March 5, 2025 • 11 mins
This episode highlights significant upcoming tax changes for 2025 that every business owner should be aware of!
• Discussion of the BOI report saga
• Overview of major tax changes impacting 2025
• Depreciation Changes business owners should plan for.
• Estimated Tax Payments and the new penalties!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
In the past we had said pay it, don't pay it.
The penalty is pretty small.
It's not really that big of adeal.
You might be earning more onyour interest from your savings
account by leaving it in therethan the penalty anyway.
Well, that's not really thecase anymore.
Welcome to what your CPA Wantsyou To Know.
Speaker 2 (00:21):
Tax and accounting help can be expensive, so we've
created this podcast to helpguide you through it all and
make you feel like you have aCPA in your back pocket.
I'm Carson Sands and I'm TarynSands.
Speaker 1 (00:35):
I'm a CPA with over 10 years of experience helping
people start and grow theirbusinesses.
Speaker 2 (00:41):
And I'm an MBA with a specialization in marketing and
entrepreneurship.
Taxes suck and we want to makesure you don't pay more than
your fair share.
Speaker 1 (00:50):
We're here to share everything your CPA wants you to
know in a fun and easy tounderstand way.
Let's get started.
Speaker 2 (00:59):
Let's do it.
Hello, hello.
Tax season is now in full swing, so Carson will probably be
acting a little bit weird, butthat's okay.
Also, he gave me a funny look,so also this episode is kind of
(01:20):
boring, I think, but necessary.
We're just going to go through,as quick as we possibly can,
just the tax changes that youneed to be aware of for 2025.
So there's always a ton ofchanges.
I don't think most people areaware of most of them.
That's what our job is for, butit does definitely confuse
people, because one year they'llthink that they can do
(01:42):
something and they can, and thenext, next year, changes.
So that's why it is important,especially as a business owner,
to keep track of some of thesechanges.
So we're going to bring tolight some of the ones you
should know about.
But first, our last episode wasabout the BOI report saga and
it was saying that you don'thave to file it, but actually
(02:03):
now you do.
Speaker 1 (02:03):
Guess who's back Back again BOI report's back, Tell
your friends but really tellyour friends that own businesses
or even that don't own abusiness but have a rental
property in an LLC.
Tell them the BOI report isback on and if you haven't filed
it yet, please file it, so theydidn't charge you a whole lot
of penalties, which I'm prettysure is the whole reason that
(02:25):
they have the stupid boi reportin the first place yes, I think
so.
Speaker 2 (02:29):
Big penalties if you don't file.
Speaker 1 (02:31):
The new filing deadline is march 21st march
21st of 2025, in case you'relistening to this in the future
so that's very, very quickly.
Speaker 2 (02:41):
Make sure that you file and, like we said, being
funny, but for real, telleveryone because a lot of people
didn't realize that that means,like LLCs that they've set up
in the past, that they're notreally doing anything.
With Every LLC that you havethat's active, you need to file
a BOI report for.
Speaker 1 (02:58):
And let me tell you something about the BOI report.
This is probably the fifth timethey've gone back and forth on
you do have to file it, youdon't have to file it.
So you do have to file it againas of February 18th 2025, and
it's due March 21st.
But let me tell you why.
It's super unfair.
I met a lady that she had ahusband who had an LLC with
(03:19):
three other guys or two otherguys there was three of them
total and he died her husbandand one of the other guys died
and then the third partner inthat thing told her about it,
like basically on his deathbed.
And so that's how she found outthat she owns this LLC because
obviously she inherited it.
According to the rules, there'snot really any forgiveness for
someone in that situation.
(03:39):
I mean, maybe they won'tenforce it that strictly and
maybe they'll forgive that kindof penalty in that situation,
but I mean, that's not what therules say.
So it is really concerning.
Just try to make sure you knowof everyone that has an LLC.
Remember all of your LLCs orany other corporations that you
have, and try to get this filedfor those, because the penalties
(04:00):
stack up pretty fast.
Speaker 2 (04:02):
Yeah, I'm interested to see how they're going to
actually execute all of that thepenalties and figuring out who
didn't file, and all of that,because they've done a really
poor job of letting people knowthat they need to file it in the
first place.
So we will see.
I'm sure we'll have yet anotherupdate on the BOI at some point
.
Speaker 1 (04:16):
The next time they cancel it.
Speaker 2 (04:19):
Or penalties start rolling out.
So more to come on that, butlet's dive into the changes that
you need to know for 2025.
Speaker 1 (04:27):
Right.
So 2025, the taxes and therules will be pretty similar.
Not a lot of changesspecifically, but these are
things that are important toknow for 2026 and go ahead and
start thinking about as the yearends, because most of the
things from the TCJA or the TaxCuts and Jobs Act ends at the
end of 2025.
(04:47):
Now, that was part of Trump'sadministration and he's back in
office, so there's a chancethey'll extend it.
I hope they do, but if theydon't, then these are some of
the things that will change.
The tax brackets will go backup, so about 3% to 4% increase
in income tax.
For a lot of people, the QBIQualified Business Income
Deduction goes away.
That's where, if you haveanything besides a C-Corp, an
(05:10):
S-Corp, a partnership or aSchedule C business gets a 20%
deduction on their tax return,and that 20% it's 20% of your
profit from your business, sothat's a really nice deduction,
especially if you have abusiness that makes a lot of
money.
The standard deduction will becut in half because it was
doubled basically whenever theTCGA happened, which could be a
(05:31):
problem now if you have a lot ofitemized deductions.
Property taxes and mortgageinterest has gone up a lot in
the last few years.
That might offset that If youitemize your deductions you
might be able to get almost asmuch as you were getting on that
standard deduction.
So the one positive is thatthat limit of $10,000 on your
property taxes or state incometaxes for itemized deductions
(05:54):
that goes away.
You can go back to deductinghowever much you pay.
If you pay $40,000 for propertytaxes you can deduct it.
Speaker 2 (06:01):
Is that for all houses?
Speaker 1 (06:03):
Yes, actually there's limits on the mortgage interest
and the number of you candeduct it.
Is that for all houses?
Yes, actually there's limits onthe mortgage interest and the
number of houses you can deductmortgage interest for.
But the old rules and who knowswhat they'll do but the old
rules allowed that you could.
If you had four vacation homes,you could deduct the property
taxes from all of them.
Speaker 2 (06:18):
All right.
Speaker 1 (06:19):
And, of course, the other big change is that
depreciation will change.
That's already been changing,as you know.
Up until 2022, you were able todo 100% bonus depreciation,
just meaning any major assetsthat you purchased, you could
deduct the full cost in the yearthat you purchased them, which
was great.
In 2023, that went down to 80%,and for 2024 tax filings it's
(06:43):
down to 60%, and now, planningfor your 2025 tax year, it's
going down to 40% and then, ofcourse, down to 20% for 2026.
Speaker 2 (06:52):
And it's phasing out completely as a plan.
Speaker 1 (06:55):
After that, yes, and so that just means that a couple
of important things.
Of course you won't get aslarge of a deduction for your
equipment purchases and thingslike that.
Necessarily you may withsection 179, which we'll talk
about in a minute but you won'tget those big deductions.
And it also means some otherthings, like if you are trading
(07:15):
vehicles a lot, then you mightbe in a situation where your
vehicle has gone down in valuebut you've depreciated the whole
thing and now you're going tohave a big gain when you trade
that in and you won't have thecorresponding offset of the new
vehicle because you don't get todeduct it all in the first year
.
So you could be in a situationwhere you trade in a vehicle and
(07:36):
buy a more expensive vehicleand still end up paying tax on
that transaction.
A more expensive vehicle andstill end up paying tax on that
transaction.
So maybe talk to your CPAbefore you make that trade just
to make sure it's not going tobite you in the butt.
Speaker 2 (07:47):
Right, this sounds a little bit confusing, but that's
the best.
Advice is if you're going totrade in a vehicle, especially
if you're making quick trades,talk to them first so that you
know what the tax consequencesare before you do that, just
because all of these rules havechanged and it's not what you're
used to in the past.
Speaker 1 (08:03):
Now, on that note, there is still Section 179
depreciation.
It's very similar in that youget to deduct 100% of the cost
of the asset that you buy in theyear that you buy it.
But where it's different thanthe bonus depreciation is that
you have a lot of limitations onthere.
For example, the most importantone is if you have a loss, you
(08:23):
can't use section 179.
You can't increase a loss withsection 179.
You can only bring your incomedown to zero.
And so now that might not seemlike a big deal because you're
like well, if I don't make anymoney, I won't pay any taxes.
Well, sometimes people havemultiple businesses and they're
using these losses generatedfrom massive depreciation on one
business to offset a whole lotof profit on another business,
(08:47):
and this might just mean thatyou shift which business you buy
those assets through.
There's some things you can do.
That would make a really bigdifference if you just talk to
your CPA before you make thosepurchases.
Speaker 2 (08:58):
All right, what's next?
Speaker 1 (08:59):
And the last big change we've mentioned before.
It's already happened, but somepeople still aren't doing this.
So the estimated tax penalty.
If you don't make estimated taxpayments through the year and
you have income where there's nowithholding not a W-2,
something like a business orrental income or anything like
that you're supposed to payquarterly to the IRS what you
(09:21):
might owe for the year and ifyou don't, they charge you a
penalty.
In the past we had said pay it,don't pay it.
The penalty is pretty small.
It's not really that big of adeal.
You might be earning more onyour interest from your savings
account by leaving it in therethan the penalty anyway.
Well, that's not really thecase anymore.
The interest rates have gone upand, as such, the IRS has
increased that estimated taxpenalty.
(09:43):
It's around 7%, so most peoplearen't getting that in a savings
account.
It stings quite a bit more now.
So I would recommend that youdo pay those estimated tax
payments through the year toavoid that extra penalty.
Speaker 2 (09:57):
Yeah, so our advice is changing on that.
So if you listen to previousepisodes from a while back, then
now we say make your estimatedtax payments.
Speaker 1 (10:05):
Right, and that's not really a change of principle,
it's just the math.
Paying less than 3% in penaltywhen you can have a 4% savings
account is fine really, butpaying 7% when the best savings
accounts out there aren't evenpaying 5%, it just doesn't
really make sense.
Speaker 2 (10:23):
Well, that wraps up this very super exciting episode
about tax law changes, butreally not too many for this
year moving forward yet Ifthere's anything big, we'll
definitely have another podcastepisode, but we thought these
were the most important thingsto point out for people
listening to this podcast.
So until next time, thank youso much for listening to.
Speaker 1 (10:45):
What your CPA Wants you to Know.
Speaker 2 (10:47):
Podcast.
Speaker 1 (10:54):
This podcast is intended to provide accounting
and tax information foreducational purposes only.
All tax situations are uniqueand should be handled with the
assistance of a tax professional.
In the past we had said pay it, don't pay it.
The penalty is pretty small.
It's not really that big of adeal.
You might be earning more onyour interest from your savings
account by leaving it in therethan the penalty anyway.
Well, that's not really thecase anymore.
Welcome to what your CPA Wantsyou To Know.
Speaker 2 (00:21):
Tax and accounting help can be expensive, so we've
created this podcast to helpguide you through it all and
make you feel like you have aCPA in your back pocket.
I'm Carson Sands and I'm TarynSands.
Speaker 1 (00:35):
I'm a CPA with over 10 years of experience helping
people start and grow theirbusinesses.
Speaker 2 (00:41):
And I'm an MBA with a specialization in marketing and
entrepreneurship.
Taxes suck and we want to makesure you don't pay more than
your fair share.
Speaker 1 (00:50):
We're here to share everything your CPA wants you to
know in a fun and easy tounderstand way.
Let's get started.
Speaker 2 (00:59):
Let's do it.
Hello, hello.
Tax season is now in full swing, so Carson will probably be
acting a little bit weird, butthat's okay.
Also, he gave me a funny look,so also this episode is kind of
(01:20):
boring, I think, but necessary.
We're just going to go through,as quick as we possibly can,
just the tax changes that youneed to be aware of for 2025.
So there's always a ton ofchanges.
I don't think most people areaware of most of them.
That's what our job is for, butit does definitely confuse
people, because one year they'llthink that they can do
(01:42):
something and they can, and thenext, next year, changes.
So that's why it is important,especially as a business owner,
to keep track of some of thesechanges.
So we're going to bring tolight some of the ones you
should know about.
But first, our last episode wasabout the BOI report saga and
it was saying that you don'thave to file it, but actually
(02:03):
now you do.
Speaker 1 (02:03):
Guess who's back Back again BOI report's back, Tell
your friends but really tellyour friends that own businesses
or even that don't own abusiness but have a rental
property in an LLC.
Tell them the BOI report isback on and if you haven't filed
it yet, please file it, so theydidn't charge you a whole lot
of penalties, which I'm prettysure is the whole reason that
(02:25):
they have the stupid boi reportin the first place yes, I think
so.
Speaker 2 (02:29):
Big penalties if you don't file.
Speaker 1 (02:31):
The new filing deadline is march 21st march
21st of 2025, in case you'relistening to this in the future
so that's very, very quickly.
Speaker 2 (02:41):
Make sure that you file and, like we said, being
funny, but for real, telleveryone because a lot of people
didn't realize that that means,like LLCs that they've set up
in the past, that they're notreally doing anything.
With Every LLC that you havethat's active, you need to file
a BOI report for.
Speaker 1 (02:58):
And let me tell you something about the BOI report.
This is probably the fifth timethey've gone back and forth on
you do have to file it, youdon't have to file it.
So you do have to file it againas of February 18th 2025, and
it's due March 21st.
But let me tell you why.
It's super unfair.
I met a lady that she had ahusband who had an LLC with
(03:19):
three other guys or two otherguys there was three of them
total and he died her husbandand one of the other guys died
and then the third partner inthat thing told her about it,
like basically on his deathbed.
And so that's how she found outthat she owns this LLC because
obviously she inherited it.
According to the rules, there'snot really any forgiveness for
someone in that situation.
(03:39):
I mean, maybe they won'tenforce it that strictly and
maybe they'll forgive that kindof penalty in that situation,
but I mean, that's not what therules say.
So it is really concerning.
Just try to make sure you knowof everyone that has an LLC.
Remember all of your LLCs orany other corporations that you
have, and try to get this filedfor those, because the penalties
(04:00):
stack up pretty fast.
Speaker 2 (04:02):
Yeah, I'm interested to see how they're going to
actually execute all of that thepenalties and figuring out who
didn't file, and all of that,because they've done a really
poor job of letting people knowthat they need to file it in the
first place.
So we will see.
I'm sure we'll have yet anotherupdate on the BOI at some point
.
Speaker 1 (04:16):
The next time they cancel it.
Speaker 2 (04:19):
Or penalties start rolling out.
So more to come on that, butlet's dive into the changes that
you need to know for 2025.
Speaker 1 (04:27):
Right.
So 2025, the taxes and therules will be pretty similar.
Not a lot of changesspecifically, but these are
things that are important toknow for 2026 and go ahead and
start thinking about as the yearends, because most of the
things from the TCJA or the TaxCuts and Jobs Act ends at the
end of 2025.
(04:47):
Now, that was part of Trump'sadministration and he's back in
office, so there's a chancethey'll extend it.
I hope they do, but if theydon't, then these are some of
the things that will change.
The tax brackets will go backup, so about 3% to 4% increase
in income tax.
For a lot of people, the QBIQualified Business Income
Deduction goes away.
That's where, if you haveanything besides a C-Corp, an
(05:10):
S-Corp, a partnership or aSchedule C business gets a 20%
deduction on their tax return,and that 20% it's 20% of your
profit from your business, sothat's a really nice deduction,
especially if you have abusiness that makes a lot of
money.
The standard deduction will becut in half because it was
doubled basically whenever theTCGA happened, which could be a
(05:31):
problem now if you have a lot ofitemized deductions.
Property taxes and mortgageinterest has gone up a lot in
the last few years.
That might offset that If youitemize your deductions you
might be able to get almost asmuch as you were getting on that
standard deduction.
So the one positive is thatthat limit of $10,000 on your
property taxes or state incometaxes for itemized deductions
(05:54):
that goes away.
You can go back to deductinghowever much you pay.
If you pay $40,000 for propertytaxes you can deduct it.
Speaker 2 (06:01):
Is that for all houses?
Speaker 1 (06:03):
Yes, actually there's limits on the mortgage interest
and the number of you candeduct it.
Is that for all houses?
Yes, actually there's limits onthe mortgage interest and the
number of houses you can deductmortgage interest for.
But the old rules and who knowswhat they'll do but the old
rules allowed that you could.
If you had four vacation homes,you could deduct the property
taxes from all of them.
Speaker 2 (06:18):
All right.
Speaker 1 (06:19):
And, of course, the other big change is that
depreciation will change.
That's already been changing,as you know.
Up until 2022, you were able todo 100% bonus depreciation,
just meaning any major assetsthat you purchased, you could
deduct the full cost in the yearthat you purchased them, which
was great.
In 2023, that went down to 80%,and for 2024 tax filings it's
(06:43):
down to 60%, and now, planningfor your 2025 tax year, it's
going down to 40% and then, ofcourse, down to 20% for 2026.
Speaker 2 (06:52):
And it's phasing out completely as a plan.
Speaker 1 (06:55):
After that, yes, and so that just means that a couple
of important things.
Of course you won't get aslarge of a deduction for your
equipment purchases and thingslike that.
Necessarily you may withsection 179, which we'll talk
about in a minute but you won'tget those big deductions.
And it also means some otherthings, like if you are trading
(07:15):
vehicles a lot, then you mightbe in a situation where your
vehicle has gone down in valuebut you've depreciated the whole
thing and now you're going tohave a big gain when you trade
that in and you won't have thecorresponding offset of the new
vehicle because you don't get todeduct it all in the first year
.
So you could be in a situationwhere you trade in a vehicle and
(07:36):
buy a more expensive vehicleand still end up paying tax on
that transaction.
A more expensive vehicle andstill end up paying tax on that
transaction.
So maybe talk to your CPAbefore you make that trade just
to make sure it's not going tobite you in the butt.
Speaker 2 (07:47):
Right, this sounds a little bit confusing, but that's
the best.
Advice is if you're going totrade in a vehicle, especially
if you're making quick trades,talk to them first so that you
know what the tax consequencesare before you do that, just
because all of these rules havechanged and it's not what you're
used to in the past.
Speaker 1 (08:03):
Now, on that note, there is still Section 179
depreciation.
It's very similar in that youget to deduct 100% of the cost
of the asset that you buy in theyear that you buy it.
But where it's different thanthe bonus depreciation is that
you have a lot of limitations onthere.
For example, the most importantone is if you have a loss, you
(08:23):
can't use section 179.
You can't increase a loss withsection 179.
You can only bring your incomedown to zero.
And so now that might not seemlike a big deal because you're
like well, if I don't make anymoney, I won't pay any taxes.
Well, sometimes people havemultiple businesses and they're
using these losses generatedfrom massive depreciation on one
business to offset a whole lotof profit on another business,
(08:47):
and this might just mean thatyou shift which business you buy
those assets through.
There's some things you can do.
That would make a really bigdifference if you just talk to
your CPA before you make thosepurchases.
Speaker 2 (08:58):
All right, what's next?
Speaker 1 (08:59):
And the last big change we've mentioned before.
It's already happened, but somepeople still aren't doing this.
So the estimated tax penalty.
If you don't make estimated taxpayments through the year and
you have income where there's nowithholding not a W-2,
something like a business orrental income or anything like
that you're supposed to payquarterly to the IRS what you
(09:21):
might owe for the year and ifyou don't, they charge you a
penalty.
In the past we had said pay it,don't pay it.
The penalty is pretty small.
It's not really that big of adeal.
You might be earning more onyour interest from your savings
account by leaving it in therethan the penalty anyway.
Well, that's not really thecase anymore.
The interest rates have gone upand, as such, the IRS has
increased that estimated taxpenalty.
(09:43):
It's around 7%, so most peoplearen't getting that in a savings
account.
It stings quite a bit more now.
So I would recommend that youdo pay those estimated tax
payments through the year toavoid that extra penalty.
Speaker 2 (09:57):
Yeah, so our advice is changing on that.
So if you listen to previousepisodes from a while back, then
now we say make your estimatedtax payments.
Speaker 1 (10:05):
Right, and that's not really a change of principle,
it's just the math.
Paying less than 3% in penaltywhen you can have a 4% savings
account is fine really, butpaying 7% when the best savings
accounts out there aren't evenpaying 5%, it just doesn't
really make sense.
Speaker 2 (10:23):
Well, that wraps up this very super exciting episode
about tax law changes, butreally not too many for this
year moving forward yet Ifthere's anything big, we'll
definitely have another podcastepisode, but we thought these
were the most important thingsto point out for people
listening to this podcast.
So until next time, thank youso much for listening to.
Speaker 1 (10:45):
What your CPA Wants you to Know.
Speaker 2 (10:47):
Podcast.
Speaker 1 (10:54):
This podcast is intended to provide accounting
and tax information foreducational purposes only.
All tax situations are uniqueand should be handled with the
assistance of a tax professional.
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