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ERP Implementation: Why Organizations Should Consider External Support

Posted on by Kristine Sinisi

By: Ian Tobin

Enterprises today strive for operational efficiency and improved productivity, often turning to Enterprise Resource Planning (ERP) systems to achieve these goals. However, introducing an ERP system into an organization is a complex and multifaceted endeavor that demands meticulous planning, coordination, and execution. While implementation vendors typically assign a project manager, your internal team must uphold the importance of having a dedicated project manager. Also, companies often need more resources to staff an implementation project internally, resulting in management and executives assuming responsibility for these projects while managing their daily roles. This scenario splits their attention and dilutes focus, hindering the success of the ERP implementation. 

For a successful implementation, businesses should allocate around 50% of their time to this initiative. This requires a critical re-evaluation of concurrent priorities and ongoing projects. Without this dedicated focus, the implementation might lack the attention and resources needed for a seamless execution. Companies often take on these projects without considering the time commitment they require. This leads to a gap between their available resources and what is needed to go live.

One way to bridge this gap is to seek experienced support externally. External support can include a dedicated project manager to work internally on your team and additional resources to support project open items. This ensures a consistent focus on the implementation while allowing company leaders to concentrate on daily responsibilities. 

Although the vendor typically acts as the primary product configurator, having an internal project manager and staff to assist with open items is crucial for project success. The internal project manager is the organization’s advocate, streamlines internal resources, coordinates with the vendor, and tracks contracted deliverables against actual outcomes. The collaborative effort between the vendor and the client-side project manager ensures that the implementation aligns precisely with the organization’s unique needs and goals. It is also essential to have dedicated resources on your team to assist during system configuration and setup. Implementation vendors manage these projects in a way that slowly transfers ownership to your team. Generally, their team will set up the system’s overall configuration. However, customization of certain areas is frequently overlooked, and your team will be responsible for handling them in numerous instances. Some areas that commonly need more support from the vendor are user security and dashboards. Vendors provide high level training on these features, but the support can be limited when it comes to customization. These are also two areas where the benefits of an ERP system shine. User-security features allow for segregation of duties, and restricted access to certain data. Dynamic and customizable dashboards deliver real time insights that improve and accelerate decision making. Having experienced members on your team that can fill in where vendor support is lacking will ensure you are getting the most out of your system.

Managing organizational change is another challenge that comes with implementing an ERP system. Employees may need help adapting to a new system and processes. The training that implementation vendors provide can also lack the detail that end-users need to be successful post-go-live. Your internal project manager will be responsible for facilitating change management. This includes creating training plans and organizing the resources to fill training gaps and provide ongoing support. This ensures that employees are well-prepared for the transition, comprehend the benefits of the ERP system, and have a resource to turn to when vendor support is unavailable. 

In summary, a successful ERP implementation relies heavily on effective project management and staffing adequate resources. It requires dedicated focus, planning, and seamless coordination between your internal team and the implementation vendor. Organizations can ensure their ERP implementation is smooth with the proper allocation of time, resources, and expertise, paired with continuous collaboration with the vendor. An experienced internal project manager and team reduces the time commitment burden on company leaders. Additionally, a comprehensive change management strategy will foster user adoption and maximize efficiency in the long term. Seeking external support to fill these roles during your implementation will help steer the project toward success. 

At Wiss, our team incorporates all these aspects into our approach and will help you navigate the complexities of an ERP implementation. Do not undertake a project like this alone. Contact Wiss Technology Advisory for dedicated support and guidance throughout your implementation journey. 

Achieving Balance: Mastering Personal Wellness and Financial Health for a Fulfilling Life

Posted on by Michelle Antico

Commitment to improvement in both personal wellness and personal financial health are common resolutions made when the New Year comes around. Despite knowing their importance, it is all too easy to come up with excuses on why it is difficult to prioritize personal wellness and finances, or even one of them. It is even more difficult to prioritize them when numerous outside factors are out of your control. However, both are intertwined in ways that may not be so obvious, and there are decisions that you can control that will have long-lasting benefits. The impact that financial stress can have on both physical and mental health, as well as the impact that health issues can have on your wallet, underscores the importance of focusing on both.

The following are commonalities in how to approach both your personal wellness and financial health:

Have clear goals.

Before developing your personal wellness and financial health plans, the key is to have a clear idea of what you are trying to accomplish. Without clear goals, it is difficult to come up with an achievable plan or to measure success. There are many guidelines out there on how to develop goals best. The important part is knowing the goals before moving on but not letting defining them prevent progress.

In relation to personal wellness, some examples of things to think about are whether your goals are linked to a current or potential medical condition, energy levels, or an athletic achievement goal.

In relation to personal finances, some things to consider are whether the goal is higher income, spending less and saving more, or improving credit to support a particular expenditure.

Make sure your goals have measurable outcomes. As an accountant, my goals are often numerical, such as losing a certain number of pounds or increasing my savings by a set dollar amount.

Come up with a plan.

Once you have determined your goals, a clear plan will help you stay on track. Make sure to carve out adequate time to work on your goals. You may also need to take a more complex plan and break it down into smaller, simpler milestones. By focusing on these minor changes, you can see progress sooner, motivating you to continue changing your habits. Make sure each of your milestones has a clear timeframe. While making an impact on your personal wellness or finances is not likely quick, it will be difficult to get prompt feedback on how you are doing along the way if your timeframe is too long.

As a personal wellness example, if your goal is to achieve an athletic goal, your training plan may involve committing a certain amount of time to an activity weekly and increasing that time each week.

As a personal finances example, if your goal is to reduce your spending, try finding some small ways to save money in the first few weeks before seeking bigger wins. Common starting points are making your coffee and bringing lunch from home.

Small, consistent efforts over time lead to meaningful results. A focus on personal wellness can result in higher energy levels, which can lead to getting more done and reducing stress levels. Further reducing stress levels while alleviating financial concerns may help improve sleep quality, which then results in increased energy.

In addition to the commonalities between personal wellness and finance plans, they can also help each other. When building your strategy and creating new habits, consider the ones that will impact both goals. There will be opportunities to replace expensive or unhealthy habits with cheaper and healthier alternatives. For example, replace an expensive online shopping habit with in-person shopping at a local consignment store. You may even find unused clothing around your house that you can sell. Another example is to plan your next dinner with friends to be a night of cooking up a meal together instead of heading out to a restaurant.

Have self-discipline and grace.

While putting these in the same section might seem counterintuitive, they are both critical.

Without self-discipline, creating new habits is unlikely to be successful. Focus on your existing routines and how to incorporate your new habits into them. Stay disciplined by reminding yourself why the new habits are important and how they are part of your plan to achieve your goals. Keep in mind that self-discipline is inward-looking, as it does not focus on comparing yourself to or competing with anyone else.

It can be tempting to give up when something interferes with your goals, and that is where grace comes into play. You need to give yourself grace when you falter and forgive your mistakes. It will be easier to find the motivation to get back on track if you are kind to yourself and acknowledge that the changes you are trying to implement are not meant to be easy.

Incorporate Accountability and Support

No one achieves significant goals alone, especially when it comes to personal wellness and finances. Ask for help and lean on the people around you who can support you in your journey. Seek out friends, family members, or professional resources who can help keep you accountable. A workout buddy, for instance, can encourage you to stick to your exercise routine, while a financial advisor can help you build a more robust savings strategy.

Additionally, you can expand your support network by looking for local groups or online communities focusing on health or financial wellness. Connecting with like-minded people working toward similar goals can provide valuable advice, motivation, and camaraderie along the way. Group accountability can also be incredibly powerful in maintaining long-term progress.

In conclusion, prioritizing personal wellness and financial health is an integrated approach to achieving long-term happiness and stability. You can make meaningful progress in both areas by setting clear, measurable goals, developing a structured plan, practicing self-discipline and grace, and seeking support. While it may not always be easy, the benefits of balancing your health and finances will be far-reaching, resulting in a more fulfilling and less stressful life.

For more information, contact our experts today.

Tax Alert: IRS Relief for Los Angeles County Residents

Posted on by Michelle Antico

California’s Los Angeles County has faced devastating wildfires recently, causing widespread destruction, displacement, and hardship for thousands of residents. Recognizing the tremendous impact of these events, both the IRS and California governments have stepped in to offer critical tax relief to those affected. This IRS Tax Relief for Los Angeles is designed to ease the financial burden on individuals and businesses by extending filing and payment deadlines, allowing taxpayers to focus on recovery and rebuilding. Read on for a breakdown of what this means for you and how to take advantage of these extended deadlines.  

Why This Relief Was Granted

The wildfires in Los Angeles County have been among the most severe in recent history, prompting a state of emergency declaration by Governor Gavin Newsom and a Major Disaster Declaration by President Joe Biden. These measures enable residents to access various forms of disaster relief, including extended tax filing and payment deadlines at both the state and federal levels.  

This tax relief aligns with the urgency of the situation, offering LA County residents more time to manage their finances without the immediate pressure of tax obligations.  

Key Tax Relief Measures

The IRS and the California Franchise Tax Board (FTB) have implemented several measures to provide relief for individuals and businesses affected by the wildfires. Here are the main details you need to know: 

Federal & State Filing and Payment Extensions

  • Extended Deadline: With the California tax extension 2024, taxpayers in LA County now have until October 15, 2025 to file 2024 tax returns and make required tax payments.  
  • Impacted Deadlines: 
  • Individual tax returns and payments originally due on April 15, 2025.  
  • Quarterly estimated tax payments due on January 15, April 15, June 15, and September 15, 2025.  
  • Corporate and pass-through entity tax returns originally due on March 15 and April 15, 2025.  
  • Tax-exempt organization returns due on May 15, 2025.  
  • Pass-through elective tax payments previously due on March 15 and June 15, 2025.  

Sales and Use Taxes (for Businesses)

For businesses filing sales and use taxes, the state has extended the January 31, 2025, filing deadline to April 30, 2025.  

Disaster Loss Deduction

Residents who have experienced significant property damage or loss may be eligible to claim a disaster loss deduction on their 2024 tax returns to expedite refunds.  

Who Is Eligible?

The IRS Tax Relief applies to individuals and businesses directly impacted by the Los Angeles wildfires, including those who either reside in or operate a business in areas covered by the Major Disaster Declaration. If you’re unsure whether you qualify, it’s a good idea to consult with a tax professional or contact the IRS and FTB directly.  

Practical Tips for Taxpayers

Here’s what you can do right now to make the most of the IRS Tax Relief for Los Angeles: 

1. Review Your Tax Situation

Assess upcoming tax obligations to see how these extensions may benefit you. Whether it’s delaying your next quarterly payment or extending your filing deadline, you now have more room to adjust. 

2. Gather Documentation for Disaster Losses

If you’ve suffered property damage, gather receipts, insurance reports, and photos of the damage to claim disaster loss deductions. These deductions may help you qualify for a quicker refund. 

3. Talk to Your Tax Preparer

A professional can help ensure you meet all extended deadlines and make the best use of available deductions.  

4. Stay Updated

Tax relief laws and guidelines can change. Check updates on the IRS and FTB websites to stay informed about deadlines and requirements.  

Additional Resources

If you need further assistance, here are some resources to consult: 

  • IRS Disaster Assistance Page

Visit irs.gov/disaster for comprehensive guidance on federal relief measures. 

  • California Franchise Tax Board Hotline

Call the FTB Disaster Team at 800-852-5711 for personalized support with state tax matters. 

  • Free Tax Assistance Programs

Organizations like the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free support to qualifying individuals. 

This disaster has left many in Los Angeles County struggling, but these tax relief measures offer some breathing room as residents work to rebuild their lives. Make sure to take advantage of the IRS Tax Relief for Los Angeles extended deadlines, and don’t hesitate to reach out for personalized guidance if you need it. 

Quality of Earnings – Revenue Adjustments in the Travel Industry

Posted on by Michelle Antico

Travel & tourism represents approximately 10.4% of of global GDP, according to the World Travel & Tourism Council.  Companies in this sector include airlines, hotels, cruise ships, tour operators, and travel agencies. The services are offered globally and are directly impacted by economic changes, geopolitical incidents, and environmental events. Understanding these factors through the financial due diligence process is essential in presenting normalized revenue in a quality of earnings analysis. This blog will primarily concentrate on revenue adjustments in the travel industry, but it is important to note that a comprehensive full quality of earnings analysis must also take into account other potential impacts to EBITDA.

The quality of earnings analysis provides investors and shareholders with a clearer view of true operational earnings by eliminating non-recurring, unusual or non-operational transactions. In the travel industry, various factors impact growth and play a role in revenue fluctuations. As a result, analyzing revenue is essential in normalizing financial results and accurately calculating the quality of earnings.

  • Seasonality: A travel company may be specialized in a certain sector or geographical location. This specialization may lead to some fluctuations in its monthly earnings. A ski resort will generally experience higher revenues in the winter months and a decline during the warmer months. It is important to consider the seasonality of the business as estimating and normalizing revenue is likely not as easy as just annualizing the remainder of the year.
  • Identification of Non–Recurring Items: Discussions with management and trend analysis (considering seasonality) should highlight non-recurring revenue streams. These revenue streams will be one-time in nature and the prospect of recurring again or lasting beyond a short-term period is unlikely.

→ One-Time Events such as a unique trip offering, or one-time corporate sponsorship events are examples of one-time revenue.

→ Volume discounts or promotions to customers. These may be offered as part of the normal course of the business or used to fill a hole in capacity. An understanding of the volume and timing would be needed to determine if an adjustment is required.

→ Extraordinary Events: Extraordinary events may have a positive or negative impact on revenue. These events should be evaluated and compared to historical revenues to determine if an adjustment is warranted.

→ During the Covid-19 pandemic travel plans were canceled or postponed. Postponed plans and remote work initiatives may have caused an unusual surge in revenues in the years after the lockdown period. This surge may be in addition to normal revenues and should be considered as an adjustment when calculating the quality of earnings. Significant amounts of deposits also represented a backlog of demand that once utilized could potentially normalize at lower levels is also an important consideration when looking at revenue in the aftermath of Covid-19.

→ Weather and natural phenomena can play a significant role in travel. A hurricane, volcanic eruption, total solar eclipses, and other occurrences can directly impact fluctuations in revenue. During a total solar eclipse, there may be an increase in travel as people want to experience the path of totality. A total solar eclipse occurs every few years, however it is rare for the path to occur in the same location. Variance analysis may indicate increased revenue for a period and may require an adjustment. Natural disasters may impact pre-booked trips or future trips based on the disaster. The extent of damage incurred by a region may indicate if there will be short- or long-term ramifications on revenue.

→ Geopolitical events may impact a region in several ways: safety/security, visa restrictions, worker strikes, terrorist threats, economic concerns, disruption in travel. These events may temporarily or permanently cause a partial or total disruption in revenues earned. The disruption may be long-term, and if so, revenue previously earned may need to be adjusted.

→ Cancellation/refund revenue should be evaluated and compared to historical periods. The analysis should highlight potential non-recurring revenues. The impact of global or meteorological events on the travel industry may highlight one-time periods of high cancellations that would need to be adjusted.

  • Non-Operating Revenues: Amounts received from government grants or subsidies (PPP Loan forgiveness, Employee Retention Tax Credit) should not be recognized as earnings.
  • Exchange Rate Fluctuations: International travel offerings may expose a company to currency fluctuation.
  • Changes in Accounting Policies: If there are any changes in accounting policy, the nature of the change should be reviewed to determine if any adjustments are needed to report revenues consistently with normal operations.

Normalizing revenue adjustments in the travel industry is an integral part of the quality of earnings calculation, requiring proper financial analysis to understand the true revenue of a company. By considering factors such as seasonality, non-recurring revenues and other factors, normal financial performance may be derived. The revenue adjustments in the travel industry provide a tool that may be used to make informed decisions for executives and investors, leading to effective management and decision-making.

For more information, contact our experts today.

Understanding the Impact of Connelly v. United States on Business Planning and Estate Tax

Posted on by Michelle Antico

On June 6, 2024, the U.S. Supreme Court issued a landmark ruling in Connelly v United States, a decision with far-reaching implications for estate tax valuations and business planning. This pivotal case has reshaped how life insurance proceeds are factored into the valuation of closely held corporations upon a shareholder’s death.

If you are a business owner, estate planner, or legal professional, understanding the nuances of this case is critical. The decision affects how buy-sell agreements funded by life insurance are structured and could lead to higher estate tax liabilities for business owners’ heirs.

This blog breaks down the main aspects of the Connelly v United States decision, its implications for estate and tax planning, and actionable considerations for business owners and professionals.

Key Takeaways from the Connelly v United States Decision

What Was the Connelly v United States Case About?

The Connelly v. United States case centered on how life insurance proceeds used to fund the redemption of shares from a deceased shareholder should be treated when calculating the fair market value (FMV) of the business for estate tax purposes.

The 8th Circuit Court had ruled that life insurance proceeds—often considered a means for liquidity to redeem shares—must also be factored into the fair market value of a business. The Supreme Court upheld this ruling, which effectively increases the valuation of the business for estate tax calculations.

Previously, life insurance proceeds were excluded from FMV when tied explicitly to buy-sell agreements. The court’s ruling, however, emphasizes that such proceeds can no longer be automatically excluded, regardless of their purpose.

Why Is This Case Significant?

The decision changes the rules governing how buy-sell agreements funded using life insurance are viewed in tax planning. Closely held corporations and family businesses, in particular, face the risk of significantly higher estate tax liabilities—potentially leading to financial strain on heirs and business continuity challenges.

The ruling suggests a broader view of corporate value, where liquidity benefits gained through life insurance are seen as an integral part of the entity’s overall worth at the time of valuation.

The Implications for Business Owners and Estate Planners

  1. Impact of Connelly v United States Case on Estate Tax Liabilities

Under current federal estate tax laws, the value of an estate exceeding the exemption threshold is subject to significant taxation. With the Supreme Court ruling, including life insurance proceeds in FMV calculations means many estates may cross the exemption threshold more easily, leading to higher taxes.

For example, consider a family-owned manufacturing company valued at $15 million. If $5 million in life insurance proceeds were previously excluded as part of a buy-sell agreement, the taxable estate would now be assessed at $20 million—leading to substantial additional estate taxes.

  1. Redefining Planning for Buy-Sell Agreements

Buy-sell agreements are commonly funded with life insurance, ensuring the business has liquidity to buy back a deceased owner’s shares from their estate. The Connelly ruling forces business owners to reconsider these plans to account for the impact on estate valuation.

Without proactive restructuring or alternative planning, heirs could be left with a significant tax liability, jeopardizing the financial health of the company and potentially requiring the sale of assets or even the company itself to cover the tax bill.

  1. Uncertainty for Closely Held Corporations

For closely held corporations and family businesses, this decision heightens the need for advanced valuation strategies that consider insurance proceeds as a part of FMV. Tax professionals and planners must educate business owners about this critical shift and take action to mitigate potential risks.

Actionable Insights for Business and Estate Planning

Plan Proactively to Minimize Estate Tax Exposure

Businesses should work closely with tax professionals to reevaluate estate plans in light of the Connelly decision. Consider the following strategies to reduce potential tax exposure:

  • Revisit Buy-Sell Agreements: Amend buy-sell agreements to include provisions that minimize the impact of life insurance proceeds on FMV. Consider structuring agreements that rely less on direct valuation impacts.
  • Establish Irrevocable Life Insurance Trusts (ILITs): ILITs can remove life insurance proceeds from the taxable estate, shielding those proceeds from FMV altogether.
  • Explore Alternative Liquidity Solutions: Look into company reserves, deferred payouts, or other funding mechanisms to mitigate the reliance on life insurance.

Collaborate with Valuation Experts

Given the court’s focus on FMV, working with valuation experts is essential. They can provide accurate appraisals of a company’s value while factoring in the nuanced effects of the Connelly ruling.

Consider State-Level Impacts

Estate taxes vary state by state. Businesses operating in states with stricter estate tax rules should evaluate the dual impact of federal and state-level taxation post-Connelly.

Questions Estate Planners and Businesses Must Address

  1. What is the current value of the business, and how do life insurance proceeds affect that valuation?
  2. Are all buy-sell agreements structured optimally given the new ruling?
  3. How can alternative tools, such as trusts, be incorporated into the estate plan?
  4. What strategies can mitigate the liquidity challenges of increased estate taxes?

What Lies Ahead for Estate and Business Planning?

The Supreme Court decision in Connelly v United States serves as a critical reminder of the complexities surrounding estate planning in dynamic tax and legal environments. For business owners, failing to act on these changes could lead to significant financial challenges for their heirs, including the potential breakup of family-owned enterprises.

Proactive planning is now more important than ever. Business owners, legal professionals, and tax advisors must adopt a collaborative approach to reevaluating buy-sell agreements, implementing trusts, and exploring other methods to mitigate the ruling’s impact.

Final Thoughts

The Connelly v United States decision may have introduced new challenges, but with proper guidance and planning, these challenges can be navigated successfully. If you’re unsure about how this ruling impacts your business, reach out to a Wiss team member today. By engaging with trusted tax and estate planning professionals, you can protect your legacy and ensure a smoother transition for the next generation.

2026 Federal Tax Changes: What You Need to Know

Posted on by Michelle Antico

2026 Federal Tax laws are heading for uncertainty as many key provisions from the Tax Cuts and Jobs Act (TCJA) approach their expiration at the end of 2025. Since the TCJA came into effect in 2018, it has reshaped both individual and corporate tax landscapes. However, without congressional intervention, taxpayers will see many tax provisions revert back to pre-2018 tax regulations. Understanding these potential changes is essential for financial planning.

Learn more about how to prepare now with our year-end tax planning guide for individuals.

Possible Tax Changes for Individual Taxpayers

Many of the TCJA’s individual tax provisions hold expiration dates at the close of 2025, signaling substantial changes to incomes, deductions, and credits. Here are some areas most likely to affect individuals:

Income Tax Rates  

The lower 2026 federal tax brackets under the TCJA—ranging from 10% to 37%—will revert to their pre-2018 counterparts, which top out at 39.6%. These higher rates may result in increased tax liabilities for nearly all taxpayers.

Standard Deduction and Personal Exemptions  

The doubled standard deduction amounts of $27,700 for married couples filing jointly, $13,850 for single filers, and $20,800 for heads of household (as of 2024) will revert to the much lower pre-TCJA levels of $12,700 for married filers and $6,350 for individuals. Personal exemptions of $4,050 per filer or dependent eliminated under the TCJA are set to return.

To learn more about these 2026 tax changes and how they could impact your tax planning, connect with our team of tax professionals.

Child Tax Credit  

The current tax credit of $2,000 per qualifying child is slated to drop to $1,000, with stricter income phaseout thresholds making it harder for many families to qualify.

Itemized Deductions  

Several deductions eliminated or reduced under the TCJA will return, including miscellaneous itemized deductions above 2% of adjusted gross income (AGI). The notorious Pease limitation on itemized deductions will also resurface, reducing deductions by 3% of AGI above certain thresholds. On the bright side, the $10,000 cap on state and local taxes (SALT) is set to expire, restoring the full deductibility of these payments.

Alternative Minimum Tax (AMT)  

The AMT—largely sidelined for individuals during the TCJA era—will bounce back, potentially impacting a wider swath of taxpayers due to lower exemption thresholds and the return of deductions like SALT.

Estate and Gift Taxes  

The estate and gift tax exemption, which ballooned to nearly $14 million per individual by 2025, will revert to approximately $7 million beginning in 2026. While the “anti-clawback” rule ensures previously applied exemptions won’t be taxed retroactively, larger estates face heightened tax exposure in the years ahead.

For a deeper dive, read our full analysis on the 2026 estate and gift tax exemption reduction.

Generation-Skipping Transfer Tax Exemption

Likewise, the separate generation-skipping transfer tax exemption that applies to amounts that skip a generation has been indexed for 2025 to $13,990,000 per individual and will revert to approximately $7,000,000 on January 1, 2026.

Implications for Business Taxpayers

The expiration of TCJA provisions also places businesses in a precarious position, with key tax changes set to affect profitability and tax planning strategies:

Section 199A Deduction for Pass-Through Entities  

Sole proprietorships, partnerships, LLCs, and S corporations have benefited from a 20% deduction on Qualified Business Income (QBI) since the TCJA, effectively lowering their top income tax rates. This deduction is scheduled to sunset in 2026 unless extended.

Bonus Depreciation

The ability to write off 100% of certain capital investments will phase out gradually, falling to 50% in 2025, 20% in 2026, and disappearing entirely in 2027. For businesses depending on significant infrastructure investment, this phaseout could reduce cash flow and curb reinvestment opportunities.

Business Interest Expense Deduction  

Under the TCJA, businesses have faced stricter limits on deducting interest expenses. These restrictions, currently set at 30% of adjusted taxable income, will tighten further by reverting to pre-2018 rules.

International Tax Revisions  

The highly technical provisions governing Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) will see less favorable deductions in 2026. GILTI’s effective tax rate may rise from 10.5% to 13.125%, and FDII could see increases to approximately 16.4%.

Congress Faces Big Decisions

Congress faces a critical juncture in determining the future of these provisions. It essentially has three options:

  1. Do Nothing – This would allow the TCJA provisions to expire, fully restoring pre-2018 tax rules.
  2. Extend or Make Permanent the TCJA Provisions – Legislation could preserve, either temporarily or permanently, the tax cuts and deductions, although the Congressional Budget Office estimates this could cost $5 trillion from 2025 to 2034.
  3. Introduce New Legislation – Congress could attempt to reform the tax code entirely, creating a new framework that may differ from both current and pre-TCJA laws. 

Get insights into possible reforms by reviewing Trump’s 2025 tax plan and its potential impact.

Navigating the Road Ahead

The potential 2026 federal tax changes on the horizon underscore the importance of a well-thought-out strategy to safeguard your financial future. Navigating these complexities requires awareness and expert advice tailored to your unique circumstances.

At Wiss, our team of knowledgeable tax professionals is here to guide you through these potential tax changes and help you plan with confidence. Whether you’re an individual or a business owner, we can provide the insights and solutions you need to make informed decisions.

Don’t wait—contact Wiss today to discuss how these developments could impact your financial outlook. Together, we’ll create a plan that keeps you ahead, no matter what changes come your way.

The NJ PILOT Program – Driving Economic Development

Posted on by Kristine Sinisi

When it comes to driving economic growth and revitalizing communities, New Jersey’s Payment in Lieu of Taxes (PILOT) Program stands as a significant catalyst. For business owners and real estate developers, understanding the NJ PILOT Program is essential to leveraging its benefits for both private and public interests. This blog dives deep into what the NJ PILOT Program is, the advantages it presents to redevelopers and municipalities, its current impact, and how Wiss can be a strategic partner in navigating its complexities.

What Is the NJ PILOT Program?

The NJ PILOT Program is a tax abatement initiative aimed at encouraging redevelopment in municipalities by providing financial incentives to developers. Instead of paying conventional property taxes, developers participating in the program make negotiated payments to the municipality, often lower than standard property tax rates. These payments are calculated based on a percentage of either project revenue or total project costs, rather than full property valuation.

The logic behind the PILOT Program is simple yet impactful – incentivizing redevelopment by reducing the tax burden during the early stages of a project’s life cycle, where financial risks and investments are at their peak.

Learn more about the eligibility and benefits of the NJ PILOT Program.

The Benefits of New Jersey PILOT Program for Redevelopers

Redevelopers find the PILOT Program particularly appealing due to its tangible financial benefits. Chief among these is the significant reduction in their tax liabilities during the initial phases of property development. With rising interest rates and construction costs, tax savings through PILOT agreements provide essential relief that offsets financial headwinds.

For example, consider a real estate developer converting an old industrial property into a modern logistics hub. The traditional property taxes might make the project financially unfeasible. However, with a PILOT agreement, the developer can reinvest these savings into construction, hiring, and other developmental activities.

Further, the program enhances project viability by keeping operational costs in check. This, in turn, enables developers to attract investors and secure financing more effectively. Essentially, the PILOT Program helps reduce barriers to entry and encourages investment in areas that need revitalization.

The NJ PILOT Program Benefits for Municipalities

While redevelopers benefit from lower costs, municipalities also stand to gain. PILOT agreements often generate revenue streams that can be directly reinvested in local infrastructure, schools, or community services.

One of the most significant advantages for municipalities is economic stimulation. Redeveloped areas often see increased property values, higher population density, and new businesses opening up, which contribute to a thriving local economy. Additionally, these payments under PILOT agreements remain entirely with the municipality, in contrast to regular property taxes, which are typically divided among county and state budgets.

By initiating redevelopment projects through PILOT incentives, municipalities can also address long-standing issues like neighborhood decline or underutilized industrial spaces, paving the way for long-term urban growth.

The Current Impact – A Post-COVID Perspective

The economic struggles brought on by the COVID-19 pandemic posed challenges to municipalities and developers alike. However, the PILOT Program emerged as a stabilizing force, particularly in the industrial real estate sector.

Post-pandemic, industrial real estate has experienced substantial growth, driven by e-commerce expansion and the need for modern logistics centers. Through PILOT agreements, developers have been able to mitigate the pressure from record-high construction costs and fluctuating interest rates, creating a much-needed boost to redevelopment efforts.

The program’s role in offsetting various economic risks means projects that otherwise might have stalled due to financial constraints were able to move forward. This has had a cascading effect on job creation, infrastructure development, and regional economic health, making the PILOT Program a true game-changer in uncertain times.

These trends coincide with recent legislative changes impacting New Jersey businesses that aim to retain and attract employers post-pandemic.

The New Jersey PILOT Program at Work Today

The numbers behind the PILOT Program tell a compelling story of its scope and impact. Based on data from 2023:

  • There were 2,678 PILOT agreements throughout New Jersey, representing an assessed property value of $29.9 billion.
  • These agreements contributed a total PILOT billing of $426.5 million, compared to the conventional property tax figure of $882.7 million. This translates into cost savings of roughly $456.2 million for developers and property owners.

When contrasted with 2019 data, the growth becomes even more apparent:

  • That year saw 1,367 PILOT agreements covering assessed property value at $22.9 billion.
  • Total PILOT billings reached $252.5 million, compared to what would have been $660.2 million in taxes, leading to savings of around $407.7 million.

A significant rise in these agreements has been observed in central cities and urban-suburban regions, reflecting an increased focus on revitalizing densely populated areas. This upward trend indicates that the PILOT Program will continue to play a substantial role in stimulating economic development in the years to come.

Additional legislation like New Jersey Bill A4694 and its potential economic impact may further support redevelopment.

How Wiss Can Help

Navigating PILOT agreements involves significant financial, legal, and compliance complexities, which is where Wiss comes in. Wiss has extensive experience helping developers and municipalities make the most of PILOT opportunities while ensuring strict adherence to regulatory requirements.

Compliance and Audits

One key requirement of PILOT agreements is submitting an annual audit performed by a licensed CPA. Typically due 90 days after year-end, these audits ensure transparency and accuracy in financial reporting. Wiss can assist in organizing and conducting these audits, helping clients stay compliant without stress.

Financial Agreement Review

Wiss can also support developers during the initial stages of the application process. This includes evaluating financial agreements to identify potential pitfalls and ensuring that fiscal plans align with program guidelines. By addressing challenges early, developers can avoid common mistakes that might delay projects or lead to costly penalties.

Fiscal Plan Development

Preparing a robust fiscal plan is an integral part of the PILOT Program application process. Wiss offers expertise in this area, ensuring that all submissions meet municipal requirements and increase the chances of successful approval.

By partnering with Wiss, developers gain access to a team of experts who can streamline the often-daunting regulatory landscape, allowing them to focus on what they do best – driving redevelopment projects that make a difference.

Next Steps with NJ PILOT Program

The New Jersey PILOT Program is more than just a tax incentive—it’s a powerful tool for economic growth and urban revitalization. For redevelopers, it offers a financial lifeline that makes ambitious projects possible. For municipalities, it’s an opportunity to breathe new life into communities while retaining direct economic benefits.

Whether you’re a business owner or a real estate developer, understanding and utilizing the NJ PILOT Program could be the key to your next successful project. With its compliance, audit processes, and financial agreements expertise, Wiss stands ready to guide you through every step. You may also want to explore additional tax incentives through Opportunity Zones to complement your PILOT strategy.

For more information on the PILOT Program and resources, explore guides like the Municipal Tax Abatement Handbook and Tax Abatement Kit.

Bench Accounting Shutdown Then Buyout Exposes AI Bookkeeping Challenges

Posted on by Michelle Antico

The abrupt Bench Accounting shutdown and its unexpected acquisition by an unfamiliar entity called Employer.com, has left its clients in a difficult situation, urgently seeking alternatives as the tax year comes to an end. This news has highlighted the vulnerabilities of relying solely on automated bookkeeping services and has sparked widespread discussions among business owners, accountants, and financial experts.

Many are now reconsidering their reliance on purely AI-driven platforms and seeking more sustainable, hybrid solutions that blend technology with professional oversight. At Wiss, we offer outsourced accounting solutions that combine advanced tools like Basis AI with our team’s expertise to deliver reliable, tailored financial management. With over 50 years of experience and recognition as a top 100 accounting firm, we blend industry knowledge with cutting-edge technology to provide trusted support for businesses navigating complex financial challenges, including outsourced accounting, tax, and wealth management services.

Client Reactions to the Bench Accounting Shutdown

The tumultuous news surrounding the Bench Accounting software shutdown has left many business owners feeling blindsided and frustrated. The timing, so close to year-end financial and tax deadlines, has added significant pressure. Clients expressed feelings of betrayal, this distrust underscores the need for businesses to thoroughly vet accounting providers.

Key client grievances include:

  • Disrupted Operations: With limited time to transition to new services, many clients worry about maintaining compliance and avoiding penalties.
  • Data Accessibility: Concerns were raised about accessing historical financial data, as Bench’s proprietary system made it difficult for clients to export records in a usable format.
  • Mistrust of Recommendations: Bench’s suggestion to migrate to Kick, a relatively unknown service still in beta, fueled skepticism. Many clients questioned the reliability and quality of such alternatives, especially given the low-cost model that some associate with insufficient support.

Risks of Only Relying on Automation in Accounting

While automation offers convenience and cost savings, recent events have highlighted its shortcomings when relied upon without adequate human oversight. Clients have reported significant issues, including:

  • Miscategorized Transactions: Automated systems can incorrectly code expenses, leading to inaccurate financial records. These errors can directly impact the bottom line, affecting profitability and financial decision-making.
  • Missed Deductions: Without expert review, opportunities for tax optimization are frequently overlooked, resulting in higher taxable income.
  • Compliance Risks: Financial reporting mistakes can result in penalties and costly corrections, with some clients needing to rebuild records and file amended returns due to significant errors.

Best Alternatives After the Bench Accounting Shutdown

In the wake of Bench’s changes, clients are exploring various alternatives, ranging from DIY solutions to comprehensive outsourced accounting services. Key recommendations include:

Human-Centric Bookkeeping Services

  • Established Accounting Firms: Wiss offers a full suite of services, including CFO-level insights, outsourced accounting, and industry-specific tax filings. With a client-centric approach and a track record of proven expertise, Wiss guarantees seamless transitions and exceptional financial management support.

Software Solutions

  • QuickBooks Online (QBO) and Xero: These platforms are consistently recommended for their reliability, data portability, and compatibility with various third-party tools. Clients transitioning from Bench will find these systems to be scalable and robust, particularly when paired with professional oversight.
  • ERP Systems: For growing businesses, enterprise resource planning (ERP) solutions like NetSuite or Sage Intacct offer scalability and advanced features, making them suitable for complex financial needs.

Why Wiss is the Ideal Solution

As businesses evaluate their next steps, our team stands out as a trusted partner for outsourced accounting services. With a reputation for excellence and a commitment to leveraging cutting-edge technology, we combine the power of Basis AI with the strategic oversight of seasoned financial professionals. This hybrid approach addresses the limitations of purely automated systems while delivering superior results.

Key Benefits of Wiss’ Approach

  1. Human Interaction: Unlike fully automated platforms, we prioritize client relationships, offering personalized support and actionable insights that drive smarter financial decisions.
  2. Accuracy and Efficiency: Basis AI automates routine tasks such as transaction categorization and reporting, reducing the risk of errors. Our professionals validate and refine this data, ensuring accuracy and uncovering opportunities for tax optimization.
  3. Customized Solutions: Recognizing that every business is unique, we tailor our services to meet specific needs. Whether a client requires assistance with cash-basis accounting, financial planning, or tax compliance, we provide flexible and scalable solutions.
  4. Data Accessibility and Ownership: Our team ensures that our clients retain full access to their financial records, avoiding the pitfalls of vendor lock-in and ensuring seamless transitions if future changes are needed.
  5. Proven Expertise: With a legacy of excellence in outsourced accounting, we have successfully transitioned clients from various systems, providing stability and confidence during times of change.

Steps for Transitioning Clients

For businesses affected by the Bench shutdown, we offer a clear path to recovery and growth. Key steps include:

  1. Data Retrieval: We can assist clients in securing and organizing historical financial data, ensuring a smooth transition to a more reliable accounting system.
  2. System Integration: Leveraging Basis AI, we integrate seamlessly with existing tools like QBO, Sage Intacct and Xero, minimizing disruptions and enhancing efficiency.
  3. Tailored Onboarding: We develop customized plans to address each client’s immediate needs and long-term goals.
  4. Ongoing Support: From routine bookkeeping to strategic financial planning, our team provides comprehensive services to ensure sustained success.

Lessons from the Bench Shutdown

The disruptions surrounding Bench Accounting shutdown underscores the importance of balancing automation with human oversight.  While AI-driven tools offer valuable efficiencies, they are not a substitute for expert validation and strategic guidance. Businesses must prioritize transparency, data ownership, and a blended approach to financial management.

Advice for Businesses

  • Vetting New Providers: When evaluating alternatives, businesses should prioritize solutions that combine technology with professional expertise. Transparency, flexibility, and commitment to client success are key indicators of a reliable provider. When selecting a new vendor evaluate the cost of service—cheaper options may not deliver the same quality or reliability.
  • Emphasizing Compliance: Accurate financial reporting and tax optimization require more than automation. Expert review ensures compliance with evolving regulations and maximizes financial opportunities.
  • Future-Proofing Financial Systems: Choosing scalable, portable solutions like QBO and Xero minimizes risks associated with proprietary platforms.

Conclusion

The news surrounding Bench Accounting software shutdown highlights the risks for businesses relying on automated bookkeeping solutions without adequate human oversight. At Wiss, we provide the ideal solution for businesses navigating a possible transition, offering a unique blend of cutting-edge technology and expert support. By partnering with our team, companies can confidently move forward, safeguarding their finances and ensuring long-term stability and growth.

Important Update on Corporate Transparency Act (BOI Reporting)

Posted on by Michelle Antico

The Update

On December 26, 2024, the United States Court of Appeals vacated their stay on the preliminary injunction regarding the Corporate Transparency Act (CTA) BOI filing requirements.

What does this mean?

  • The preliminary injunction is now back in effect, meaning the government currently cannot enforce penalties for noncompliance with the CTA.
  • This is not a final judgment. It ensures the “constitutional status quo” remains in place while the court further reviews the case and considers its substantive arguments.
  • The appeal is on an expedited schedule, but the dates of the arguments have yet to be confirmed.
  • We are awaiting additional guidance from FinCEN.

What Actions Should You Take?

Although filing is again not required at this time, our recommendation remains the same—be prepared to file your BOI reports as the situation may change quickly if the government wins the appeal or if there is another reversal. You also have the option to voluntarily file your reports if you desire.

What if you already filed?

If you have already filed, the BOI report there is nothing more you need to do at the moment.  If there are changes in the information filed, you should keep track of those changes and be ready to file updated reports if the requirements are reinstated.

Important Reminder on Filing Fees

We’ve heard from some clients who have mistakenly ended up on what appear to be “official” websites charging fees (up to $350 per entity), only to realize these are not directly affiliated with the government. Please note that BOI filing can be done free of charge on the official FinCEN website (fincen.gov).

If you have multiple entities and prefer to use a filing service, please feel free to reach out to us—we can connect you with trusted contacts.

We will continue to keep you educated as this case and others develop. If you have any questions or would like to discuss how this might impact you or your organization, don’t hesitate to reach out. As with anything BOI related you should also consult with your legal advisors to assess your specific situation.

2024 Year-End Tax Planning for Individuals

Posted on by Michelle Antico

With rising interest rates, inflation, and continuing market volatility, year-end tax planning is as essential as ever for taxpayers looking to manage cash flow while paying the least amount of taxes possible over time. As we approach the end of the year, now is the time for individuals, business owners, and family offices to review their 2024 and 2025 tax situations and identify opportunities for reducing, deferring, or accelerating their tax obligations.

The information contained in this article is based on federal laws and policies in effect as of the publication date. This article discusses tax planning for U.S. federal income taxes. Applicable state and foreign taxes should also be considered. Taxpayers should consult with a trusted advisor when making tax and financial decisions regarding any of the items below. 

INDIVIDUAL TAX PLANNING HIGHLIGHTS

2024 Federal Income Tax Rate Brackets

 

Tax Rate

 Joint/Surviving Spouse  

Single

  

Head of Household

 Married Filing Separately  

Estates & Trusts
10% $0 – $23,200 $0 – $11,600 $0 – $16,550 $0 – $11,600 $0 – $3,100
12% $23,201 – $94,300 $11,601 – $47,150 $16,551 – $63,100 $11,601 – $47,150     –
22% $94,301 – $201,050 $47,151 – $100,525 $63,101 – $100,500 $47,151 – $100,525      –
24% $201,051 – $383,900 $100,526 – $191,950 $100,501 – $191,950 $100,526 – $191,950 $3,101 – $11,150
32% $383,901 – $487,450 $191,951 – $243,725 $191,951 – $243,700 $191,951 – $243,725      –
35% $487,451 – $731,200 $243,726 – $609,350 $243,701 – $609,350 $243,726 – $365,600 $11,151 – $15,200
37% Over $731,200 Over $609,350 Over $609,350 Over $365,600 Over $15,200
 

     2025 Federal Income Tax Rate Brackets
 

Tax Rate

 Joint/Surviving Spouse  

Single

  

Head of Household

 Married Filing Separately  

Estates & Trusts
10% $0 – $23,850 $0 – $11,925 $0 – $17,000 $0 – $11,925 $0 – $3,150
12% $23,851 – $96,950 $11,926 – $48,475 $17,001 – $64,850 $11,926 – $48,475 —
22% $96,951 – $206,700 $48,476 – $103,350 $64,851 – $103,350 $48,476 – 103,350 —
24% $206,701 – $394,600 $103,351 – $197,300 $103,351 – $197,300 $103,351 – 197,300 $3,151 – $11,450
32% $394,601 – $501,050 $197,301 – $250,525 $197,301 – $250,500 $197,301 – $250,525 —
35% $501,051 – $751,600 $250,526 – $626,350 $250,501 – $626,350 $250,526 – $375,800 $11,451 – $15,650
37% Over $751,600 Over $626,350 Over $626,350 Over $375,800 Over $15,650

 

TIMING OF INCOME AND DEDUCTIONS

Taxpayers should consider whether they can reduce their tax bills by shifting income or deductions between 2024 and 2025. Ideally, income should be received in the year with the lower marginal tax rate, and deductible expenses should be paid in the year with the higher marginal tax rate. If the marginal tax rate is the same in both years, deferring income from 2024 to 2025 will produce a one-year tax deferral, and accelerating deductions from 2025 to 2024 will lower the 2024 income tax liability.

Actions to consider that may result in a reduction or deferral of taxes include:

  • Delaying closing capital gain transactions until after year-end or structuring 2024 transactions as installment sales so that gain is deferred past 2024 (see also Long-Term Capital Gains, to the right).
  • Triggering capital losses before the end of 2024 to offset 2024 capital gains.
  • Delaying interest or dividend payments from closely held corporations to individual business-owner taxpayers.
  • Deferring commission income by closing sales in early 2025 instead of late 2024.
  • Accelerating deductions for expenses such as mortgage interest and charitable donations (including donations of appreciated property) into 2024 (subject to adjusted gross income (AGI) limitations).
  • Evaluating whether non-business bad debts are worthless — and should be recognized as a short-term capital loss — by the end of 2024.
  • Shifting investments to municipal bonds or investments that do not pay dividends to reduce taxable income in future years.

Taxpayers that will be in a higher tax bracket in 2025 may want to consider potential ways to move taxable income from 2025 into 2024, so that the taxable income is taxed at a lower tax rate. Current-year actions to consider that could reduce 2025 taxes include:

  • Accelerating capital gains to 2024 or deferring capital losses until 2025.
  • Electing out of the installment sale method for 2024 installment sales.
  • Deferring deductions such as large charitable contributions to 2025.

LONG-TERM CAPITAL GAINS

The long-term capital gains rates for 2024 and 2025 are shown below. The tax brackets refer to the taxpayer’s taxable income. Capital gains also may be subject to the 3.8% net investment income tax.

2024 Long-Term Capital Gains Rate Brackets

Long-Term Capital Gains Tax Rate Joint/Surviving Spouse  

Single

 Head of Household Married Filing Separately  

Estates & Trusts
0% $0 – $94,050 $0 – $47,025 $0 – $63,000 $0 – $47,025 $0 – $3,150
15% $94,051 – $47,026 – $63,001 – $47,026 – $3,151 –
$583,750 $518,900 $551,350 $291,850 $15,450
20% Over $583,750 Over $518,900 Over $551,350 Over $291,850 Over $15,450
 

2025 Long-Term Capital Gains Rate Brackets
Long-Term Capital Gains Tax Rate Joint/Surviving Spouse  

Single

 Head of Household Married Filing Separately  

Estates & Trusts
0% $0- $96,700 $0 – $48,350 $0 – $64,750 $0 – $48,350 $0 – $3,250
15% $96,701 –

$600,050

 $48,351 – $533,400 $64,751 – $566,700 $48,351 – $300,000 $3,251 –

$15,900
20% Over $600,051 Over $533,400 Over $566,700 Over $300,000 Over $15,900

Long-term capital gains (and qualified dividends) are subject to a lower tax rate than other types of income. Investors should consider the following when planning for capital gains:

  • Holding capital assets for more than a year (more than three years for assets attributable to carried interests) so that the gain upon disposition qualifies for the lower long-term capital gains rate.
  • Considering long-term deferral strategies for capital gains such as reinvesting capital gains into designated qualified opportunity zones.
  • Investing in, and holding, “qualified small business stock” for at least five years.
  • Donating appreciated property to a qualified charity to avoid long-term capital gains tax (see also Charitable Contributions, below).

NET INVESTMENT INCOME TAX

An additional 3.8% net investment income tax (NIIT) applies on net investment income above certain thresholds. The NIIT does not apply to income derived in the ordinary course of a trade or business in which the taxpayer materially participates. Similarly, gain on the disposition of trade or business assets attributable to an activity in which the taxpayer materially participates is not subject to the NIIT.

Impacted taxpayers may want to consider deferring net investment income for the year, in conjunction with other tax planning strategies that may be implemented to reduce income tax or capital gains tax.

SOCIAL SECURITY TAX

The Old-Age, Survivors, and Disability Insurance (OASDI) program is funded by contributions from employees and employers through FICA tax. The FICA tax rate for both employees and employers is 6.2% of the employee’s gross pay, but is imposed only on wages up to $168,600 for 2024 and $176,100 for 2025. Self-employed persons pay a similar tax, called SECA (or self-employment tax), based on 12.4% of the net income of their businesses.

Employers, employees, and self-employed persons also pay a tax for Medicare/Medicaid hospitalization insurance (HI), which is part of the FICA tax, but is not capped by the OASDI wage base. The HI payroll tax is 2.9%, which applies to earned income only. Self-employed persons pay the full amount, while employers and employees each pay 1.45%. An extra 0.9% Medicare (HI) payroll tax must be paid by individual taxpayers on earned income that is above certain AGI thresholds: $200,000 for individuals, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately. However, employers do not pay this extra tax.

LONG-TERM CARE INSURANCE AND SERVICES

Premiums an individual pays on a qualified long-term care insurance policy are deductible as a medical expense. The maximum deduction amount is determined by an individual’s age. The following table sets forth the deductible limits for 2024 and the estimated deductible limits for 2025 (the limitations are per person, not per return):

Age Deduction

Limitation 2024

 Deduction

Limitation 2025
40 or under $470 $480
Over 40 but not over 50 $880 $900
Over 50 but not over 60 $1,760 $1,800
Over 60 but not over 70 $4,710 $4,810
Over 70 $5,880 $6,020

 

RETIREMENT PLAN CONTRIBUTIONS

Individuals may want to maximize their annual contributions to qualified retirement plans and individual retirement accounts (IRAs).

  • The maximum amount in elective contributions that an employee can make in 2024 to a 401(k) or 403(b) plan is $23,000 ($30,500 if age 50 or over and the plan allows “catch-up” contributions). For 2025, these limits are $23,500 and $31,000,
  • The SECURE Act permits a penalty-free withdrawal of up to $5,000 from traditional IRAs and qualified retirement plans for qualifying expenses related to the birth or adoption of a child after December 31, 2019. The $5,000 distribution limit is per individual, so a married couple could each receive $5,000.
  • Under the SECURE Act, individuals are now able to contribute to their traditional IRAs in or after the year in which they turn 70½.
  • Beginning in 2023, the SECURE Act 2.0 raised the age at which a taxpayer must begin taking required minimum distributions (RMDs) to 73. If the individual reaches age 72 in 2024, the required beginning date for the first 2025 RMD is April 1, 2026.
  • Individuals age 70½ or older can donate up to $105,000 in 2024 ($108,000 in 2025) to a qualified charity directly from a taxable IRA.
  • The SECURE Act generally requires that designated beneficiaries of persons who died after December 31, 2019, take inherited plan benefits over a 10-year period. Eligible designated beneficiaries (i.e., surviving spouses, minor children of the plan participant, disabled and chronically ill beneficiaries, and beneficiaries who are less than 10 years younger than the plan participant) are not limited to the 10-year payout rule. Special rules apply to certain trusts.
  • Under final Treasury regulations (issued July 2024) that address RMDs from inherited retirement plans of persons who died after December 31, 2019, and after their required beginning date, designated and non-designated beneficiaries will be required to take annual distributions, whether subject to a 10-year period or otherwise.
  • Small businesses can contribute the lesser of (i) 25% of employees’ salaries or (ii) an annual maximum amount set by the IRS each year to a simplified employee pension (SEP) plan by the extended due date of the employer’s federal income tax return for the year that the contribution is The maximum SEP contribution for 2024 is $69,000. The maximum SEP contribution for 2025 is $70,000. The calculation of the 25% limit for self-employed individuals is based on net self-employment income, which is calculated after the reduction in income from the SEP contribution (as well as for other things, such as self-employment taxes).

FOREIGN EARNED INCOME EXCLUSION

The foreign earned income exclusion is $126,500 in 2024 and increases to $130,000 in 2025.

ALTERNATIVE MINIMUM TAX

A taxpayer must pay either the regular income tax or the alternative minimum tax (AMT), whichever is higher. The established AMT exemption amounts for 2024 are $85,700 for unmarried individuals and individuals claiming head of household status, $133,300 for married individuals filing jointly and surviving spouses, $66,650 for married individuals filing separately, and $29,900 for estates and trusts. The AMT exemption amounts for 2025 are $88,100 for unmarried individuals and individuals claiming head of household status, $137,000 for married individuals filing jointly and surviving spouses, $68,500 for married individuals filing separately, and $30,700 for estates and trusts.

KIDDIE TAX

The unearned income of a child is taxed at the parents’ tax rates if those rates are higher than the child’s tax rate.

LIMITATION ON DEDUCTIONS OF STATE AND LOCAL TAXES (SALT LIMITATION)

For individual taxpayers who itemize their deductions, the Tax Cuts and Jobs Act introduced a $10,000 limit on deductions of state and local taxes paid during the year ($5,000 for married individuals filing separately). The limitation applies to taxable years beginning on or after December 31, 2017, and before January 1, 2026. Various states have enacted new rules that allow owners of pass-through entities to avoid the SALT deduction limitation in certain cases.

CHARITABLE CONTRIBUTIONS

Cash contributions made to qualifying charitable organizations, including donor-advised funds, in 2024 and 2025 will be subject to a 60% AGI limitation. The limitations for cash contributions continue to be 30% of AGI for contributions to non-operating private foundations.

Tax planning around charitable contributions may include:

  • Creating and funding a private foundation, donor-advised fund, or charitable remainder trust.
  • Donating appreciated property to a qualified charity to avoid long-term capital gains tax.

ESTATE AND GIFT TAXES

For gifts made in 2024, the gift tax annual exclusion is $18,000 and for 2025 it is $19,000. For 2024, the unified estate and gift tax exemption and generation-skipping transfer tax exemption is $13,610,000 per person. For 2025, the unified estate and gift tax exemption and generation-skipping transfer tax exemption is $13,990,000. All outright gifts to a spouse who is a U.S. citizen are free of federal gift tax. However, for 2024 and 2025, only the first $185,000 and $190,000, respectively, of gifts to a non-U.S. citizen spouse is excluded from the total amount of taxable gifts for the year.

Tax planning strategies may include:

  • Making annual exclusion
  • Making larger gifts to the next generation, either outright or in trust.
  • Creating a spousal lifetime access trust (SLAT) or a grantor retained annuity trust (GRAT) or selling assets to an intentionally defective grantor trust (IDGT).

NET OPERATING LOSSES AND EXCESS BUSINESS LOSS LIMITATION

Net operating losses (NOLs) generated in 2024 are limited to 80% of taxable income and are not permitted to be carried back. Any unused NOLs are carried forward subject to the 80% of taxable income limitation in carryforward years.

A non-corporate taxpayer may deduct net business losses of up to $305,000 ($610,000 for joint filers) in 2024. The limitation is $313,000 ($626,000 for joint filers) for 2025. A disallowed excess business loss (EBL) is treated as an NOL carryforward in the subsequent year, subject to the NOL rules. With the passage of the Inflation Reduction Act, the EBL limitation has been extended through the end of 2028.

For more information, contact our experts today.