Changes to charitable donation deductions are on the horizon
Changes to charitable donation deductions are on the horizon. Beginning in 2026, if you itemize deductions, your otherwise allowable charitable deductions will be limited to the amount that exceeds 0.5% of your 2026 adjusted gross income. In addition, if you’ll be in the 37% income tax bracket, your tax benefit generally will be as if you were in the 35% bracket. If you’ll be affected, you may want to accelerate donations into 2025 and then bunch donations into alternating years. But if you claim the standard deduction, in 2026 you can potentially benefit from a new charitable deduction for nonitemizers of up to $1,000 ($2,000 for married couples filing jointly). Contact us to learn more.
Significant changes to information reporting go into effect for the 2026 tax year
If your business has employees or independent contractors, you’re subject to various information reporting requirements. Some significant changes to these rules will go into effect for the 2026 tax year (forms that will be filed in early 2027 to report 2026 amounts). Specifically, new reporting will be required to help employees and others claim tax deductions for qualified tips income and qualified overtime income. But there also will be some reporting relief for businesses. Effective for payments made after 2025, the reporting threshold for filing Form 1099-MISC and Form 1099-NEC will increase to $2,000 (from $600 for 2025), with inflation adjustments for payments made after 2026.
New law eases the limitation on business interest expense deductions for 2025 and beyond
Interest paid or accrued by a business can be deductible for federal tax purposes. But for larger businesses, the deduction is generally limited to 30% of adjusted taxable income (ATI). Now, for tax years beginning in 2025 and beyond, ATI will be computed before any deductions for depreciation, amortization or depletion. This change more closely aligns the ATI definition with the financial accounting concept of earnings before interest, taxes, depreciation and amortization (EBITDA) and increases ATI, thus increasing allowable deductions for business interest expense. The rules are complicated. If your business may be affected, contact us. We can help assess the impact.
Businesses should carefully contemplate their cybersecurity budgets
As your business grows, a strong cybersecurity budget is essential to mitigate risk. To determine how much to spend, first review your technological environment. Define how your systems are structured and managed, identify protections in place, and evaluate whether past issues indicate vulnerabilities. Most companies budget for recurring costs (such as software subscriptions and external support) as well as periodic enhancements to address new threats and evolving technology. Adding cybersecurity as a dedicated line item in your annual budget helps keep spending predictable and aligned with your strategic objectives. Contact us for help developing or reviewing your cybersecurity budget.
Checking off RMDs on the year-end to-do list
If you’re age 73 or older and have one or more tax-advantaged retirement accounts or you’re younger and have inherited such an account, you may need to take required minimum distributions (RMDs) by Dec. 31. If you don’t comply, you can owe a penalty equal to 25% of the amount you should have withdrawn but didn’t. (If the failure is corrected in a “timely” manner, the penalty drops to 10%.) The RMD rules can be confusing, especially if you’ve inherited a retirement account. If you’re subject to RMDs, it’s also important to accurately calculate your 2025 RMD. We can help ensure you’re in compliance. Please contact us today.
Michigan’s Decoupling from Federal Bonus Depreciation and Section 179 Expensing under The One Big Beautiful Bill Act (OBBBA)
The federal 2025 Act, also known as the One Big Beautiful Bill Act (OBBBA), made significant changes to federal depreciation rules. It permanently reinstated 100% bonus depreciation for qualified property acquired after January 19, 2025, and increased the Section 179 expensing limit to $2.5 million with a $4 million phase-out threshold, both indexed for inflation. […]
Protect business continuity with an emergency succession plan
An unexpected crisis can disrupt even the best-run small to midsize business. And the risk is especially high when the owner solely handles many critical relationships and decisions. That’s why your company needs an emergency succession plan. Its purpose is to clarify responsibilities, preserve operational continuity and reassure key stakeholders in the event of a crisis. The plan should identify an emergency successor; ensure this person has appropriate power and access; document key policies, procedures and systems; and include a strategy for communicating with employees and external stakeholders. Contact us for help developing an emergency succession plan or reviewing an existing one.
There’s still time to save 2025 taxes
Just because it’s December doesn’t mean it’s too late to reduce your 2025 tax liability. Consider implementing one or more of these year-end tax-saving ideas by Dec. 31: 1) Defer income and accelerate deductions. 2) Harvest investment losses. 3) Donate appreciated stock to qualified charities. 4) Maximize pre-tax and deductible retirement plan contributions, including catch-up contributions if you’re age 50 or older. Some of these strategies will be beneficial only if you itemize deductions. Other factors could make these ideas less beneficial in certain circumstances. Contact us to discuss what makes sense for your situation and more last-minute tax-saving strategies.
Is it time for your business to start outsourcing?
As your small to midsize business grows, handling every operational task in-house can stretch your talent and resources while unnecessarily elevating certain risks. It may be time to consider outsourcing functions such as accounting and financial reporting, customer service, information technology, and payroll and human resources. Doing so can improve efficiency, strengthen compliance and free up your team to focus on revenue-generating work. Just bear in mind that you’ll need to vet providers thoroughly, incur ongoing engagement costs and put effort into maintaining outsourcing relationships. Contact us for help evaluating your options and understanding the financial and tax implications.
6 last-minute tax tips for businesses
Year-round tax planning generally produces the best results, but there are some steps you can still take in December to lower your 2025 taxes. Here are six that business owners should consider: 1) Postpone invoicing. 2) Prepay expenses. 3) Buy equipment. 4) Use credit cards. 5) Contribute to retirement plans. 6) Reduce income if needed to qualify for the “pass-through” deduction. These strategies are subject to various limitations and restrictions and won’t be beneficial for every business owner. So consult us before implementing them. We can also offer more ideas for reducing your taxes this year and next.
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