Tip Category: Planning
Take Advantage Before Changes Occur - Weekly Tax Tip!
Unless Congress takes action, a number of temporary tax laws are going to expire at the end of 2025. This means you have this year and next to take advantage of the current rules. That doesn’t mean Congress won't extend the current laws, but why take the chance? Here are some of the larger changes to consider:
Tax rates will go up, with very different income brackets
Result: Most taxpayers will be subject to higher tax rates with the top rate moving from 37% to 39.5%. The income subject to these rates will also change dramatically. Now is the time to effectively manage tax brackets to avoid higher rates!
Many more taxpayers will itemize deductions and have them subject to phase outs
Result: Standard deductions may go down and your deductions may be lowered if your income exceeds certain thresholds. There is good news as the $10,000 tax limitation will be removed, and currently-excluded deductions are planned to be reintroduced.
More will be impacted by the alternative minimum tax
Result: Many more families will be subjected to a potential second tax calculation with the higher of the two tax rates being used to tax your income.
The child tax credit will be reduced, as will the phaseout for qualifying for the credit
Result: Most families with children will see a higher tax bill.
There will be different capital gain tax rules
Result: Planning sales of assets will be more important than ever and is a tremendous tax planning opportunity to consider prior to the tax change!
Exemptions will be re-introduced
Result: This tax reduction provision may take some of the sting out of the rollback of temporary tax laws.
Small businesses may lose their 20% QBI deduction
Result: While small businesses in flow through tax entities, such as S Corporations, partnerships and sole proprietorships, will lose a valued tax break, look for Congress to re-introduce other tax incentives to combat the perceived lack of tax fairness when compared with other countries.
Given these pending changes on the tax horizon, now is a great time to see if you can take advantage of the current tax laws BEFORE they are scheduled to change.
Contact us and let our skilled OAHU Tax Experts offer their well-rounded tax advice and tailored tax solutions to help you file accurate tax reports. Diamond Head Tax Group is Honolulu's trusted source of tax filing services serving Waianae, Honolulu, Kapolei, Oahu and surrounding areas.
Tax Planning Changes Weekly Tax Tip from Diamond Head Tax Group
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