Tax clients are already starting to ask their accountants about the many changes in the massive One Big Beautiful Bill Act passed by Congress last week.
"I think they're just kind of waking up and saying, 'OK, what's the bottom line here for me, and how does this affect me?'" said Robert Lickwar, a partner at Top 50 Firm UHY. "Certainly there are things in there that will, but then there's other things that won't."
The bill has both pros and cons for various taxpayers. "It's like anything with any bill that comes out of D.C.," said Lickwar. "Some people see parts of it as good, others see it as bad. It depends on how it affects your situation."
On the positive side is tax rate stability, thanks to the many "permanent" features of the bill, which could nevertheless be changed by a future Congress and administration.
"I think the tax rate provisions being stable, at least for another four years, allows for people to better plan their transactions," said Lickwar. "The fact that there's certainty with standard deductions and child credits, at least in the short term, is probably good. They made some good adjustments to the qualified small business stock, and they put a couple other things in there, but that's a big one for most of my clients."
The rollbacks in renewable energy tax credits and incentives are causing some gnashing of teeth.
"A certain number of people will probably be disappointed with the energy provisions, like the clean vehicles and some of the improvements to the home, including the solar, the wind and the geothermal, and the fact that those are going to be phased out over a relatively short period of time," said Lickwar. "I'm sure people are probably not overly thrilled about that, and may influence what they do in the next few months, as far as looking to obtain that clean vehicle by September 30 to enable themselves to get the credit."
Many of the tax incentives for clean energy under President Biden's Inflation Reduction Act will be coming to an end under Trump's bill. But there was already some expectation that would happen given the rhetoric coming out of the White House.
"At least from my personal client base, everyone who had something planned is going to proceed," said Lickwar. "I don't have any that were waiting till the bitter end to say, 'What's going to happen here?' I have a few clients that have done roofing projects, for example, on their manufacturing facilities and things of that nature. Those projects have already been done, so nothing has really come down to the wire. I think it's problematic. There was a little bit of an extension on some of those types of products, and certain of the energy credits were pushed out to a later date, depending on when construction starts."
Other clients, such as restaurants, will be impacted by the tax exemption on tip income.
"Certain of our clients are going to be affected by the tip provisions and the wage provisions," said Lickwar. "I have no idea how the payroll departments are going to even know where to start. They're going to have a lot of work to do over the summer."
Read the full article published by Accounting Today.
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