As we have in prior years, Aprio is privileged to offer you our year-end tax planning guide. In this year’s guide, we review evergreen planning strategies while also discussing key dynamics, such as the expiration of notable tax provisions and the political landscape, that will make planning for the 2025 tax year particularly challenging.
01
Business Tax
As we near year-end there are two significant factors that will greatly impact businesses — the planned expiration of many key tax provisions under the Tax Cuts and Jobs Act of 2017, and the 2024 presidential election.
These expiring provisions, such as the 20% QBI deduction and bonus depreciation phase-out, and the political landscape present unique tax planning challenges for businesses as the resulting impact can be quiet substantial.
20% deduction for QBI set to expire at the end of 2025
12 TCJA provisions are scheduled to sunset in 2025
02
Individual Tax
Individual taxpayers face even more uncertainty than business taxpayers due to the scheduled sunset of a plethora of tax provisions under the Tax Cuts and Jobs Act of 2017.
The opportunities and pitfalls, particularly surrounding estate planning and wealth transfers, will create a bumpy 2025 for individual taxpayers unless Congress acts to extend or modify these provisions past the scheduled expiration date on December 31, 2025.
03
Estate & Gift Tax
As we approach the sunset of the estate and gift tax exemption, it is paramount for taxpayers to evaluate how current estate tax laws and potential future changes could impact their financial strategies and legacy intentions.
While the current estate and gift tax exemption allows individuals to transfer a significant portion of their wealth to their loved ones tax-free, it’s important to take proactive steps and take advantage of these benefits before they expire on December 31, 2025.
Estate tax exemption will decrease by 50% after Dec 31, 2025
Proposed regulations on Section 961 & impact on PTEP rules
04
International
The IRS has been active in issuing guidance on several international transactions and holdings, including Section 961 guidance and certain inbound reorganizations and developments on the U.S./Chile tax treaty as well as the Russia tax treaty.
Additionally, 2024 has brought significant court rulings by the Supreme Court, such as the landmark decision in the Moore v. U.S. case and the potential international impacts due to the overruling of the Chevron Doctrine.
05
Employee Retention Program (ERC)
Since the beginning of the ERC program, legislators and the IRS have not provided clear guidance on the rules surrounding the eligibility process, which has opened doors to abuse in the system. The IRS has regularly acknowledged the challenges with respect to these abuses, as well as the confusion that may have been caused due to lack of clarity on eligibility.
On August 15, 2024, the IRS announced updates to the ERC program, including a limited reopening of the Voluntary Disclosure Program and the continued commitment to identify and act upon claims they believed were improperly filed or for businesses that were ineligible to claim the credit.
Filing 2021 ERC refund claims expires on April 15, 2025
Year-end consolidations are due on Jan 1, 2025
06
Employment Tax
When heading into year-end, there are several federal and state employment tax considerations that businesses should pay attention to as they deliver the biggest impact and affect many organizations.
From confirming all payments made to employees were properly included in income for the year to reviewing the treatment of any merger, acquisition, or internal reorganization activities, companies should ensure they were properly reported.
07
State & Local Tax
The ongoing changes to the global economy will continue to drive state and local tax policy. As states seek to keep up with technology and changing streams of revenue, the state income tax landscape will also continue to shift.
With a likely change in federal tax policy post-election, states will have additional considerations for how to align state income tax with their economic policies and outlook.