the benefits around So, without further ado, my co presenter Barbara and I are going to jump right into this. To everybody in the audience today, you probably all know that the big beautiful bill is just that. It is a big bill. So we're gonna be moving at a very quick clip today. I would encourage everyone avail yourself of that question window because we've got some expert folks on the line trying to answer as many of those questions as we can. With that, let's get started. The first thing we're gonna talk about is bonus depreciation. And what this really is is the ability to write off for the purchase of large eligible assets. That deduction is 100%, and that is going to be a permanent deduction, which is very exciting. I think that's gonna affect a lot of folks that are hearing my voice right now. You should know that this is gonna be for eligible property that is bought and also placed in service on or after January 19. So we are living in an environment today where this matters to us all. Barbara, maybe you have some thoughts on how a small business might wanna prepare to take advantage of this. Absolutely. I mean, look at your equipment. What needs to be replaced? Are you tired of repairing everything? Also think about leasehold improvements which can qualify. So maybe there are some build outs that you want to do. Decide can you afford to do this? What's your budget look like? Think about financing. You can finance your purchases and that has no impact on what you can deduct. So let's say you're spending 10X and you finance 80X, you're still getting to deduct the 10X and in fact it can even help cash flow because you're writing everything off now even though you're paying later. Finally, think about the impact of this deduction on your overall tax strategies because by reducing your income through this write off, you may be eligible for additional tax breaks that you wouldn't have qualified otherwise or maybe larger tax breaks, the for qualified business income deduction. So think about the specific benefits and also the larger picture. Thank you, Barbara. Let's go to another sort of hot topic within the OB3, let's call it that for the sake of time. Domestic research and development expenditures. This is again, only for domestic and it's for costs that are incurred in 2025 and beyond. And there's a couple of different options that a business has when it comes to the ability to expense for r and d. They can deduct those costs in the year the costs are incurred. They can amortize it over the useful life of not more than sixty months. Or if you like, you can even spread that out over a ten year period. And r and d, of course, is a hot topic right now. So again, something that's impactful to a wide range of businesses. Barbara, what's your thoughts on this one? Qualified small businesses, meaning businesses that have average annual gross receipts in the three prior years can go back to 2023, 2024, 2022 and decide whether gee, I should have expensed then and now I have the opportunity to do this and this means getting a tax refund now. You have more funds available to make more R and D if you want. We don't know how this is going to play out in terms of amended returns, we have to watch for IRS guidance. All businesses, regardless of size, can choose to, if they've been amortizing for those five years, they can now choose to accelerate that and take the remaining expenses now. So again, just look at these opportunities, maybe money in your pocket. That's a good point. This one, I found fascinating. The, the ability to expense qualified production property. And what's nice about this is we know what production property is. That's going to be manufacturing, It's gonna be refining, agricultural, and chemical production facilities. So maybe not everybody in the audience, but I'm willing to bet at least some of the folks in the audience might be able to take advantage of this. And this is a big deduction, you know, 100%. There's a little bit of clarity on what doesn't count. Unfortunately, office buildings, strip malls, lodgings, parking, things like that, not applicable. But if you're in that manufacturing and refining space, this is a deduction that, is potentially a big one for you. And it's gonna be, effective in an interesting way. Barbara and I were actually chatting about this a little bit during our rehearsal. And, you know, when you're putting these types of facilities into, into play when you're building and getting ready to spin up, it takes time. So you need to know that it's for a facility where construction has begun on or after 01/19/2025 and is wrapped up before 01/01/2029, placed in service before the start of 2031. It's a little sobering to think how close 2031 is. So, Barbara, I know you might have, a couple insights on this and how the folks out there might, be able to best leverage it. Yeah, as you said, Zach, this is an amazing opportunity because usually you have to depreciate the cost of a building over thirty nine years. So really, never heard of this kind of break before, it's brand new, but you have to get going. What we know when you have to build something, a lot's involved, you have to acquire the land, you have to get the designs, get the permitting, get the financing in place, You may be able to take advantage of SBA loans for this purpose but the bottom line is you got to get going quickly if you want to use this break. Alright, guys. So let's sure that we recap what we've learned so far before we move on to the next topic. For starters, we can write off by bonus depreciation, equipment, furniture and fixtures, potentially automobiles, potentially other types of assets that we are purchasing for our business right off the value of them in the first year. And this deduction has been made permanent, which is a new thing for me because it always gets delayed or saying it's gonna expire after a few years, but this is now a permanent thing. So you can really make some long term decisions because of that. Research and development expenses as well. Please know you don't necessarily have to be in the pharmaceutical industry to take advantage of the research and development deduction. I have a lot of clients that use it for market research or when they're working on samples or if they have employees or outside contractors, they're working on new products or new services that could potentially be eligible for this first year deduction as well. So that's another big bonus that you should be considering. And finally, like Bozak and Barbara said, if you're building a manufacturing facility, brand new deduction to write off those costs as long as you abide by the terms that those costs are spent. But this is something new as well. And I think another thing that could have a big impact on businesses that are looking to make those investments. Okay. So Zach, let me turn back to you. There's other business write offs that we want to cover. Sure are. So let's jump into it. Okay. I think the next one that we should talk about, maybe, I would say pretty broadly applicable to, is, sort of a a reversion almost in the interest expense deduction. Let's get into the acronyms. You know, as of as of 01/01/2025, so as of right now, we're going from EBIT to EBITDA. What does that really mean? A return to EBITDA means that there is more interest that can be deducted under the limitation rule. So we can now add in or add back in maybe depreciation and amortization. So that's gonna extend the the amount of deduction that I think a lot a lot of businesses have to take advantage of. So with that, Barbara, do you have any thoughts on this one for us? Well, you can see the numbers of what the limitation is for this year. The numbers will be adjusted for inflation in 2026 and going forward. If you don't get to take the loss because of the limitation, you don't lose it, it gets carried over as part of net operating losses. Now this is a special limit for owners of pass through entities and this has nothing to do with interest, this is just your overall limit on your losses, what you can write off. Going forward, looking at the NOL carryovers, the net operating loss carryovers, you can only use up to 80% to offset your taxable income. So if you can't use your losses now, you're going to have a long time until you get to write them off. But hopefully we won't have losses. Hopefully we'll be making money. Fair enough. F. Archer Barbourath, apologize for pushing forward that slide so quickly. I mean, she was talking about interest and then we went into the loss limit for pass through entities. Both of your points on that are really good. Appreciate that very much. Let's keep talking. So there's employer tax credits issues that we want to, also address as part of this legislation. So, Zach, update us on on on what we mean by that. Yeah. Let's, let's talk about one that, I think it's fair to say almost everybody cares about, and that is paid family and medical leave credit. The credit is now permanent, gang, and that's gonna be, effective in 2026. A couple of things to be aware of with this one. The credit can be claimed even for leave that is required by state or local law. So depending on where you live, depending on where you operate from, that is, potentially, a significant benefit. Employers can also use that credit to offset premiums for insurance, which is exciting. And it's also important to note that, on the employee side, eligibility has sort of been dialed down a little bit. I believe it used to be one year. Now we're looking at six months. So I think this is, going to affect a lot of folks. It's going to affect businesses, and it's certainly going to affect those employees that are may be eligible for this when they weren't before. Barbara, other comments? I think it's a great opportunity for employers to offer these kinds of benefits, it's a way to attract and retain good employees, most large companies do this kind of thing and it's really an incentive for small businesses. I think you just have to look at your overall offerings and your good business practices. And of course look for insurance because this is a new opportunity to claim the credit with respect to insurance. Yeah, appreciate that. And both of you guys, I want to say a lot of my clients, a lot of people are running small businesses aren't really aware. I mean, credit has been around for a while. Now it's been made permanent and expanded. And the reason why I think it's important is that if we are, even if we're subject or not subject to the family, the FMLA, the Family Medical Leave Act, if we are helping out our employees that have to take family or medical leave with some portion of their compensation, there's this tax credit available. It's the government is basically saying to us, help your employees out while they're off and we will help fund some of that cost through this tax credit. So it's an opportunity for you to provide this benefit to, you know, attract and retain good workers that the government itself is is willing to contribute a little bit to help. So it's an important thing. I I I just wanted to mention that and make sure that we're all aware of that. Okay. So Zach, let's talk about, you know, the next topic. So it's childcare credit as well. What what do you have to say about that? Right. You know, this is, there's some big numbers here, Jean. I I was really surprised when, when we were taking a look at that. Employer provided childcare credit. Again, that's employer provided childcare. It is gonna be increasing in 2026. It's gonna be increasing quite a bit, you know, 40%, 50% for the small employers out there. And the credit cap is, pretty significant. You know, right now, we're a $150,000. That's going up to 500,000. That's half $1,000,000 even more for the smallest employers. So this is a, gosh, this is a pretty significant increase for the employers that that are operating in this space and in offering something like this. Can you just expand a little bit what you mean by, your employer provided childcare credit? Like what is this? What you how does this actually affect a business's taxes? Yeah, you know, it's basically for those businesses that are offering something like this as a benefit to their employees. Right. And they get a credit against their taxes for doing just that. Okay. Also another big issue. And again, just personally, a lot of my clients, they have employees that have children, they have issues taking care of their children. Whatever we can be doing as employers to help them do that will obviously help them be more productive and be at work that much more often. Exactly right. And like the family medical leave, the credit for taking family medical leave that's been made permanent. This childcare credit, this expansion of it, it's just another way I think of the government saying, hey, provide that help for your employees, offer that benefit and we will help you with that benefit. So I think it's a real good thing. Okay. Let's talk about our next other employer tax credits. Zach? Actually, Barbara, why don't, why don't you take points? Sure. You know, you've been talking about all the good things and now I have to deliver some bad news, I think. Unfortunately, yeah. The employee retention credit, which was the hot ticket during COVID to incentivize employers to keep employees on the payroll, the credit ended in 2021 but there was an opportunity to file for refunds. Well, what the new law does is say that refunds that are still pending and as of April there were about 600,000 unprocessed refund claims, the IRS is not going to pay them unless the refund claims were filed by the January in 2024. Also, there were a lot of erroneous and even fraudulent claims made and now the IRS has more time to pursue those claims and get the tax dollars back. Another credit is the Work Opportunity Credit which is for employers that hire individuals from certain targeted groups like long term unemployed, certain veterans, ex felons. This credit has been around for many, many years and it keeps getting extended, extended, extended. Well it's set to expire and it was not extended by this law. However, it still could be extended by another law. So I think employers need to watch for this but the credit will apply for qualified employees that begin employment by 12/31/2025. Yeah, was bummed to hear about that Barbara as well. You and I were exchanging emails on this. Said the Work Opportunity Tax Credit is a big benefit to employers that hire people potentially out of the military or long term unemployed or that were formerly incarcerated. Just bear in mind everybody that although the federal credit might, you know, is scheduled to expire at the end of this year, a lot of states still have work opportunity tax credits and similar credits available that you might still be able to take advantage of. Barbara, I'm gonna stick on with you now about employee provided fringe benefits. What do you have to say about that? Well, more of the same, more of Congress encouraging these kinds of benefits for employees. So dependent care assistance plans, they could be where employers pay for dependent care or their dependent care flexible spending accounts where employees pay for their own dependent care on a pre tax basis, the amount is going up or it is up to $7,500 after 2025, it's $5,000 this year. So that's a pretty big jump for next year and that's something to think about as an offering in the coming year. Educational assistance plans, employers can help employees with their career development. I know career development is a big consideration for many people looking for jobs or staying on jobs and employers can pay. There is a dollar limit, this dollar limit of $5,250 has been around forever, but starting next year it's going to be indexed for inflation. And one other aspect to this, these educational assistance plans can pay for student loans that are being repaid. Employers can pay them directly or reimburse employees for their loan repayments under this umbrella of an educational assistance plan. So really a great benefit for businesses to look for. And Barbara, just to clarify, I know it says employer tax credits at the top of this slide, but these are really deductions that the employer can take, correct? Correct, correct. These are not deductions and again, if it's a dependent care FSA, the employer is not taking any deduction, it's the employee who's paying on a pre tax basis. But the thing for employers to remember is when you're offering many of these fringe benefits, you're saving on employment taxes that you don't pay, that you would have paid if you gave employees more compensation. So this is really a way to help employees without raising your own employment costs. Yeah, you're absolutely right. And it's per employee as well. Again, just real life. I mean, I have a lot of clients that say, hey, listen, we do want to help with your education and I know that this deduction for education doesn't necessarily have to be related to the job either. You know, it's a deduction that you can take and offer it as a benefit and the government is saying take a tax deduction for them. The employee does not get taxed on that either. More examples of just ways that the tax law, none of it, this is not necessarily new. It's just been expanded because of this legislation, but I've always believed that more employers need to be aware that these are available, that we can offer to our employees. And it just helps expand the benefits that we are offering. All right. We got to keep moving on and because we have so much to cover in this, it's just crazy. So we now have no tax on tips and overtime. Zach, let's unpack this. Yeah. Okay. You know, Gene, I think you you really hit the nail on the head. One of the themes so far, everything we've talked about is Uncle Sam helping businesses Right. To help their employees. Right. We're gonna shift gears a little bit. Now this is a benefit, I think, directly for some employees. Not all the employees, but a lot of them. And I think it's fair to say, here at Paychex, this is the one that we have been getting questions on. Probably the most ink has been devoted as we've discussed the the big better bill. This is one of the hot topics. So let's delve into it. What is it really? You know, I think it's it's not quite fair to say no tax on tips. You know, let's let's call it what it really is. This is gonna be a deduction on personal income tax for qualified tips reported on the w two. And it's not quite that simple. When is it ever? But there's gonna be a limit. The limit of $25,000 of available tips can be claimed as a deduction. So if you're getting more than $25,000 in tips, that's a a great position to be in, but you do need to be aware of how you're gonna be claiming that. It's also important to know if your gross income exceeds $150,000, that's a 150,000 for an individual, or if you're filing jointly 300,000, there's going to be a reduction in the amount that's available. It's gonna be $100 for every thousand dollars over the limit. And the limit again, $1.50 or 300, depending on how you're filing. Effective, well, it's kind of effective retroactively, which is interesting. One of the things we're gonna need to be on the lookout for is a, you know, how exactly do we calculate this retroactively for, for tips that are reported before 01/01/1926? Well, we need to use a reasonable method, which is, you know, always a little bit scary when it's left us to decide what that reasonable method is. Barbara, don't know. Maybe you have some thoughts on, on what that might look like. Well, I think, you know, in conjunction with the no tax on tips, Congress decided to be more generous to employers with respect to a tax credit on FICA on tips. And up until now, tax credit was limited to restaurants and taverns and the food and beverage industry. Now it can be used by businesses in the beauty service industry, barbers and spas and that sort of thing. So this is a tax credit and sort of it dovetails with the individual no tax on tips. So Barbara, I guess what you're saying is that now, you know, if you're in the not in the food and beverage industry, but also in the, you know, in beauty care business or that beauty service industry, you know, if you're paying the employer portion of FICA, you now may be eligible for a credit on those taxes. Precisely, precisely. And it's sort of the same timeframe as the no tax on tips, it's a temporary measure for the same timeframe. I mean, that's great and Zach, you said that this type of legislation is impacting employees directly, it absolutely is. I'll also argue though, mean, there's certainly benefit to business owners as well. I mean, you know, the more that the government is helping the employees put more money in their pockets Without a doubt. Right? The the more the general population knows that these employees are not being taxed on their tips, they're they're making that much. It's it's less compensation pressure Exactly. On the employer, you know? You I also think it's fair to say, Jean, who is the employee gonna ask the questions to? They're gonna come to that employer first. So, know, is it a benefit for the employees? Yes. For the employers? Yes. But either way, the employers are gonna wanna know how this works. Yeah. And again, the who is the tip workers gets, you know, that still has to be clarified. I always made the joke of telling all of my clients just reclassify all your workers as tipped workers and then you don't have to pay any tax. But obviously that's just a joke. So we're waiting for the full clarification from the government to tell us that, but it's a big deal. All right. Let's move to our next note, which is taxes on overtime. This is you Barbara. Tell us a little bit about that. Well, it kind of goes hand in hand with the no tax on tips, the same timeframe, it's effective this year and there's a deduction limit, you claim the deduction whether or not you itemize, so it helps all individuals that are receiving overtime. It only applies to the portion that's considered the premium. So let's say you're getting $20 an hour and overtime you're getting $30 an hour, it's only the $10 overtime that's subject to this and I think that that's, I read the law pretty carefully and that's what it is. And I think for employers, you're gonna have to be breaking out a lot of this information on the W-two. I think the IRS is gonna give us more guidance on what we have to do on the W-two. The other point is that the overtime is being paid, there's no change in income tax withholding or payroll taxes, it's really again, as you point out, Jean, it's something on the employee level putting more dollars in their pocket from tax savings and I think maybe if I could just throw this in, I think the notion is that if employees have more money in their pocket from tax savings, there'll be more money to spend in the economy. It's probably a win win for everybody. Yeah, I agree. And I also think that if you're not taxing on overtime, and by the way, your point is really people don't realize that. It's not if you're paying somebody time and a half for their overtime hours, it's just that differential that doesn't get taxed. But even so, like you just mentioned, Barbara, it is more money in the employee's pocket. And also as an employer, if you do run a kind of business where people are working overtime, it gives them a little bit more of an incentive like, hey, I realize you got to work this overtime, but you're going to be getting even more money because you're doing it. I think that helps employers as well. So I can't see how that is a bad thing. I'm also being told that the IRS confirmed that there's going to be like a transition relief for taxpayers for all of this. They just did this this week. So there's going be time to figure out what the rules are. And I would advise you as you do this to talk to your financial advisor, your CPA, paychecks to make sure you're keeping up with it. But all these rules aren't going to happen and fall on us all at one time. Barbara, I'm going come back to you now because we're going to talk to you about tax rates and how they're changing or not changing because of this legislation. So let's jump into it. Talk to me a little bit about this on the stack. Is this for you to talk about or Barbara, you're welcome to talk about it Go in ahead. Yeah, absolutely. There was buzz about perhaps lowering the corporate tax rate but nothing changed. So the corporate tax rate is still a flat 21%. With respect to the tax rates on individuals, now remember about 95% of all businesses are pass through entities, meaning that the owners pay tax using their personal tax rates on their share of business income. So the personal tax rates are vital to most business owners in this country. The rates were set to expire, the favorable rates that were put in place in 2017 were supposed to expire at the 2025 but they've been made permanent and they haven't been changed, they haven't been increased or decreased. So I think that what this means for businesses and business owners is to look at the tax rates plus the totality of all the tax changes that we're talking about and things that we haven't even been able to put in this one brief program and think about how that will impact taxes for 2025. There are still two estimated tax payments to be made for 2025 for calendar year C corporations and owners, that would be September 15, C corporation calendar year, the last installment would be December 15 and for individuals, 01/15/2026, maybe if you're taking advantage of these breaks, you're making a big bonus depreciation purchase, you can reduce your estimated tax payments for the rest of the year and that will put more money in your pocket now that you can put back into the business or spend as you pay down debt or do whatever you want with it. I think that's really what we want to do that kind of tax planning now. That's great. That is great. And now here comes the big one, right? And this one is for you, Zach. It is a qualified business income deduction, otherwise affectionately known as the 199A deduction, the pass through deduction. I'm the owner of an S corporation, and I couldn't be happier to see that this was made permanent. So let me, you know, I'll pass over to you, Zach. Tell us a little bit about what's going on. Yeah. As you know, Gene, you know, it's permanent and it's made permanent in a way that really represents no interruption at all. The one ninety nine is gonna be phased in and amounts are also gonna be increased. And again, this I I keep saying this. It seems to be the theme. It's not just a little increase. We're going from $50,000 for individuals up to $100,000. And, if you're a joint return filer, 75 to one fifty. So let's just call it a doubling at this point. I also think we should probably reference that a new section is added for a minimum deduction, for active qualified income of $400. And that's gonna be for any taxpayer who has an aggregated QBI of at least $1,000 I don't think we note that on the slide, but something maybe the audience might wanna jot down as a quick note. Barbara, I think you had something you wanted to mention with this or no? Well, I think that what people need to know about is this is a personal deduction based on your business income and the impact of the deduction reduces the effective rate of the tax that you're going to pay on your share of business income. So if you're in the 37% tax bracket, it really brings your tax rate on your profits down to 29.6%. So that's really a big deal. And accordingly, depending on if you're in a lower tax bracket, it will bring it down as well. It doesn't quite bring it down to the 21% flat rate for corporations but something and I think we need to explore this and as you point out, we have now the greater phase out range, meaning that more business owners will qualify for some or all of the 20% deduction here. Barbara, I got to ask you as well, I have clients, some clients that are C corporations, some clients that are pass through entities. When this deduction, this pass through deduction became a reality back in 2017 with the original Tax Cuts and Jobs Act, people are reevaluating whether or not should we move from being a C Corporation to an S Corporation, you know, depending on our rates and our certain circumstances. And I had many clients that decided not to because they knew this was going to expire in 2025. Well, this qualified business income deduction now has been made permanent. Right? So now like your businesses that are a pass through or whether or not they're a C corporation, Do you think that it makes sense for them to have their CPAs or their accountants reevaluate their overall tax structure and compare now that everything's permanent, whether it makes sense? Maybe I do change from a C Corp to a pass through now or maybe I change the other way. Are you thinking of recommending that to your clients? Is that viable? Well, raise a wonderful point. First of all, back in 2017 when they did drop the tax rate on corporations, there wasn't a lot of conversion to be a C corporation. The predictions were everybody wants to be a corporation now and that wasn't so. But there are so many reasons for maybe making a change. Businesses that do operate in multiple states as pass throughs, you're going have to file multiple returns for every owner in every state versus just one C corporation return. So if you want, if the business is really growing and you want access to big funding, C corporations are the way to go. Crowdfunding is much easier through, equity crowdfunding is you have to be a C corporation basically. So there are many other factors, but certainly the permanence of the qualified business income deduction is the help to owners of pass through entities. Great, all right, thanks. All right, let's talk SALT, So shall Zach, this is your term, tell us about this, this is obviously be getting a lot of news. So Yeah. I would say about it. Is also one of the banner provisions. You're exactly right, Gene. The state and local tax deduction. What we have here is something that's I think great, but it's not permanent. So let's delve into it. First off, we have a, a temporary deduction cap, $40,000 beginning 2025. So we are there today. That's going to increase permanently $40,000 in 2026. Maybe I shouldn't say permanently. We'll get to that in just a moment. But, for a while, we're going to, we're gonna have that $40,000 and then sort of, tied into, an escalating paradigm. It's going to increase 1% per year from 2027 to 2029, and then it's gonna revert. It's gonna go back to $10,000 in 2030. So I think this is this is great. It's gonna help a lot of people. But just know it's not going to be forever. All good things must come to an end. It's also important to note that, the pass through entity tax is, still able to be used. So you are going be able to optimize for both state and local taxes. That pass through entity to cover the state taxes is still going to be available. You might have a way of sidestepping the SALT cap through that path. Barbara, talk to me a little bit about this slide about the SALT deduction. Well, I think it's important to recognize that about 90% of all individuals take the standard deduction. So this deduction is not meaningful to them, it's only the 10% that who itemize are concerned with it. But the fact that you can take this deduction may mean that more people will itemize. This might be an incentive for those who were claiming the standard deduction before now will itemize. So that's something to watch out for. The other, as Zach pointed out, pass through entity tax which is a state level way to enable owners of pass through entities to claim more of their state and local taxes. There was considerable talk about eliminating this but they didn't. So I think it's important for owners to check out whether this is available and also know that in many places you have to make elections each year, like just because you claimed it in the past, you may not automatically be entitled to it and so determine what actions you have to take. So combining the SALT tax with the PTT, you might be able to write off an awful lot of your state and local taxes. Okay. Let us move now and I've got Barbara still, right now you've still got the microphone, we'll talk about qualified small business stock and what changes have occurred here as part of this legislation. Well, this is one of my favorite tax breaks, I have to confess. And going back to what you said, Jean, this is only for C corporations only for certain types of C corporations, so that's something to think about. What break is, is to enable some or all of the gain on the sale of this stock to be tax free, which is how The can you beat changes that were made by the new law apply to stock issued on or after July 4. Not only have they made changes and some I'm going go through on this slide and some on the next slide, but they've increased the amount that you can exclude, it's 10 times the basis of your stock or up to a dollar limit and the dollar limit had been $10,000,000 it's now $15,000,000 so great incentive for startups to really try to make it big. The dollar limit is going to be indexed for inflation and the definition of qualified small business stock has changed a little bit because it's based on the value of assets and it used to be have a $50,000,000 cap and now it has a $75,000,000 cap and that's also gonna be indexed for inflation. Keep talking. Yeah, okay, so owners, if you hold the stock for, before you had to hold the stock for more than five years to get the break, now there's a three year, four year and five year option. So if you hold it three years, you get 50 percent exclusion, you hold it four years, 75% exclusion, you hold it for five years or more, the 100% exclusion as well. Again, it only applies to certain businesses like tech businesses is really like the idea behind it, but also manufacturing, wholesale, retail. It doesn't apply to service businesses. So it doesn't apply to you or me, Jean. So we can't benefit from it. Yeah. Which is why this is not my favorite deduction. I'm sorry. My favorite is the, is the pass through deduction Barbara, because that's a, that affects me Exactly. I love this tax free income on, you know, on, on how can you beat it? Yeah. And and I do. I I know a lot a lot of clients, a lot of investors that that take advantage of this rule because it is a it's a way to put money into small businesses. And, if they take off and they increase in value, I mean, you can exit after five years without paying taxes. I mean, you're absolutely right. What could be better than that? All right, good stuff. To go if back you're just starting a business now and thinking about how should I form, maybe the C corporation, if you are in the tech sector, is the way to go because if you do do well, then you're gonna have this tax break. That's such a great point as well. And that's why if you are starting up a business or even forming a, you know, another company, you gotta talk to your tax advisers about this because this is the kind of thing that could attract investors. So you're absolutely right. All right. Let's talk, Zach, about some other changes as we head towards the end of this adventure that we're on with all these new taxes or tax legislation. Tell me about some additional business tax credits. Yeah. There's a lot of them. This as you as the name implies, it's a big bill guys. So maybe not for everybody, but let's touch on some of the lesser known provisions. We've got a business tax credit change for advanced manufacturing and investment. That's gonna be a credit that increases from 25% right now to 35% in the start of the new year. Like some of the other things we've talked about, this isn't forever. It's only until the 2026, but it is a significant increase. So if you fall in the the cadre of businesses that can take advantage of this, be prepared to, to act quickly. Barbara, I don't know if you have anything to add on that. No, it's designed to incentivize semiconductors and other chip manufacturing and you got to act quickly. The most important thing. And this is just not to be confused here. We talked before about a deduction that you would get for building out like a new manufacturing or production facility. That's new. This has been around this advanced manufacturing, Right. But it's an increase in a credit that you can take for certain types of investments, that you are making. Okay. Zach, let's keep going on. So we've got, some information about information returns. Yeah. We won't go through this line by line in the interest of time, Gene, but you know, I think it's important to know that, October, in general, are getting easier, which is good. The reporting threshold for the October k is gonna be, increased, And the reporting threshold for, other ten ninety nines, the the NEC and the R, etcetera, they've increased from $600 in compensation to $2,000 in compensation in order for a return to be required. So that means that, just so I know, like, I have independent contractors in my business, I'm sending them a ten ninety nine. Yep. Right now, anybody that I'm paying more than $600, I would have to do it. Now it's over 2,000. Gonna go up to. Exactly. Like everything else, big increase, less reporting, easier administration. Okay, that's great. And Barbara, what do you have to say about estate taxes? Many small business owners, their business is their biggest asset and if they die, their heirs are going to have to empty up to the government. The good news is that the law has established a high exemption amount. So it's gonna be $15,000,000 value of your estate if you die in 2026 and going forward that will be indexed for inflation. What this means is that if you're a small business owner, a really small business owner, you might not have to invest in expensive estate planning anymore but you still probably need to do it because you never know, good fortune can shine on you and your business can explode and you want to protect your wealth and see that it gets passed to your heirs and not to uncle Sam. And Amel, if I, I'm sorry, Just one one more just one more thing. That while the exemption amount is so high for federal, tax purposes, many states have much lower, exemption exemption amount. So you still might need to do it for state purposes. I'm so glad you brought that up. That was a point that was actually going to make. Mean, depending on the state that you're in, the exemptions are much lower and sometimes the rates can be as high as 20%. So yeah, there is some need for estate planning for that. And also Barbara, isn't it true? Like it's 15,000,000 individual, but if you're filing a joint return, I think the exemption is as much as $30,000,000, right? It's 15 per spouse. Let's say the first spouse is not the business owner. The surviving spouse can use any unused amount from the first spouse. So it can be considerably more. That's great. And again, I don't wanna put off using estate attorneys. I know a lot of really good professional estate attorneys that can advise you on your, not only your wills, also setting up trusts, but, you're absolutely right, Barbara. This does make estate planning a lot easier, I think for business owners. All right, Zach, talk to us a little bit about AI legislation. Now this is not necessarily tax related, but it's part of the bill as I think it's important and it's a little bit different. We're gonna talk about what's not in the bill. Okay. Gene. Yep. And AI is important to us all. I dare say, whether we know it or not, we're all using AI at this point. And, there was a lot of back and forth when we were, in the in the days leading up to the passage. Will there be a moratorium on state level AI legislation that was initially included in the bill. It was a basically a ten year hold, at the federal level that would prevent states from developing any type of controls on AI. And really, that was in the interest of, I think, fostering innovation and allowing the federal government to legislate something that is increasingly a big part of all of our lives. Well, that wasn't included in this bill, at least. But I think we should all know as we talk about AI and as we think about AI that this is moving fast. You don't need me to tell you that. I think we're gonna see legislation that is the same or substantially similar that's gonna be reintroduced very soon. The Trump administration just passed an executive order. There's going to be more AI legislation, not in the big beautiful bill, though. So we are still in a state of flux, but every business should be aware of how AI is gonna impact them and what the legislative landscape looks like. Maybe I'll get to come back and talk with you on that sometime It in the is a whole other topic. Alright guys. So before I get to sharing some resources, you know, and you know, obviously there's a lot of information in this in this webinar in such a short amount of time. And Barbara, I'm gonna give you a chance to chime in in a minute. Zach, give me a takeaway on this tax bill for small business owners. Tell me good bad, you know, give me your thoughts. I think it's tremendous. I think there's something in the big beautiful bill for everyone. We've just spent about, close to an hour going through it, Jane and Barbara. And, you know, every business out there has something that's gonna help them, that's gonna help them help their employees, or is gonna help their employees directly. So I see this as a positive for businesses and employees alike. It's a good thing. Okay, that's great. Barbara, what about you? What do you think about this bill? I think that I agree with Zach a 100% and just want to point out that there were some negatives in the bill for some people such as cutbacks in various green energy tax credits, like credits for buying plug in electric vehicles and stuff that may require you to take action quickly if you wanna take advantage of these breaks. I think the bottom line to find out what is relevant to your business and how you can benefit, you have to talk to the experts, you have to talk to paychecks on what to do with the payroll, you have to talk to your CPA, perhaps even your lawyer and estate planning and business formation. So a lot to think about and a lot to get started on quickly before it's too late. And if I could just chime in, agree with both of you guys as well. You're never gonna have a bill where you're gonna agree with a 100% of what's in the bill. I do think there are certain negative parts of this bill. I think there are, you know, certain cutbacks and certain programs might widen up being more costly, like health care, for example, for businesses. I'm concerned about deficit reduction as well and the bill not doing enough there. But, I mean, come on guys, when it comes from a tax perspective, we're three tax nerds here. You can't ask for, you know, more benefits for businesses and individuals than what's included in this bill. So I think that's all a good thing. So first of I want to thank everybody for attending. This has been a great session. Clearly, there is a lot of resources that Paychex has for you. If you look on the slide here, we have specific links. You'll be able to download this slide deck separately. You can read the full tax law through these links. There's specific articles on works about tax and spending bill, what it's like and what it means for you specifically. Our Thrive podcast that we do, we're digging into some of the aspects of this legislation. We just did a really great one and popular one about some of the permanence in these tax legislation and how it will impact all of us as well. Paychex is offering state resources. And then of course, you know, there's a lot of things you have to keep into consideration. You know, Paychex can provide a lot of services and consulting and help to make sure that you're fully leveraging this bill or a Paychex partner or a CPA that's affiliated with the company as well can also provide you with great advice as well. So there is a lot to keep in mind, lot of things that you want to be considering. Do it now. It is just July. My smartest clients are now talking with their accountants and their tax and financial professionals and making sure that they're making their moves now so they can benefit for the rest of the year and beyond 2025. So with that said, I want to thank you all for attending this presentation. I hope you learned and you took away a lot. Zach, thank you so much for taking the time to be here. Barbara as well, all the way from Florida. Thank you so much. Hope the weather was good for you. I'm sure it is and hot, but we're real happy that you were here and we appreciate the information that you shared. My name is Gene Marks. Again, thanks everybody for watching. I'm sure we'll see you again sometime in the future. Take care.