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Business Journals
6 days ago
- Business
- Business Journals
Regions explains The Big Beautiful Bill
What are the most impactful changes for businesses in this tax package? No matter if you are a business owner, or you're looking at the legislation from a personal financial perspective, there are several important changes. For owners of certain sole proprietorships, S-corporations, and partnerships, the Section 199A deduction for qualified business income still allows for a deduction of up to 20% when calculating taxable income. There is now a minimum deduction of $400 for taxpayers with $1,000 of qualified business income. Previously, higher-income owners of certain specified service trade or businesses, or SSTBs, like businesses involved in the fields of law, accounting, brokerage services, etc., were limited from taking the deduction at certain income levels. Generally, the limitation for these owners was introduced over a phase-in range. Prior to the law, these phase-in ranges extended to $50,000 of income over a certain threshold for single-file taxpayers, and $100,000 for taxpayers filing married. The law increases these phase-in ranges to $75,000 for single filers and $150,000 for joint filers. This means taxpayers receiving income from specified businesses may qualify for more of a deduction benefit at higher income levels, if other criteria are also met. The qualified business income deduction is now permanent. Two additional changes are the Section 168(k) bonus depreciation for new tangible property used for business purposes placed into service after January 19, 2025, and the ability to expense qualifying capital purchases under Section 179. The law restores a more generous measure for business interest expense deductibility. Prior to 2025, businesses were able to deduct up to 30% of adjusted taxable income (ATI), akin to EBIT – earnings before interest and taxes – but with depreciation and amortization factored in. The law expands the 30% ATI limit to 30% of EBITDA after December 31, 2025, meaning that businesses with large deduction and amortization expenses could potentially find the after-tax cost of financing to be quite favorable. To be clear, the corporate income tax rate for C-corporations remains at 21%. How does the new package affect individual taxpayers, especially middle-income families? The law continues the suspension of personal exemptions in lieu of higher standard deductions, while also making permanent the suspension that was part of the 2017 Tax Cuts and Jobs Act. That permanent suspension was something a lot of people were looking for. So, depending on whether a taxpayer itemizes deductions or not, this can continue to be beneficial for taxpayers who would otherwise not have enough deductions to itemize. The introduction of savings accounts for children allows parents and others to set aside up to $5,000 of after-tax dollars for a child beginning in 2027. Growth inside an account is tax-free. Withdrawals cannot take place until a child reaches 18, and after that, follow many of the rules for individual retirement accounts. Distributions before age 59 ½ are subject to a 10% penalty, unless the distribution is used for college tuition or a first-time home purchase. These can be good options for saving for the future and should be evaluated considering how the funds are intended to be used, as well as other options that already exist, such as 529 accounts. How permanent are these changes – and how should taxpayers plan for future political shifts? Could key provisions sunset or reverse after the next election cycle? These changes are permanent, unless Congress decides to change them in a future law. A key benefit is that many sunset dates that came with the 2017 Tax Cuts and Jobs Act are not present this time around, and some of the most popular provisions are now permanent. However, there are a few provisions that will sunset or be reduced in future years. Those include: the elevated $40,000 state and local tax (SALT) deduction (2029) tip income deduction (2028) qualified overtime pay deduction (2028) $6,000 income tax deduction for seniors (2028). What is your current outlook on the economy? Optimistic? Cautious? Uncertain? Overall sentiment certainly improved among businesses in the months following April. Remember, back in April, there were unknowns about tariffs; the headlines were all about uncertainty and what the tariffs would mean. But as the months went on, I think more people recognized the goal was to get trade partners to the bargaining table to outline new deals. That seemed to bring greater reassurance to the marketplace over time. Another area where businesses have more clarity now than they did back in April is the tax situation. With the new law passed, provisions enacted several years ago are permanent, and that gave business owners a stronger basis for planning and managing expenses. Regions' go-to-market strategy is centered on having a relationship-based approach to serving clients. We do not focus on single transactions but instead prioritize the needs of our clients and walk alongside them to help meet their financial and business goals. It's part of our legacy here in Birmingham and across the Southeast, and it continues to be a strong driver to our company's growth. We are integral parts of the lives and operations of our clients, helping provide advice, guidance and propose solutions through any economic cycle. This information is general in nature, is provided for general marketing and educational purposes only, and should not be interpreted as accounting, financial planning, investment, legal or tax advice or relied on for any decisions you may make. Regions encourages you to consult a professional for advice applicable to our specific situation and consult for current tax rules.
Yahoo
08-08-2025
- Business
- Yahoo
4 ways business owners could reap big tax savings under OBBBA
Financial advisors and tax professionals with clients who own businesses of any size can help them rake in significant savings under several provisions of the One Big Beautiful Bill Act. The massive legislation signed into law by President Donald Trump last month tweaked tax rules on business deductions, capital-gains exclusions and estate planning. Those changes will require advisors and their clients to take a fresh look at their strategies, according to Jere Doyle, an estate planning strategist with BNY Wealth, and Holly Swan, the head of wealth solutions in the global client strategy unit of asset management firm Allspring Global Investments. Outside of the elimination starting next year of certain tax advantages for businesses that buy food for employees, experts say the legislation will generally extend or expand companies' lower payments to Uncle Sam through the Tax Cuts and Jobs Act of 2017. Some companies are already touting the incentives for capital investments, even as they struggle to prepare for the earnings impact of Trump's tariffs. Interestingly, the final law didn't include the House bill's effort to hike the Section 199A deduction for qualified business income, even as it boosted the incentives for qualified small business stock, Swan noted. "QBI and 199A aren't really the big news that people had hoped they would be," she said, noting that "no one was anticipating" the Senate's changes to the guidelines for qualified small business stock. "The rules have always been great, but they haven't really kept up with the times. And I think the new rules are pretty amazing." READ MORE: Trump's megabill passed — here's what advisors should know Business expenses and depreciation With a few caveats around tax code criteria and expected IRS rulemaking, businesses of all sizes may use words like "amazing" to describe the law's approach to expenditures for research and development and other corporate investments. In particular, the alterations in Sections 168 and 179 of the code amount to "an incentive for people to buy stuff" in ways that "will boost sales" of heavy machinery, Doyle noted. By raising the possible annual equipment expense deduction to $2.5 million (subject to phaseouts based on income) and enabling the businesses to depreciate capital investments based on their full cost up front rather than in the "straight line" method, those provisions of the law alone could push up the value of many businesses. "The message is, people can write stuff off sooner, deduct it sooner," Doyle said. "That lowers their taxable income and increases the amount you take home." READ MORE: Trump's new law cuts both ways for Social Security beneficiaries Qualified small business stock Just as those rules seek to promote economic activity, the legislation bulks up the capital-gains exclusions available for qualified small business stock under Section 1202 as a means of spurring investment, Swan noted. The legislation beefed up the criteria for eligibility to businesses valued at as much as $75 million with inflationary adjustments from only $50 million, while ratcheting up the available exclusion to $15 million from $10 million, Swan noted. In addition, those exclusions will kick in at 50% of the gain three years after the investment and 75% after four years, on top of the previous 100% level available after five. "It's really an acknowledgement of the fact that some of these small businesses do sell faster than expected," Swan said. "It's a really big incentive to invest in American small businesses that a lot of people didn't see coming. … So hopefully that will be extremely stimulative for small businesses." Those provisions offer "a little bit more leeway" in that the "company can be a little bit bigger to qualify," Doyle noted. While the fact that the company must be a C-corporation rather than a limited liability company to get the exclusion still poses some complications for startups, the new treatment of qualified small business stock will be a "huge" boon, he added. READ MORE: Caps, credits, contributions: Tax planning for parents under OBBBA Snacks and meals for the team not tax-friendly anymore On the other hand, the need to raise revenue to pay for at least part of the huge cost of the legislation led to the outright elimination of a deduction for most employer-provided meals and snacks that the 2017 law had previously reduced to 50% of the amount of the price of the food. That provision didn't receive as much attention as, say, the tense negotiations on the deduction for state and local taxes. But Swan has received several calls from advisors about it, she said. "I had viewed it as a non-issue," Swan said. "I just think we're all going to bring in our own snacks, but I was shocked by how many people called me." READ MORE: How to avoid capital gains taxes with highly appreciated stocks Section 199A deduction for qualified business income The final legislation also made permanent the current 20% deduction available to the owners of qualified pass-through businesses. Economists had frequently criticized the questionable impact to job creation and disproportionate benefits of the deduction for the wealthiest taxpayers. Regardless, the combination of the extension of the qualified business income deduction and the Senate's removal of a part of the House version of the bill that would have "done a big scale-back" of a so-called pass-through entity tax workaround for state and local taxes will likely prove advantageous to business owners in New York, California and Illinois, Swan said. "People with pass-through entities who live in those high-tax states can still benefit," she said. "I end up getting a lot more questions about PTET than I do about QBI." READ MORE: An overlooked charitable IRA tool steps into the spotlight Estate taxes While they may be applicable to many non-business owners as well, other provisions of the law that expanded the opportunity zone credit and exemptions from the estate tax could affect many entrepreneurs and their families, Doyle noted. "We encouraged people to do things before the end of the year because that exemption was supposed to sunset," he said. "They've got certainty around what the exemption is going to be."
Yahoo
16-07-2025
- Business
- Yahoo
Builders say One Big Beautiful Bill Act will fuel construction activity
This story was originally published on Construction Dive. To receive daily news and insights, subscribe to our free daily Construction Dive newsletter. The One Big Beautiful Bill Act is opening the door for increased construction investment, but it may also deepen existing challenges tied to labor and supply. Unlike the Inflation Reduction Act, which concentrated its support on clean energy, the One Big Beautiful Bill Act casts a wider net, said Vance Walter, senior director of legislative affairs at Associated Builders and Contractors. Its most transformative provisions include the restoration of 100% bonus depreciation, immediate expense of research and development costs and a permanent extension of the 20% pass-through deduction under Section 199A, said Deniz Mustafa, senior director of infrastructure finance at Associated General Contractors of America. These serve as boons for construction activity, according to industry sources. 'This also improves cash flow and makes it easier for contractors to replace aging equipment,' said Mustafa. 'In the construction industry, this means it is easier for companies to access equipment that is safer, cleaner and more efficient.' The changes are particularly significant for small and mid-sized contractors, where cash flow and tax predictability influence everything from equipment purchasing to hiring. 'Businesses can now immediately expense capital investments through 100% bonus depreciation,' said Walter. 'This will encourage firms to invest in new construction equipment and technologies, boosting safety, quality, productivity and economic growth.' Winning sectors The biggest potential winner may be manufacturing construction, said John Robbins, global head of enterprise project management at Turner & Townsend, the U.K.-based real estate and infrastructure consultancy. Expect more construction activity on automotive, food production and semiconductors, all of which now qualify for the 100% deduction, he said. 'I believe this will stimulate activity and investment with construction of new high-tech manufacturing. These tax enhancements should be very attractive and help greenlight shovels in the ground throughout the country,' said Robbins. 'Any newly built non-residential facility whose primary use is to manufacture, process or refine tangible goods can take the 100% deduction.' The provision covers a wide swath of domestic production, so long as projects break ground between January 2025 and December 2028, and are placed in service by 2031, said Robbins. This means projects that have been in a holding pattern or on the design boards — the Project Stress Index increased 11.4% in May — can 'now be accelerated,' according to Robbins. Beyond factory construction Other sectors likely to benefit include defense-related construction, air traffic control improvements and traditional energy production, said Jeff Urbanchuk, senior vice president at the American Council of Engineering Companies. The bill also sets aside nearly $50 billion for border security construction, he added. That funding could lead to new contracts across the southern U.S., potentially driving demand for firms with experience in civil and federal work. Projects tied to air traffic control and defense infrastructure may also open the door for specialty contractors and design firms, especially those with experience navigating federal contracts and military specs. Robbins added electric production, including zero-emission nuclear power, could also see renewed construction activity due to the broader capital-friendly structure of the bill. That may prompt developers to advance previously delayed or underfunded power generation work, said Urbanchuck. 'America's engineering firms are engaged across the domestic energy sector, designing systems that produce and transmit power generated from traditional, nuclear and renewable sources,' said Urbanchuck. 'We do believe the Big Beautiful Bill will lead to meaningful growth.' A rush to build But as more construction companies benefit from greater activity, pressure could build on labor and material pipelines already under strain, said Joseph Molloy, tax partner at Anchin, a New York City-based accounting, tax and advisory firm. 'The bill's emphasis on domestic sourcing and reshoring may increase demand for U.S.-based construction labor and materials,' said Molloy. '[That's] potentially intensifying workforce and supply chain pressures.' That strain may only increase as firms rush to break ground before other provisions phase out, said Robbins. For example, tax credits for energy-efficient buildings are set to expire after 2026, creating urgency for stalled or newly planned green developments. 'Timing and financing strategy now matter as much as project cost in maximizing the new law's benefits,' said Robbins. Enhanced incentives for projects in opportunity zones could also drive more construction in distressed communities, particularly in residential and mixed-use segments, he added. Yet, even with these provisions in play, long-term momentum still hinges on what comes next, said Urbanchuk. 'Overall, the Big Beautiful Bill is a step forward for our industry,' said Urbanchuk. 'Our attention now goes to what Congress is planning for the reauthorization of the Infrastructure Investment and Jobs Act, which is set to expire in September 2026.' Recommended Reading Tariffs keep contractors guessing on material costs
Yahoo
12-07-2025
- Business
- Yahoo
The Oligarchs' Big Prize in Trump's Budget-Busting Bill
If America is a ruled by a billionaire oligarchy, as I argued in a recent New Republic feature story ('How the Billionaires Took Over'), what will our billionaire overlords get out of the 'big, beautiful' budget reconciliation bill that narrowly cleared the Senate this week? Higher interest rates, for one, because the bill more than doubles the budget deficit; this will benefit billionaire creditors but hurt billionaire borrowers. The top marginal rate won't rise from the present 37 percent to 39.6 percent, as it would have done in a Harris administration, which is excellent news if you actually pay that much—but often billionaires do not. And I'll wager your typical oligarch doesn't give a rat's ass whether or not 12 million people lose medical coverage and six million people lose food stamps. The oligarchs' real prize in the reconciliation bill is the continuation or possible expansion of a 2017 change in the tax code so tedious to explain that most news accounts haven't bothered. Some people call it the qualified business income deduction, others call it the pass-through deduction, and still others just call it Section 199A. It's a deduction of 23 percent (House version) or 20 percent (Senate version) on business income that 'passes through,' untaxed, to a private individual, who then pays taxes on it as personal rather than corporate income. The rationale for this deduction is that business income shouldn't be taxed at a maximum 37 percent rate when the corporate income tax is only 21 percent. Are you bored yet? If so, you're exactly where the oligarchs want you. Maybe you'll perk up if I tell you this tax cut will add to the budget deficit either $820 billion (House version) or $736 billion (Senate version). More than half the benefit will go to millionaires. Pass-through income is a key driver of income inequality. Between 1985 and 2021, the top 1 percent in the income distribution increased its share of the nation's income from 13 percent to more than 25 percent. The majority of that increase came from pass-through income. Defenders of the pass-through tax break will tell you that most pass-through businesses are small businesses, and that's true. But the majority of income from pass-through businesses goes to the rich. In 2011, 70 percent of all pass-through income went to the top 1 percent; the 2017 tax break almost certainly pushed that proportion higher. We're talking oligarch money. When corporations spend money on political candidacies, as they were invited to do by the Supreme Court's execrable Citizens United ruling in 2010, the corporations in question are seldom publicly held (i.e., the kind that pay corporate tax), because shareholders are liable to object. Instead, corporate contributions typically come from privately held S-corporations, partnerships, and limited liability corporations (or LLCs), where income passes through to a very wealthy owner. The less tax these oligarchs pay on pass-through income, the more they have to buy politicians. Pass-through corporations proliferated after Ronald Reagan's 1986 tax reform reduced the top marginal income-tax rate from 50 percent to 28 percent. That law lowered the corporate tax rate too, but not enough to halt a stampede from public to private corporations. (I'm grateful for this history to Bloomberg's Justin Fox.) The pass-through advantage diminished in subsequent years as a result of various tax changes. But when Trump's 2017 tax law dropped publicly held corporations' tax bill from 35 percent to 21 percent, the pass-through-dependent rich screamed bloody murder until Congress agreed to lower taxes on pass-through income too, with the 20 percent deduction. (Reason Number I-Lost-Count why it was dumb to lower corporate taxes in the first place.) The result was not, in fact, parity, mainly because revenue generated by publicly held corporations gets taxed twice (through corporate taxes and taxes on dividends or capital gains) whereas pass-through revenue gets taxed only once. If any type of corporate structure should be favored by the tax system, it's public ownership. I'm no cheerleader for publicly held corporations, but they're usually preferable to privately held corporations because they're at least theoretically accountable to shareholders, many of them pensioners. And again, it's privately held corporations that account for the bulk of corporate political spending unleashed by Citizens United. But the trend runs the other way; between 1996 and 2020, the number of publicly held corporations shrank by nearly half. You don't have to be a bleeding heart to hate the pass-through tax break. The American Enterprise Institute's Kyle Pomerleau can't stand it, either, on the grounds that tax policy shouldn't favor one type of corporate structure over another. According to Fox, 'it's hard to find any tax expert of any political leaning not in the employ of the pass-through industrial complex who thinks the qualified business income deduction is a good idea.' A 2021 study by the National Bureau of Economic Research found the 2017 pass-through deduction did not increase capital investment, wages, or employment. When it was first proposed, Daniel Savior, professor of law at New York University, called it 'the worst provision ever even to be seriously proposed in the history of the federal income tax.' But oligarchs love pass-through income, perhaps most especially Donald Trump, whose Trump Organization is privately held. And what oligarchs want, they usually get. Sign in to access your portfolio
Travel Weekly
07-07-2025
- Business
- Travel Weekly
ASTA lauds two measures in Trump's Big Beautiful Bill
While ASTA offered no overall position on the Trump administration's budget bill signed into law on July 4, the Society pointed to two victories it had been lobbying for: a tax break for advisors was made permanent and flexibility was increased for education savings accounts. The bill makes permanent a tax break known as the Section 199A deduction. Small businesses can deduct 20% of their qualified business income. The tax break was originally set to expire at the end of the year. According to ASTA, the law has been updated to raise income limits to $75,000 for individuals or $150,000 for couples filing jointly. It also guarantees a minimum deduction of $400 for those earning at least $1,000 in business income. ASTA said the deduction is applicable to many advisors. In a survey conducted earlier this year, 87% of respondents said it was moderately or very significant to reduce their tax liability. "Travel advisors pour their profits into customer service, technology and education. Making the tax deduction permanent provides certainty so they can keep innovating for travelers," said ASTA vice president of advocacy Jessica Klement. Text from the Freedom to Invest in Tomorrow's Workforce Act was also included in the bill, expanding the approved uses of 529 savings plans. Previously, the funds could be applied to a U.S. college or university or an apprenticeship program. Now, funds can be used for postsecondary training and credentialing, like ASTA's Verified Travel Advisor certification. Klement called it "a common-sense update," noting that "professionals can choose the training that best suits their goals."
