Businesses Can Still Choose to Address Sustainability

For many years, businesses of all shapes and sizes have at least considered sustainability when running their operations. Many people — including customers, investors, employees and job candidates — care about how a company impacts the environment. And reducing energy use, water consumption and waste generally lowers operational costs.

However, the current “environment regarding the environment,” has changed. With the passage of the One, Big, Beautiful Bill Act (OBBBA), the federal government has disincentivized businesses from taking certain green measures. So, you may be reevaluating your company’s stance on sustainability.

Apparent interest

According to one survey, a serious interest in sustainability remains present among many businesses. In February, management consultancy Kearney, in association with climate action media platform We Don’t Have Time, released the results of a survey of more than 500 finance executives from companies in the United States, United Kingdom, United Arab Emirates and India.

Of those respondents, 93% said they saw a clear business case for sustainability. Meanwhile, 92% expected to invest more in sustainability this year — with 62% of respondents saying they planned to allocate more than 2.1% of revenue to sustainability in 2025.

Now whether and how fully these investments come to fruition this year is hard to say. However, the fact remains that sustainability has been and will likely continue to be a strategically significant factor in many industries.

Vanishing tax breaks

As mentioned, the OBBBA has thrown a wrench into tax relief related to certain sustainable measures.

For example, the Section 179D Energy Efficient Commercial Buildings Deduction has been around since 2006. It got a big boost from the Inflation Reduction Act (IRA) of 2022, which increased the potential size of the deduction and expanded the pool of eligible taxpayers. However, the OBBBA permanently eliminates this tax break for buildings or systems on which construction begins after June 30, 2026.

The OBBBA also nixes an incentive for the business use of “clean” vehicles. The Qualified Commercial Clean Vehicle Credit, under Sec. 45W of the tax code, hadn’t been previously scheduled to expire until after 2032. However, it’s now available only for vehicles acquired on or before September 30, 2025. Depending on vehicle weight, the maximum credit is up to $7,500 or $40,000.

Has your company installed an electric vehicle charger or another qualified dispenser of or storage facility for clean-burning fuel? If so, you may be able to claim the Alternative Fuel Vehicle Refueling Property Credit under Sec. 30C of the tax code. The IRA had scheduled the credit — which is worth up to $100,000 per item — to sunset after 2032. But under the OBBBA, eligible property must be placed in service on or before June 30, 2026, to qualify.

Tailored strategy

Where does all this leave your business? Well, naturally, it’s up to you and your leadership team whether you want to address sustainability and, if you decide to do so, precisely how. Typically, when devising or revising a strategy in this area, your company should:

Conduct an up-to-date baseline assessment of energy use, water consumption, waste generation and your business’s overall carbon footprint,
Set clear goals and metrics based on reliable data and the input of professional advisors,
Address the impact of logistics, your supply chain and employee transportation, and
Communicate effectively with staff to gather feedback and build buy-in.

And don’t necessarily give up on tax incentives. Although some federal tax breaks may be going away in the near future, state and local ones might exist that could benefit your business.

Your call

Again, as a business owner, you get to make the call regarding your company’s philosophy and approach to sustainability. If it’s something you intend to prioritize, we can help you review your operations and identify cost-effective and possibly tax-saving ways to make a positive environmental impact.

The federal government has announced a major change that will affect how numerous Americans receive their tax refunds and federal benefit payments. The U.S. Treasury Department, the IRS and the Social Security Administration (SSA) will soon stop issuing paper checks. This transition is designed to increase efficiency, reduce fraud and lower administrative costs — but it also means that taxpayers must prepare for an all-electronic system.

Background information

Many taxpayers still receive paper checks for tax refunds. This is also the case with some Social Security benefits and other federal payments. Under an executive order (EO) signed by President Trump, paper checks will no longer be an option, effective September 30, 2025. Direct deposit will become the default (and only) method of payment, unless the government extends the deadline or provides exceptions.

In the EO, President Trump cites several reasons for eliminating paper checks. One is to reduce the risk of fraud. “Historically, Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer,” the EO states.

Taxpayers without bank accounts

One significant challenge to making the transition away from paper checks is the “unbanked” population. These are people who don’t have traditional bank accounts. According to the FDIC, millions of Americans remain unbanked for various reasons, including lack of access, mistrust of banks or high fees.

The government may solve this challenge by issuing refunds on debit cards or encouraging financial institutions to offer free or low-fee accounts for affected taxpayers. Taxpayers without bank accounts should take steps now to open them to avoid delays in receiving their refunds.

Key implications

Some people may opt to request paper refund checks when filing their tax returns for reasons other than not having bank accounts. In some cases, they may have security or privacy concerns about providing account information to the IRS. Or perhaps they don’t know where they want to deposit their refunds when their tax returns are being prepared.

Here are three ways you may be affected after the federal government completes the transition from paper checks to an all-electronic system:

A bank account will be required. Taxpayers must have U.S.-based bank accounts or credit union accounts to receive their refunds.
There will be no more delays due to the mail. Direct deposit is faster than mailing paper checks, resulting in reduced wait times.
The risk of lost or stolen checks will be eliminated. Electronic transfers will eliminate fraud and identity theft associated with paper checks.

Special considerations for U.S. citizens abroad

Americans living overseas may encounter problems receiving electronic refunds. The IRS typically requires a U.S. bank account for direct deposit. Foreign accounts generally don’t work with the IRS refund system.

To address this issue, the government may offer exceptions or alternative payment methods for individuals outside the United States, but the details are still unclear. Expats should stay informed and plan ahead. The elimination of paper checks could necessitate setting up a U.S.-based bank account or using financial services that provide U.S. banking solutions.

Impact on other taxpayers

The American Institute of CPAs (AICPA) has provided feedback to the Treasury Department about the change. While the AICPA is generally in favor of eliminating paper checks, it raised some issues about taxpayers who may encounter problems with the change.

For example, executors and trustees must fill out forms that currently don’t have a place on them to enter direct deposit information. In addition, the name on an estate checking account won’t match the name on a deceased person’s final tax return. This violates an electronic refund requirement that the name on a tax return must match the name on a bank account into which a refund is to be deposited.

For these and other situations, the AICPA has recommended that the government provide exceptions or extensions of the deadline for certain taxpayers. The group would also like the IRS to provide more guidance on how to proceed in specific situations.

Social Security beneficiaries

The SSA reports that fewer than 1% of beneficiaries currently receive paper checks. If you’re one of them, visit the SSA to change your payment information to include a bank account or enroll in an option to receive your benefits with a Direct Express® prepaid debit card.

Bottom line

The elimination of paper checks is a significant shift in how federal payments are made. While this move will likely result in faster and more secure transactions, it also means taxpayers need to be prepared well before the September 30 deadline. The IRS and SSA will likely release additional guidance and outreach campaigns in the coming months.

If you have questions about how this change will affect filing your tax returns, contact us.

Successful manufacturers have the ability to navigate various changes, whether positive or negative. On the positive side, potentially, are tax law changes enacted under the One Big Beautiful Bill Act (OBBBA). Perhaps the most important changes for manufacturers are the OBBBA’s liberalized rules for depreciating business assets. Let’s take a closer look at a few tax-related provisions that may be most consequential to your manufacturing company.

Depreciation-related breaks

Many provisions in the sweeping Tax Cuts and Jobs Act (TCJA) had been set to expire soon or had already expired. Among them was 100% first-year bonus depreciation.

Under the TCJA, manufacturers could claim bonus depreciation on purchases of assets such as new or used machinery, equipment and computer systems. Manufacturers could deduct 100% of the purchase price of qualified property placed in service beginning September 28, 2017, through 2022. But the first-year bonus depreciation percentage had dropped to 40% for 2025 and was scheduled to decrease to 20% for 2026 and 0% for 2027. The OBBBA makes permanent 100% first-year bonus depreciation for the cost of qualified assets acquired and placed in service after January 19, 2025.

The OBBBA also increases the Section 179 expensing limit. For qualifying property placed in service in 2025, the OBBBA doubles the expensing limit to $2.5 million. The break begins to phase out dollar-for-dollar when asset acquisitions for the year exceed $4 million (up from $3.13 million before the OBBBA). These amounts will continue to be annually adjusted for inflation after 2025.

Sec. 179 expensing allows manufacturers to deduct (rather than depreciate over a number of years) the cost of purchasing eligible new or used assets, such as equipment, furniture, off-the-shelf computer software and qualified improvement property (QIP), placed in service during the tax year. (QIP includes improvements to interior portions of nonresidential real estate.)

Finally, the OBBBA creates a new deduction for qualified production property. The deduction is 100% and generally applies to nonresidential real property used in manufacturing that’s placed in service after July 4, 2025, and before 2031.

Together, these depreciation changes are expected to encourage capital investments, especially by manufacturing companies. And the permanent 100% bonus depreciation may alleviate the pressure on companies that didn’t want to delay purchases due to a smaller deduction.

Research and experimentation expense deduction

Beginning in 2022, the TCJA required businesses to amortize Sec. 174 research and experimentation (R&E) costs over five years if incurred in the United States or 15 years if incurred outside the country. With the mandatory mid-year convention, deductions were spread out over six years. The OBBBA permanently allows the deduction of domestic R&E expenses in the year incurred, starting with the 2025 tax year.

In addition, the OBBBA allows “small businesses” to file amended returns to claim the deduction retroactively for 2022 through 2025. Regardless of size, businesses that incurred domestic R&E expenses in 2022 through 2024 can elect to accelerate the remaining deductions for those expenditures over a one- or two-year period, rather than amortizing them over the full five-year period.

Qualified business income deduction

The Sec. 199A deduction for qualified business income (QBI) for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships was slated to expire after 2025, putting many manufacturing business owners at risk of higher taxes.

The OBBBA makes the QBI deduction permanent. It also expands the income phase-in ranges for the wage and investment limitation, which limits the QBI deduction amount to:

50% of the amount of W-2 wages paid to employees by the qualified business during the tax year, or
The sum of 25% of W-2 wages plus 2.5% of the cost (not reduced by depreciation taken) of qualified property, which is the depreciable tangible property (including real estate) owned by a qualified business as of year-end and used by the business at any point during the tax year to produce QBI.

The limitation begins to apply when the taxpayer’s taxable income falls within the phase-in range and fully applies when taxable income exceeds the range. For 2025, the phase-in range is $197,300–$247,300 ($394,600–$494,600 for married couples filing jointly). The new law expands the phase-in range from $50,000 to $75,000 (from $100,000 to $150,000 for joint filers) beginning in 2026.

Turn to us with questions

These are just a few of the many business-related tax provisions of the OBBBA. Contact us to learn more about how your manufacturing company can take advantage of the new law’s tax breaks and incentives.

The qualified business income (QBI) deduction, which became effective in 2018, is a significant tax benefit for many business owners. It allows eligible taxpayers to deduct up to 20% of QBI, not to exceed 20% of taxable income. It can also be claimed for up to 20% of income from qualified real estate investment trust dividends.

With recent changes under the One Big Beautiful Bill Act (OBBBA), this powerful deduction is becoming more accessible and beneficial. Most important, the OBBBA makes the QBI deduction permanent. It had been scheduled to end on December 31, 2025.

A closer look

QBI is generally defined as the net amount of qualified income, gain, deduction and loss from a qualified U.S. trade or business. Taxpayers eligible for the deduction include sole proprietors and owners of pass-through entities, such as partnerships, S corporations and limited liability companies that are treated as sole proprietorships, partnerships or S corporations for tax purposes. C corporations aren’t eligible.

Additional limits on the deduction gradually phase in if 2025 taxable income exceeds the applicable threshold — $197,300 or $394,600 for married couples filing joint tax returns. The limits fully apply when 2025 taxable income exceeds $247,300 and $494,600, respectively.

For example, if a taxpayer’s income exceeds the applicable threshold, the deduction starts to become limited to:

50% of the amount of W-2 wages paid to employees by the qualified business during the tax year, or
The sum of 25% of W-2 wages plus 2.5% of the cost (not reduced by depreciation taken) of qualified property, which is the depreciable tangible property (including real estate) owned by a qualified business as of year-end and used by the business at any point during the tax year to produce QBI.

Also, if a taxpayer’s income exceeds the applicable threshold and the QBI is from a “specified service business,” the deduction will be reduced and eventually eliminated. Examples of specified service businesses are those involving investment-type services and most professional practices, including law, health, consulting, performing arts and athletics (but not engineering and architecture).

Even better next year

Under the OBBBA, beginning in 2026, the income ranges over which the wage/property and specified service business limits phase in will widen, potentially allowing larger deductions for some taxpayers. Instead of the distance from the bottom of the range (the threshold) to the top (the amount at which the limit fully applies) being $50,000, or, for joint filers, $100,000, it will be $75,000, or, for joint filers, $150,000. The threshold amounts will continue to be annually adjusted for inflation.

The OBBBA also provides a new minimum deduction of $400 for taxpayers who materially participate in an active trade or business if they have at least $1,000 of QBI from it. The minimum deduction will be annually adjusted for inflation after 2026.

Action steps

With the QBI changes, it may be time to revisit your tax strategies. Certain tax planning moves may increase or decrease your allowable QBI deduction. Contact us to develop strategies that maximize your benefits under the new law.

Does your organization sponsor Health Savings Accounts (HSAs) for its employees? Or are you considering a high-deductible health plan (HDHP) with HSAs for your 2026 benefits package? Either way, the recent enactment of the One, Big, Beautiful Bill Act (OBBBA) brings some interesting news.

In short, the OBBBA expands eligibility for HSAs beginning in 2026. This development could mean that more of your employees can become HSA participants or that the HDHP+HSAs model will be more viable for your organization.

Multiple objectives

HSAs can help employers and employees accomplish multiple objectives. They allow participants, who own their accounts, to save money on a tax-advantaged basis for qualified medical expenses. Their contributions, generally made through pretax compensation deferrals, are tax-free as funds enter, grow within and exit their accounts.

Also, employer-sponsors may set up HSAs as investment vehicles. This way, participants can amass funds throughout their working lives for retirement and estate planning purposes.

The accounts can support your organization’s strategic goals as well. They may help lower overall health care benefits costs because HDHPs are generally less expensive for employers than other plan types. Additionally, HSAs encourage more informed medical spending and saving among participants, potentially resulting in fewer high-cost claims.

Under the requirements, an employer must sponsor an HDHP to also sponsor HSAs. And participants can’t have any other disqualifying coverage, such as a spouse’s non-HDHP or Medicare.

OBBBA changes

As mentioned, starting in 2026, the OBBBA broadens eligibility for HSA participation. It does so by loosening some restrictions that previously disqualified certain individuals from contributing to an HSA.

For example, under previous rules, many people enrolled in HDHPs who bought from a Health Insurance Marketplace (commonly known as an “exchange”) were ineligible to contribute to HSAs. Beginning in 2026, however, enrollees in Bronze or Catastrophic plans can participate in HSAs.

The new law also paves the way for individuals enrolled in direct primary care arrangements to generally qualify for HSA contributions. This assumes that other conditions are met, such as being covered by a qualifying HDHP and not receiving other disqualifying benefits.

The direct primary care arrangement in question must have a monthly fee of $150 or less, or $300 or less if it covers more than one person. Those dollar amounts will be annually adjusted for inflation.

Another pertinent OBBBA change is that the law restores the “telehealth coverage exception.” Introduced under the Coronavirus Aid, Relief, and Economic Security Act in 2020, it temporarily allowed HDHPs to provide telehealth services without requiring participants to first meet their deductibles. The exception disappeared under previous rules but will return permanently in 2026 and won’t impede applicable HDHP participants from contributing to HSAs.

By clarifying these aspects of HSA participation, the OBBBA allows employers to sponsor these accounts with less confusion about who is and isn’t eligible. The law’s positive impact may be especially felt by employers whose workforces have diverse or nontraditional health care needs — such as gig workers, part-time staff members and employees in rural areas.

The path forward

With 2026 fast approaching, now’s a good time to review your organization’s health care benefits. If you already sponsor an HDHP with HSAs, evaluate how the OBBBA’s changes affect your plan. And if eligibility concerns have kept you from considering HSAs in the past, the path forward may be clearer now. Contact us for help deciding whether expanding or adding an HDHP with HSAs makes sense for your organization.

Yeo & Yeo is proud to partner with specialty tax firm McGuire Sponsel for a three-part webinar series exploring how the One Big Beautiful Bill Act (OBBBA) impacts depreciation, R&D credits, and economic incentives. Gain practical insights from industry leaders to help you navigate tax changes, plan strategically, and unlock savings.

Depreciation Decisions That Deliver: Leveraging the OBBBA for Bonus, Energy, and Beyond

Wednesday, July 30, 1:00 – 2:00 p.m.
Presenter: Dave McGuire, co-founder of McGuire Sponsel

The One Big Beautiful Bill Act (OBBBA) brings major updates to depreciation: it extends 100% bonus depreciation, phases out energy incentives like Section 179D, and adds new deductions for Qualified Production Property. These changes make contract and placed-in-service dates more important and require extra attention to energy property rules as old incentives end.

In this session, McGuire Sponsel’s Dave McGuire will break down the latest depreciation-related provisions and what they mean for businesses heading into filing season. Attendees will gain insight into strategic planning decisions and how to navigate the shifting legislative landscape.

Interpret the binding contract and placed-in-service rules under the new bonus depreciation framework
Understand what qualifies as Qualified Production Property under the OBBBA
Evaluate changes to the treatment of solar panels and other energy property
Prepare for the expiration of Section 179D and other energy-related incentives

Watch the Recording

R&D in the Wake of Reform: What the New Law Means for Credit Claims, Compliance & Strategy

Tuesday, August 5, 1:00 – 2:00 p.m.
Presenters: Garrett Duffy and Tanner Niehaus, CPA

The One Big Beautiful Bill Act brings long-awaited clarity to Section 174, but also ushers in a new era of complexity for R&D tax planning. While the federal R&D credit remains a valuable tool, heightened IRS scrutiny—paired with finalized changes to Form 6765 and the addition of Section G—demands a more strategic, well-documented approach.

In this session, McGuire Sponsel’s TJ Sponsel and Tanner Niehaus, CPA, will explore what the new federal law means for credit claims and how to stay ahead of the compliance environment. Attendees will walk away with actionable strategies and real-world examples to strengthen documentation practices.

Understand how the final federal legislation impacts Section 174 amortization and R&D credit eligibility
Navigate key changes to IRS Form 6765 (Credit for Increasing Research Activities), including new Section G requirements
Apply audit-tested documentation strategies that support IRS compliance
Proactively protect and optimize R&D credit claims in a post-reform landscape

Watch the Recording

Maximizing Credits & Incentives: How Strategic Location Decisions Can Unlock Long-Term Value

Tuesday, August 12, 2:00 – 3:00 p.m.
Presenters: Ben Worrell, MBA, and Chad Collier

Whether expanding operations, investing in new equipment, or adding jobs, growth decisions often come with hidden opportunities—if you know where to look. Across the U.S., state and local governments offer economic incentives to attract and retain businesses, but too many companies miss out due to poor timing or lack of guidance.

In this session, McGuire Sponsel’s Ben Worrell, MBA, and Chad Collier will explore how businesses can take a more strategic approach to site selection, capital planning, and hiring initiatives by leveraging economic development incentives. Through real-life examples and practical insight, attendees will learn when and how to engage in the process, what programs may be available, and how to avoid the common missteps that leave value on the table.

Understand what location advisory is and why timing is critical
Recognize the types of projects that may qualify for state and local incentives
Identify common incentive programs tied to job creation, capital investment, and expansion
Learn how to integrate incentive planning into business or client growth strategies
Avoid common pitfalls that limit incentive eligibility or reduce benefit value

Watch the Recording

About McGuire Sponsel

McGuire Sponsel is a nationally recognized specialty tax firm that collaborates with over 450 CPA firms nationwide. As an extension of Yeo & Yeo’s team, McGuire Sponsel brings specialized expertise beyond traditional tax services, including Research & Development Tax Credits, global business services, and Fixed Asset Services such as cost segregation, 179D/45L energy incentives, fixed asset management, and asset reviews.

For some time, President Trump and the GOP have had their sights on repealing many of the tax incentives created or enhanced by the Inflation Reduction Act (IRA). With the enactment of the One Big Beautiful Bill Act (OBBBA), they’ve made progress toward accomplishing that goal. Here’s a closer look at some of the individual-related and business-related clean energy tax incentives that are being scaled back or eliminated by the OBBBA.

Clean energy tax breaks affecting individuals

The OBBBA eliminates several tax credits that have benefited eligible individual taxpayers. It provides short “grace periods” before they expire, though, giving taxpayers a window to take advantage of the credits.

For example, the Energy Efficient Home Improvement Credit (Section 25C) was scheduled to expire after 2032. It’s now available for eligible improvements put into service by December 31, 2025. The IRA increased the credit amount to 30% and offers limited credits for exterior windows, skylights, exterior doors, and home energy audits.

The Residential Clean Energy Credit (Sec. 25D) was scheduled to expire after 2034. It’s also now available only through December 31, 2025. The IRA boosted the credit to 30% for eligible clean energy improvements made between 2022 and 2025. The credit is available for installing solar panels or other equipment to harness renewable energy sources like wind, geothermal or biomass energy.

Clean energy tax breaks affecting businesses

The Alternative Fuel Vehicle Refueling Property Credit (Sec. 30C) for property that stores or dispenses clean-burning fuel or recharges electric vehicles will also become unavailable sooner than originally set by the IRA. The credit — worth up to $100,000 per item (each charging port, fuel dispenser or storage property) — had been scheduled to sunset after 2032. Under the OBBBA, property must be placed in service on or before June 30, 2026, to qualify for the credit.

The law also eliminates the Sec. 179D Energy Efficient Commercial Buildings Deduction for buildings or systems on which the construction begins after June 30, 2026. The deduction has been around since 2006, but the IRA substantially boosted the size of the potential deduction and expanded the pool of eligible taxpayers.

Wind and solar projects stand to take a big hit. The OBBBA eliminates the Clean Electricity Investment Credit (Sec. 48E) and the Clean Electricity Production Credit (Sec. 45Y) for wind and solar facilities placed in service after 2027, unless construction begins on or before July 4, 2026. Wind and solar projects begun after that date must be put in service by the end of 2027.

In addition, wind energy components won’t qualify for the Advanced Manufacturing Production Credit (Sec. 45X) after 2027. The law also modifies the credit in other ways. For example, it adds “metallurgical coal” suitable for the production of steel to the list of critical minerals. And, for critical materials other than metallurgical coal, the credit will now phase out from 2031 through 2033. The credit for metallurgical coal expires after 2029.

Note: The OBBBA permits taxpayers to transfer clean energy credits while the credits are still available (restrictions apply to transfers to “specified foreign entities”).

Clean vehicle credits

If you’ve been pondering the purchase of a new or used electric vehicle (EV), you’ll want to buy sooner rather than later to take advantage of available tax credits. The Clean Vehicle Credit (Sec. 30D) was scheduled to expire after 2032. Under the OBBBA, the credit is available only through September 30, 2025.

The IRA significantly expanded the credit for qualifying clean vehicles placed in service after April 17, 2023. For eligible taxpayers, it extended the credit to any “clean vehicle,” including EVs, hydrogen fuel cell cars and plug-in hybrids. The maximum credit for new vehicles is $7,500, based on meeting certain sourcing requirements for 1) critical minerals and 2) battery components. Clean vehicles that satisfy only one of the two requirements qualify for a $3,750 credit.

The IRA also created a new credit, Sec. 25E, for eligible taxpayers who buy used clean vehicles from dealers. The credit equals the lesser of $4,000 or 30% of the sale price. It also expires on September 30, 2025.

Additionally, the OBBBA targets the incentive for a business’s use of clean vehicles. The Qualified Commercial Clean Vehicle Credit (Sec. 45W) had been scheduled to expire after 2032. It’s now available only for vehicles acquired on or before September 30, 2025. Depending on vehicle weight, the maximum credit is up to $7,500 or $40,000.

Other limitations

The OBBBA also limits access to the remaining clean energy credits for projects involving “foreign entities of concern” and imposes tougher domestic content requirements. We can help you plan for accelerated expiration dates on repealed clean energy incentives and comply with the new restrictions going forward.

We’ve reached a point where artificial intelligence (AI) offers functionality and enhancements to most businesses. Yours may be able to use it to streamline operations, improve customer interactions or uncover growth opportunities.

However, getting the max benefit calls for doing much more than jumping on the bandwagon. To make this technology truly work for your company, you’ve got to develop a comprehensive AI strategy that aligns with your overall strategic plan.

Identify your needs

Many businesses waste resources, both financial and otherwise, by hastily investing in AI without thoroughly considering whether and how the tools they purchase effectively address specific needs. Before spending anything — or any more — sit down with your leadership team and ask key questions such as:

What strategic problems are we trying to solve?
Are there repetitive tasks draining employees’ time and energy?
Could we use data more effectively to guide business decisions?

The key is to narrow down specific challenges or goals to actionable ways that AI can help. For example, if your staff spends too much time manually sorting and answering relatively straightforward customer inquiries, a simple AI chatbot might ease their workload and free them up for more productive activities. Or if forecasting demand is a struggle, AI-driven analytics may help you develop a clearer picture of future sales opportunities.

Be strategic

As you develop an AI strategy, insist on targeted and scalable investments. In other words, as mentioned, prospective solutions must fulfill specified needs. However, they also need to be able to grow with your business.

In addition, consider whether the AI tools you’re evaluating suit your budget, have reliable support and will integrate well with your current systems. Don’t ignore the tax implications either. The recently passed One, Big, Beautiful Bill Act has enhanced depreciation-related tax breaks that AI software may qualify for if you buy it outright.

Provide proper training

Training is another piece of the puzzle that often goes missing when businesses try to implement AI. Earlier this year, the Pew Research Center published the results of an October 2024 survey of more than 5,200 employed U.S. adults. Although 51% of respondents reported they’d received extra training at work, only 24% of that group said the training was related to AI.

This would seem to indicate that AI-specific training isn’t exactly commonplace. Make sure to build this component into your strategy. Proper training will help ensure a smoother adoption of each tool and increase your odds of a solid return on investment.

As you provide it, also ease employee concerns about job loss or disruption. That same Pew Research Center survey found that 52% of workers who responded are worried about the future impact of AI in the workplace. You may want to help your staff understand how the technology will support their work, not replace it.

Measure and adjust

As is the case with any investment, every AI tool you procure — whether buying it or signing up for a subscription — should deliver results that justify its expense. While shopping for and rolling out a new solution, clearly establish how you’ll measure success. Major factors may include time saved, customer satisfaction and revenue growth.

Once a solution is in place, don’t hesitate to make adjustments if something isn’t working. This may involve providing further training to users or limiting the use of an AI tool until you gain a better understanding of it.

If you’re using a subscription-based solution, you may be able to cancel it early. However, first check the contract terms to determine whether you’d suffer negative consequences such as a substantial termination fee or immediate loss of data.

Account for everything

There’s no doubt that AI has a lot to offer today’s small to midsize businesses. Unfortunately, it can also be overwhelming and financially costly if you’re not careful about choosing and implementing solutions.

The One Big Beautiful Bill Act (OBBBA) includes a number of beneficial changes that will help small business taxpayers. Perhaps the biggest and best changes are liberalized rules for depreciating business assets. Here’s what you need to know.

100% bonus depreciation is back

The new law permanently restores 100% first-year depreciation for eligible assets acquired and placed in service after January 19, 2025. The last time 100% bonus depreciation was allowed for eligible assets was in 2022. The deduction percentage was generally reduced to 80% for 2023, 60% for 2024, and 40% for eligible assets placed in service between January 1, 2025, and January 19, 2025.

For certain assets with longer production periods, these percentage cutbacks were delayed by one year. For example, a 60% first-year bonus depreciation rate applies to long-production-period property placed in service between January 1, 2025, and January 19, 2025.

Eligible assets include most depreciable personal property such as equipment, computer hardware and peripherals, commercially available software and certain vehicles. First-year bonus depreciation can also be claimed for real estate qualified improvement property (QIP). This is defined as an improvement to an interior portion of a non-residential building placed in service after the building was initially put into use. However, expenditures attributable to the enlargement of a building, elevators or escalators, or the internal structural framework of a building don’t count as QIP. They usually must be depreciated over 39 years.

Section 179 first-year depreciation

For eligible assets placed in service in tax years beginning in 2025, the OBBBA increases the maximum amount that can immediately be written off via first-year depreciation (sometimes called expensing) to $2.5 million. This is up from $1.25 million for 2025 before the new law.

A phase-out rule reduces the maximum Sec. 179 deduction if, during the year, you place in service eligible assets in excess of $4 million. This is up from $3.13 million for 2025 before OBBBA was enacted. These increased OBBBA amounts will be adjusted annually for inflation for tax years beginning in 2026.

Eligible assets include the same items that are eligible for bonus depreciation. Sec. 179 deductions can also be claimed for real estate QIP (defined earlier), up to the maximum annual allowance. In addition, Sec. 179 deductions are also allowed for roofs, HVAC equipment, fire protection and alarm systems, and security systems for non-residential real property. Finally, Sec. 179 write-offs can be claimed for depreciable personal property used predominantly in connection with furnishing lodging.

There’s a special limit on Sec. 179 deductions for heavy SUVs used over 50% for business. This means vehicles with gross vehicle weight ratings between 6,001 and 14,000 pounds. For tax years beginning in 2025, the maximum Sec. 179 deduction for a heavy SUV is $31,300.

Strategy: Sec. 179 deductions are subject to a number of limitations that don’t apply to first-year bonus depreciation. In particular, things can get complicated if you operate your business as a partnership, LLC treated as a partnership for tax purposes or an S corporation. The conventional wisdom is to claim 100% first-year bonus depreciation to the extent allowed rather than claiming Sec. 179 deductions for the same assets.

First-year depreciation for qualified production property

The OBBBA allows additional 100% first-year depreciation for qualified production property (QPP) in the year it’s placed in service. QPP is non-residential real estate, such as a building, that’s used as an integral part of a qualified production activity, such as the manufacturing, production, or refining of tangible personal property. Before the new law, non-residential buildings generally had to be depreciated over 39 years.

QPP doesn’t include any part of non-residential real property that’s used for offices, administrative services, lodging, parking, sales or research activities, software development, engineering activities and other functions unrelated to the manufacturing, production or refining of tangible personal property.

The favorable new 100% first-year depreciation deal is available for QPP when the construction begins after January 19, 2025, and before 2029. The property must be placed in service in the U.S. or a U.S. possession before 2031.

Take another look

These are only some of the business provisions in the new law. We can help you take advantage of tax breaks that are beneficial in your situation for 2025 and future years.

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4. The new law includes a number of changes that will affect nonprofits, whether charities, private foundations, or health systems. Here’s a quick summary of some of the most important provisions.

Key Provisions Affecting Nonprofits

1. Changes to Charitable Giving Incentives

Charitable Deduction for Nonitemizers: The final law increases the above-the-line charitable deduction to $1,000 for individuals and $2,000 for married couples filing jointly, available through 2028.
Corporate Giving Limits: Corporations can deduct charitable contributions only if the total equals at least 1% of their taxable income, with a maximum deduction capped at 10% annually. This threshold may discourage charitable giving, particularly among smaller or less profitable businesses.

2. Excise Taxes on Private Foundations and University Endowments

Private Foundations: The excise tax on net investment income for private foundations has been replaced by a tiered structure, with a top marginal rate of 10% for the largest foundations. Foundations with lower asset levels may see little or no change, but highly endowed foundations face a substantially increased excise tax burden
University Endowments: The previous flat 1.4% excise tax on net investment income for private colleges and universities is replaced with a new rate structure of 1.4%, 4%, or 8%, depending on several variables, including the value of the endowment and the number of full-time students who meet certain other requirements.

3. Unrelated Business Income (UBI) and “Parking Tax”

The final law does not reinstate the unpopular “parking tax.” Nonprofits will not be required to treat parking and transit benefits as unrelated business income, reversing the earlier proposal.

4. Executive Compensation Excise Tax

Nonprofit Hospitals and Health Systems: The 21% excise tax on compensation over $1 million applies to all employees of tax-exempt organizations, not just the five highest-compensated individuals. However, compensation for medical services remains exempt, as in the original proposal.

What Nonprofits Should Do Now

Review Compensation Structures: Ensure compliance with the expanded excise tax on high earners.
Reassess Giving Campaigns: Leverage the expanded nonitemizer deduction to encourage broader donor participation.
Monitor Medicaid and SNAP Impacts: Prepare for potential increases in service demand due to eligibility changes.
Stay Informed: The IRS and Treasury are expected to issue guidance on implementation. Nonprofits should consult with advisors regularly.

The One Big Beautiful Bill Act (OBBBA) represents the most significant overhaul of nonprofit tax policy since 2017. In the coming months, the IRS will likely issue guidance on these and other provisions in the new law. We’ll keep you updated, but don’t hesitate to contact us for assistance.

When the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, employers were handed a considerable task. You and your leadership team must sort through the law’s many provisions and determine just how they affect your organization.

As you may be discovering, doing so isn’t easy. For example, the OBBBA grants eligible workers substantial tax breaks on qualified tips and overtime pay. However, these provisions aren’t only about them — your information reporting obligations may be affected as well.

Qualified tips

For tax years 2025 through 2028, the OBBBA creates a deduction of up to $25,000 for tip income in eligible occupations. These are occupations that customarily and regularly received tips before 2025. (The eligible occupations will be determined by the Treasury Secretary.)

Income-based phaseouts apply to the tax break, and federal payroll taxes, as well as state taxes if applicable, still apply to tip income. Tipped workers don’t need to itemize deductions on their tax returns to claim this deduction.

Employers play a key role in whether workers can claim the new tips deduction. Generally, workers can avail themselves of this tax break only for qualified tips (as defined under the OBBBA) that are included on an appropriate payee statement provided by employers or service providers.

For your employees, you must report qualified tips to the individual as well as the Social Security Administration on IRS Form W-2, “Wage and Tax Statement.” More specifically, you need to report:

The total amount of cash tips reported by the employee, and
The employee’s occupation as described under applicable sections of the tax code.

If your organization engages independent contractors or other “nonemployee payees,” you generally must submit to the IRS and the payee in question a separate accounting of the amounts reasonably designated as qualified tips. You also need to report the individual’s occupation as described under the tax code.

Such information reporting may involve IRS Form 1099-NEC, “Nonemployee Compensation,” for independent contractors, or Form 1099-K, “Payment Card and Third Party Network Transactions,” for reportable payment transactions by third-party settlement organizations to participating payees. (Whether you must complete a form depends on various factors, such as how much you paid the contractor.)

Under a transition rule, for cash tips required to be reported for periods before January 1, 2026, a separate accounting of amounts designated as cash tips can be approximated by any reasonable method specified by the Treasury Secretary.

Eligible overtime

Also for tax years 2025 through 2028, the OBBBA creates a deduction of up to $12,500 for single filers or $25,000 for joint filers for qualified overtime pay as defined by the Fair Labor Standards Act (FLSA). Income-based phaseouts and federal payroll taxes, as well as state taxes if applicable, apply. Again, workers don’t have to itemize to claim this deduction.

For employees, you must report each applicable individual’s total amount of qualified overtime pay to the person in question as well as the Social Security Administration on IRS Form W-2. Under a new twist brought forth by the OBBBA, employers need to report eligible overtime pay amounts separately on Forms W-2.

The law’s information reporting requirements for qualified overtime pay also apply to independent contractors and other nonemployee payees. This may be surprising given that, under the FLSA, independent contractors aren’t entitled to overtime pay. Nonetheless, the OBBBA stipulates that employers must provide the IRS and each applicable payee a separate accounting of the portion of payments that have been properly designated as eligible overtime pay. This may involve IRS Form 1099-NEC.

It’s expected that the IRS and the U.S. Department of the Treasury will eventually release guidance clarifying which types of workers, including nonemployee payees, are eligible to receive qualified overtime pay and, thus, claim the related deduction. Employer information reporting may also be addressed in such guidance.

Under a transition rule, for qualified overtime pay required to be reported for periods before January 1, 2026, a separate accounting of amounts designated as qualified overtime pay can be approximated by any reasonable method specified by the Treasury Secretary.

More changes ahead

As noted, additional guidance is expected on these provisions and employers’ related obligations. Also, be aware that the Treasury Secretary is required to modify the procedures for income tax withholding to account for both the new tips deduction and overtime deduction. So, changes in these areas are likely forthcoming. However, these revisions likely won’t go into effect until 2026. Contact us for more information about any aspect of the OBBBA that may affect your organization.

The One Big Beautiful Bill Act (OBBBA) includes, among many other things, numerous provisions that can affect an individual’s taxes. The new law makes some changes to existing tax breaks that will be significant to many, but not all, taxpayers. It also creates new breaks that, again, will be significant to certain taxpayers. Finally, it makes permanent the tax rate reductions and most of the changes to deductions and credits made by the Tax Cuts and Jobs Act (TCJA), with occasional tweaks.

State and local tax deduction

The OBBBA increases the limit on the state and local tax (SALT) deduction through 2029. Beginning in 2025, eligible taxpayers can deduct up to $40,000 ($20,000 for married couples filing separately) of SALT, including property tax and either income tax or sales tax, with a 1% annual increase thereafter. However, in 2030, the previous limit of $10,000 ($5,000 for separate filers) will resume.

When modified adjusted gross income (MAGI) exceeds $500,000 ($250,000 for separate filers), the cap is reduced by 30% of the amount by which MAGI exceeds the threshold — but not below $10,000 ($5,000 for separate filers). If you expect to be near or over the threshold, taking steps to reduce your MAGI (for example, increasing retirement plan contributions or making IRA qualified charitable distributions) could help you secure the full SALT deduction.

Child Tax Credit

The $2,000 Child Tax Credit (CTC) for children under age 17 was slated to return to $1,000 per child after 2025, with the income phaseout levels subject to lower thresholds. Also, the $500 Credit for Other Dependents (COD) was scheduled to expire at that time. The COD is available for each qualifying dependent other than a qualifying child (such as a dependent child over the age limit or a dependent elderly parent).

The OBBBA makes the doubled CTC permanent, with an increase to $2,200 starting this year and annual inflation adjustments to follow. It also makes permanent the $1,400 refundable portion of the CTC, adjusted for inflation ($1,700 in 2025), and the $500 nonrefundable COD. And it makes permanent the income phaseout thresholds of $200,000, or $400,000 for joint filers.

Education-related breaks

The OBBBA expands the definition of qualified expenses that can be paid for with tax-free distributions from Section 529 plans. For example, tax-free distributions can now cover qualified post-secondary credentialing expenses. In addition, tax-free elementary and secondary school distributions are no longer limited to paying tuition; they can also pay for books and other instructional materials, online educational materials, tutoring or educational classes outside the home, and certain testing fees.

The OBBBA also increases the annual limit on tax-free distributions for qualified elementary and secondary school expenses from $10,000 to $20,000 beginning in 2026.

In addition, the law creates a tax credit of up to $1,700 for contributions to organizations that provide scholarships to elementary and secondary school students. Students who benefit from the scholarships must be part of a household with an income that doesn’t exceed 300% of the area’s median gross income and be eligible to enroll in a public elementary or secondary school.

The OBBBA also makes some tax law changes related to student loans:

Employer-paid student loan debt. If your employer pays some of your student loan debt, you may be eligible to exclude up to $5,250 from income. The OBBBA makes this break permanent, and the limit will be annually adjusted for inflation after 2026.

Forgiven student loan debt. Forgiven debt is typically treated as taxable income, but tax-free treatment is available for student loan debt forgiven after December 31, 2020, and before January 1, 2026. Under the OBBBA, beginning in 2026, only student loan debt that’s forgiven due to the death or total and permanent disability of the student will be excluded from income, but this exclusion is permanent. Warning: Some states may tax forgiven debt that’s excluded for federal tax purposes.

Charitable deductions

Generally, donations to qualified charities are fully deductible up to certain adjusted gross income (AGI)-based limits if you itemize deductions. The OBBBA creates a nonitemized charitable deduction of up to $1,000, or $2,000 for joint filers, which goes into effect in 2026.

Also beginning in 2026, a 0.5% floor will apply to itemized charitable deductions. This generally means that only charitable donations in excess of 0.5% of your AGI will be deductible if you itemize deductions. So, if your AGI is $100,000, your first $500 of charitable donations for the year won’t be deductible.

Qualified small business stock

Generally, taxpayers selling qualified small business (QSB) stock are allowed to exclude up to 100% of their gain if they’ve held the stock for more than five years. (The exclusion is less for stock acquired before September 28, 2010.) Under pre-OBBBA law, to be a QSB, a business must be engaged in an active trade or business and must not have assets that exceed $50 million, among other requirements.

The OBBBA provides new, but smaller exclusions for QSB stock held for shorter periods. Specifically, it provides a 75% exclusion for QSB stock held for four years and a 50% exclusion for QSB stock held for three years. These exclusions go into effect for QSB stock acquired after July 4, 2025. The law also increases the asset ceiling for QSBs to $75 million (adjusted for inflation after 2026) for stock issued after July 4, 2025.

Affordable Care Act’s Premium Tax Credits

The OBBBA imposes new requirements for Premium Tax Credit (PTC) recipients. For example, beginning in 2028, eligible individuals must annually verify information such as household income, immigration status and place of residence. Previously, many insureds were allowed to automatically re-enroll annually.

Beginning in 2026, individuals who receive excess advanced PTCs based on estimated annual income must return the entire excess unless actual income is less than 100% of the federal poverty limit. Currently, individuals with incomes below 400% of the limit are required to make only partial repayments.

Temporary tax deductions

On the campaign trail in 2024, President Trump promised to eliminate taxes on tips, overtime and Social Security benefits and to make auto loan interest deductible. The OBBBA makes a dent in these promises but doesn’t completely fulfill them. Instead, it creates partial deductions that apply for 2025 through 2028. They’re available to both itemizers and nonitemizers:

Tips. Employees and independent contractors generally can claim a deduction of up to $25,000 for qualified tips received if they’re in an occupation that customarily and regularly received tips before 2025. (The eligible occupations will be determined by the IRS and are expected to be released by October 2, 2025.) The tips must be reported on a Form W-2, Form 1099 or other specified statement furnished to the individual or reported directly by the individual on Form 4137. The deduction begins to phase out when a taxpayer’s MAGI exceeds $150,000, or $300,000 for joint filers.

Overtime. Qualified overtime pay generally is deductible up to $12,500, or $25,000 for joint filers. It includes only the excess over the regular pay rate. For example, if a taxpayer is normally paid $20 per hour and is paid “time and a half” for overtime, only the extra $10 per hour for overtime counts as qualified overtime pay. The overtime pay must be reported separately on a taxpayer’s W-2 form, Form 1099 or other specified statement furnished to the individual. This deduction also starts phasing out when MAGI exceeds $150,000, or $300,000 for joint filers.

Deductible tips and overtime pay remain subject to federal payroll taxes and any applicable state income and payroll taxes.

Auto loan interest. Interest on qualified passenger vehicle loans originated after December 31, 2024, generally is deductible up to $10,000, though few vehicles come with that much annual interest. Qualified vehicles include cars, minivans, vans, SUVs, pickup trucks and motorcycles with gross vehicle weight ratings of less than 14,000 pounds that undergo final assembly in the United States. The deduction begins to phase out when MAGI exceeds $100,000, or $200,000 for joint filers.

“Senior” deduction. While the OBBBA doesn’t eliminate taxes on Social Security benefits, it does include a new deduction of $6,000 for taxpayers age 65 or older by December 31 of the tax year — regardless of whether they’re receiving Social Security benefits. The deduction begins phasing out when MAGI exceeds $75,000, or $150,000 for joint filers. Social Security benefits, however, are still taxable to the extent that they were before the OBBBA.

Finally, be aware that additional rules and limits apply to these new tax breaks. In many cases, the IRS will be publishing additional guidance and will provide transition relief for 2025 to eligible taxpayers and those subject to information reporting requirements.

Trump Accounts

Beginning in 2026, Trump Accounts will provide families with a new way to build savings for children. An account can be set up for anyone under age 18 at the end of the tax year who has a Social Security number.

Annual contributions of up to $5,000 can be made until the year the beneficiary turns age 18. In addition, U.S. citizen children born after December 31, 2024, and before January 1, 2029, with at least one U.S. citizen parent can potentially qualify for an initial $1,000 government-funded deposit.

Contributions aren’t deductible, but earnings grow tax-deferred as long as they’re in the account. The account generally must be invested in exchange-traded funds or mutual funds that track the return of a qualified index and meet certain other requirements. Withdrawals generally can’t be taken until the child turns age 18.

TCJA provisions

The OBBBA also makes permanent many TCJA provisions that were scheduled to expire after 2025, including:

Reduced individual income tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%,
Higher standard deduction (for 2025, the OBBBA also slightly raises the deduction to $15,570 for singles, $23,625 for heads of households and $31,500 for joint filers),
The elimination of personal exemptions,
Higher alternative minimum tax exemptions,
The reduction of the limit on the mortgage debt deduction to the first $750,000 ($375,000 for separate filers) — but the law makes certain mortgage insurance premiums eligible for the deduction after 2025,
The elimination of the home equity interest deduction for debt that wouldn’t qualify for the home mortgage interest deduction, such as home equity debt used to pay off credit card debt,
The limit of the personal casualty deduction to losses resulting from federally declared disasters — but the OBBBA expands the limit to include certain state-declared disasters,
The elimination of miscellaneous itemized deductions (except for eligible unreimbursed educator expenses), and
The elimination of the moving expense deduction (except for members of the military and their families in certain circumstances and, beginning in 2026, certain employees or new appointees of the intelligence community).

The permanency of these provisions should provide some helpful clarity for tax planning. However, keep in mind that “permanent” simply means that the provisions have no expiration date. It’s still possible that lawmakers could make changes to them in the future.

Time to reassess

We’ve covered many of the most significant provisions affecting individual taxpayers, but there are other changes that also might affect you. For example, the OBBBA adds a new limitation on itemized deductions for taxpayers in the 37% tax bracket beginning in 2026. It also imposes a new limit on the deduction for gambling losses beginning next year. And sole proprietors and owners of pass-through businesses will also be directly affected by OBBBA tax law changes affecting businesses.

Given all of these and other tax law changes, now is a good time to review your tax situation and update your tax planning strategies. Turn to us to help you take full advantage of the new — or newly permanent — tax breaks.

For businesses looking to reach the next level of success, there’s no bigger star than organic sales growth. Simply defined, this is achieving an increase in revenue through existing operations rather than from mergers, acquisitions or other external investments.

As you’ve likely noticed, coaxing this star into the spotlight isn’t easy. How can you set the stage for organic sales growth? Here are some fundamental ways.

It begins with customer service

Organic sales growth largely comes from getting more from your current customer base. Accomplishing this feat begins with premier customer service, which means more than just a smile and a handshake. Are your employees really hearing the issues and concerns raised? Do they not only solve problems, but also exceed customers’ expectations whenever possible?

The ability to conduct productive dialogues with customers is key to growing sales. Maintaining a positive, ongoing conversation starts with resolving any negative (or potentially negative) issues that arise as quickly as possible under strictly followed protocols. In addition, it includes simply checking in with customers regularly to see what they may need.

Marketing counts

Boosting sales of any kind, organic or otherwise, inevitably involves marketing. Do you often find yourself wondering why all your channels aren’t generating new leads at the same level? Most likely, it’s because your messaging on some of those channels is no longer connecting with customers and prospects.

On a regular basis, you might want to step back and reassess the nature and strengths of your company. Then use this assessment to revise your overall marketing strategy.
If you work directly with the buying public, you may want to cast as wide a net as possible. But if you sell to a specific industry or certain types of customers, you could organically grow sales by focusing on professional networking groups, social organizations or trade associations.

People matter

At the end of the day, organic sales growth is driven by a business’s people. Even the best idea can fail if employees aren’t fully prepared and committed to design, produce, market and sell your products or services. Of course, as you well know, employing talented, industrious staff requires much more than simply getting them to show up for work.

First, you must train employees well. This means they need to know how to do their jobs and how to help grow organic sales. You might ask: Does every worker really contribute to revenue gains? In a sense, yes, because everyone from entry-level staff to executives in corner offices drives sales.

Second, beyond receiving proper training, employees must be cared for and inspired through valued benefits and a positive work environment. Happy workers are more productive and more likely to preach the excellence of your company’s products or services to friends and family. Organic sales may occur as a result.

Star of the show

It’s the star of the show for a reason. Organic sales growth is generally considered more sustainable than inorganic revenue gains and a strong indicator of a healthy, competitive business. It also avoids the integration and compliance risks of mergers and acquisitions, not to mention the complications and dangers of acquiring outside financing. We can help you identify your company’s optimal strategies for achieving organic sales growth.

Missing ERISA plan documents can significantly increase costs and long-term risk for employers and plan sponsors. For example, a former employee or their heirs may file a claim for benefits they mistakenly believe are due. Here, the burden falls on the plan to provide records that prove the distribution was previously made to the employee — sometimes decades ago — or pay the claim. This scenario highlights the critical role of records retention policies.

Plan sponsors and other fiduciaries must understand their roles in preserving and maintaining plan records that help avoid duplicate distributions and ensure compliance with their fiduciary obligations. And, given that retirement plans are long-term commitments spanning many years of a participant’s work life, they inevitably generate extensive supporting documentation for plan sponsors to store and manage.

Read on to learn more about ERISA plan records retention guidelines, unusual circumstances that may complicate the plan sponsor’s role, and best practices for preserving and maintaining crucial records.

What Rules Apply to ERISA Records Retention?

Plan sponsors adhere to specific rules pertaining to record retention but may overlook some significant nuances. The following rules apply:

ERISA Section 107 requires that plans retain records in an easily accessible format for six (6) years from the date of filing (including supporting documentation).
The IRS requires most ERISA plans to keep records for three (3) years from the plan’s Form 5500 filing date.

However, ERISA Section 209 provides a more rigorous guideline, one that is key but often overlooked: Plan sponsors must keep plan records until all benefits have been paid out and the time for auditing the plan has passed. It is the plan sponsor’s responsibility to demonstrate that all due benefits have been paid to employees, as the burden of proof lies with them.

What Is Form 8955-SSA, and Why the Urgency?

Plan sponsors send a Form 8955-SSA to the Social Security Administration (SSA) when an employee leaves a job without taking their vested ERISA retirement plan benefit. When the employee reaches the plan’s normal retirement age (typically 65), sometimes decades after they accrued that benefit, the SSA will notify the employee that benefits may be available based on the Form 8955-SSA. The employee can then approach their former employer with a government letter indicating that money may be owed to them. The plan sponsor must then review plan records to answer the claim and pay the benefits unless the employer can prove that the money was already distributed.

The rules surrounding record retention and Form 8955-SSA have not changed; the circumstances have. An upcoming wave of baby boomer retirements could trigger a corresponding rise in benefit claims, leaving plan sponsors searching for records that may no longer exist.

Who Is Responsible for Maintaining ERISA Benefit Plan Records?

The responsibility for maintaining all plan records falls on the plan sponsor, whether the employer or a third-party administrator (TPA) stores them. Records of plan distributions may be the first line of defense against claims for benefits, but the following types of documents should also be kept for future reference:

Plan Distribution Documents to Reference

Plan document, adoption agreement, IRS letter, amendments, summary plan description, summary of material modification, trust documents, service agreements, and loan policies
Records supporting eligibility, vesting and benefits (census records for all employees)
Support and documentation for loans and distributions
Board resolutions and committee minutes related to the ERISA plan
Service agreements with service providers

Keeping track of records for decades remains a challenge for plan sponsors, especially considering common business events such as:

Implementation of standard record retention policies

Most companies develop record retention policies, and employees may follow them with the best of intentions. But, as noted above, ERISA benefit plan records need special handling and longer storage. Companies may unintentionally destroy the records needed to prove length of service, benefits accrued, and benefits paid from retirement plans to employees. Fixing this problem could be as simple as amending standard record retention policies to include specific guidance for benefit plan records.

Execution of business transactions such as sales, M&As, and closures

Due diligence should reveal ERISA benefit plans that pass from company to company during transactions and should be addressed. Occasionally, plan details don’t make it into the contracts, but it is more likely for records to be lost or destroyed after the transaction closes. These situations do not absolve the plan sponsor of its responsibility to retain plan records.

Termination of TPA contracts

Employers may transfer their business from one TPA to another or the provider may go out of business; either situation leaves the plan records vulnerable to loss or destruction. Unless the contract contained specific language regarding storage of the plan’s records, the TPA is not required to continue holding plan records. Here, again, the plan sponsor is responsible for the records whether they are housed with a TPA or with the employer’s HR department.

Protection of data

System migrations and conversions controlled by the employer, TPA, or other entity can result in data loss. Whether records were destroyed because an employee zealously followed the company’s record retention policy or were lost due to a glitch in an IT system is generally immaterial. As noted above, if the employer cannot prove that benefits were paid to a participant, the employer may have to pay even if it believes benefits were already distributed (including if the benefits were earned while the individual was employed at a previous entity that was acquired by the current plan sponsor).

What can plan sponsors do to protect and maintain ERISA plan records to mitigate these risks?

Records Retention Practice Tips for Plan Sponsors

Using the following best practices can help plan sponsors retain and maintain plan records essential to proving the status of a participant’s claim:
Verify that all documents are the executed versions (signed and dated), including evidence of electronic signature if signed electronically.
Implement a written record retention statement for plans that rely on electronic records and do not maintain original paper records.
Check TPA service contracts for language about records retention.
Retain all ERISA plan documents when changing recordkeepers or payroll providers, including records that are typically unavailable to plan sponsors.
Store and back up records, ensuring that other fiduciaries are aware of their location and can access them.
Verify that plan records are securely stored on current technology and protected from unauthorized use or loss.
Update the Form 8955-SSA when distributions have been made to plan participants.

When benefit claims arrive, robust records retention policies can help ensure that employees receive the benefits they deserve while avoiding overpayments.

Records Retention Is an Ongoing Process

Will a comprehensive review of your plan’s recordkeeping reveal missing documents or gaps in your retention protocols? Please consider asking our Employee Benefit Plan Audit team to review your plan and offer advice on how to improve your plan’s record management.

In many occupational fraud incidents, the perpetrator is a long-tenured, well-liked and high-performing employee. In part, that’s because many organizations ignore red flags when employees have impeccable records — which makes it easier for them to commit illegal activities. In such situations, misplaced trust becomes a vulnerability. How can you rely on your employees yet prevent theft and other crimes?

Correlation between tenure and losses

Employees who’ve been with an organization for years often develop strong relationships and may have earned performance and service awards. The trust they’ve built over time generally means they’re granted more autonomy than newer employees, and their actions are questioned less frequently. This can cause coworkers and supervisors to overlook warning signs.

Unfortunately, this level of trust can make it easier for fraud schemes to go undetected. And the longer they go undetected, the more likely losses will be heavy. According to the Association of Certified Fraud Examiners, employees with tenures of less than a year are responsible for a median fraud loss of $50,000. Those with tenures of more than 10 years cause median losses of $250,000.

Why they do it

In many fraud incidents involving long-term employees, warning signs are present but ignored. For example, long-tenured employees engaged in fraud often hesitate to take vacations or delegate tasks. Sometimes, they control multiple steps in a process that should involve more than one person. They may be protective of their work and resist audits or procedural changes. Of course, these can also be innocent signs of over-dedicated workers, which is why you should investigate red flags discreetly.

Some employees are inherently dishonest. But they typically make up a small minority among those who commit fraud. Instead, long-term employees who perform illegal acts may feel entitled, frustrated, or resentful about how they’re treated or compensated. They may live beyond their means or have a substance abuse or gambling problem. Some commit fraud simply because the opportunity presents itself. Others do so believing no one will suspect them.

A balancing act

Because sudden scrutiny of long-tenured workers can generate resentment and mistrust, apply your business’s antifraud policies fairly and consistently. Your oversight should emphasize that no one’s immune to suspicion. Here are several ways to improve oversight:

Implement job rotation and mandatory vacations. Cross-training employees in certain departments (such as accounting and shipping) makes it possible to mandate vacations without losing productivity. Workers who must take time off have a harder time perpetrating fraud.

Segregate duties. Never allow even long-term, trusted employees to control multiple parts of a financial or accounting process. If you don’t have enough staff to spread responsibilities around, consider outsourcing some of them.

Maintain a culture of accountability. All employees must understand that trust is earned through words and actions, not tenure. You and your executives must model ethical behavior and hold employees to the same high standards. Provide a confidential hotline for any stakeholder to report fraud suspicions.

Valuable assets

Long-term employees can be your organization’s most valuable assets. However, they aren’t immune to the pressures, temptations or rationalizations that can lead workers to commit fraud. By recognizing the risks of misplaced trust and applying internal controls fairly, your organization can help protect itself. Contact us with questions.

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4. The new law includes a number of favorable changes that will affect small business taxpayers, and some unfavorable changes too. Here’s a quick summary of some of the most important provisions.

First-year bonus depreciation

The OBBBA permanently restores the 100% first-year depreciation deduction for eligible assets acquired after January 19, 2025. This is up from the 40% bonus depreciation rate for most eligible assets before the OBBBA.

First-year depreciation for qualified production property

The law allows additional 100% first-year depreciation for the tax basis of qualified production property, which generally means nonresidential real property used in manufacturing. This favorable deal applies to qualified production property when the construction begins after January 19, 2025, and before 2029. The property must be placed in service in the United States or one of its possessions.

Section 179 expensing

For eligible assets placed in service in taxable years beginning in 2025, the OBBBA increases the maximum amount that can be immediately written off to $2.5 million (up from $1.25 million before the new law). A phase-out rule reduces the maximum deduction if, during the year, the taxpayer places in service eligible assets in excess of $4 million (up from $3.13 million). These amounts will be adjusted annually for inflation starting in 2026.

R&E expenditures

The OBBBA allows taxpayers to immediately deduct eligible domestic research and experimental expenditures that are paid or incurred beginning in 2025 (reduced by any credit claimed for those expenses for increasing research activities). Before the law was enacted, those expenditures had to be amortized over five years. Small business taxpayers can generally apply the new immediate deduction rule retroactively to tax years beginning after 2021. Taxpayers that made R&E expenditures from 2022–2024 can elect to write off the remaining unamortized amount of those expenditures over a one- or two-year period starting with the first taxable year, beginning in 2025.

Business interest expense

For tax years after 2024, the OBBBA permanently restores a more favorable limitation rule for determining the amount of deductible business interest expense. Specifically, the law increases the cap on the business interest deduction by excluding depreciation, amortization and depletion when calculating the taxpayer’s adjusted taxable income (ATI) for the year. This change generally increases ATI, allowing taxpayers to deduct more business interest expense.

Qualified small business stock

Eligible gains from selling qualified small business stock (QSBS) can be 100% tax-free thanks to a gain exclusion rule. However, the stock must be held for at least five years and other eligibility rules apply. The new law liberalizes the eligibility rules and allows a 50% gain exclusion for QSBS that’s held for at least three years, a 75% gain exclusion for QSBS held for at least four years, and a 100% gain exclusion for QSBS held for at least five years. These favorable changes generally apply to QSBS issued after July 4, 2025.

Excess business losses

The OBBBA makes permanent an unfavorable provision that disallows excess business losses incurred by noncorporate taxpayers. Before the new law, this provision was scheduled to expire after 2028.

Paid family and medical leave

The law makes permanent the employer credit for paid family and medical leave (FML). It allows employers to claim credits for paid FML insurance premiums or wages and makes other changes. Before the OBBBA, the credit was set to expire after 2025.

Employer-provided child care

Starting in 2026, the OBBBA increases the percentage of qualified child care expenses that can be taken into account for purposes of claiming the credit for employer-provided child care. The credit for qualified expenses is increased from 25% to 40% (50% for eligible small businesses). The maximum credit is increased from $150,000 to $500,000 per year ($600,000 for eligible small businesses). After 2026, these amounts will be adjusted annually for inflation.

Termination of clean-energy tax incentives

The OBBBA terminates a host of energy-related business tax incentives including:

The qualified commercial clean vehicle credit, effective after September 30, 2025.
The alternative fuel vehicle refueling property credit, effective after June 30, 2026.
The energy efficient commercial buildings deduction, effective for property the construction of which begins after June 30, 2026.
The new energy efficient home credit, effective for homes sold or rented after June 30, 2026.
The clean hydrogen production credit, effective after December 31, 2027.
The sustainable aviation fuel credit, effective after September 30, 2025.

More to come

In the coming months, the IRS will likely issue guidance on these and other provisions in the new law. We’ll keep you updated, but don’t hesitate to contact us for assistance in your situation.

In baseball, the triple play is a high-impact defensive feat that knocks the competition out of the inning. In business, you have your own version — three key financial statements that can give you a competitive edge by monitoring profitability, liquidity and solvency.

First base: The income statement

The income statement (also known as the profit and loss statement) shows revenue, expenses and earnings over a given period. It’s like an inning-by-inning scoreboard of your operations. While many people focus on the bottom line (profits or losses), it pays to dig into the details.

A common term used when discussing income statements is “gross profit,” or the income earned after subtracting the cost of goods sold from revenue. Cost of goods sold includes the cost of labor, materials and overhead required to produce or acquire a product. Another important term is “net income.” This is the income remaining after all expenses (including taxes) have been paid.

Also, investigate income statement trends. Is revenue growing or declining? Are variable expenses (such as materials costs, direct labor and shipping costs) changing in proportion to revenue? Are you overwhelmed by fixed selling, general and administrative expenses (such as rent and marketing costs)? Are some products or service offerings more profitable than others? Evaluating these questions can help you brainstorm ways to boost profitability going forward.

Second base: The balance sheet

The balance sheet (also known as the statement of financial position) provides a snapshot of the company’s financial health. This report tallies assets, liabilities and equity at a specific point in time. It provides insight into liquidity (whether your company has enough short-term assets to cover short-term obligations) and solvency (whether your company has sufficient resources to succeed over the long term).

Under U.S. Generally Accepted Accounting Principles (GAAP), assets are usually reported at the lower of cost or market value. Current assets (such as accounts receivable and inventory) are reasonably expected to be converted to cash within a year, while long-term assets (such as plant and equipment) have longer lives. Similarly, current liabilities (such as accounts payable) come due within a year, while long-term liabilities are payment obligations that extend beyond the current year or operating cycle.

Intangible assets (such as patents, customer lists and goodwill) can provide significant value to a business. But internally developed intangibles aren’t reported on the balance sheet; instead, their costs are expensed as incurred. Intangible assets are only reported when they’ve been acquired externally.

Owners’ equity (or net worth) is the extent to which the book value of assets exceeds liabilities. If liabilities exceed assets, net worth will be negative. However, book value may not necessarily reflect market value. Some companies may provide the details of owners’ equity in a separate statement called the statement of retained earnings. It details sales or repurchases of stock, dividend payments and changes caused by reported profits or losses.

Third base: The statement of cash flows

The cash flow statement shows all the cash flowing in and out of your company. For example, your company may have cash inflows from selling products or services, borrowing money, and selling stock. Outflows may result from paying expenses, investing in capital equipment and repaying debt.

Typically, cash flows are organized on this report under three categories: operating, investing and financing activities. The bottom of the statement shows the net change in cash during the period. Watch your statement of cash flows closely to gauge your business’s liquidity. To remain in business, companies must continually generate cash to pay creditors, vendors and employees — and they must remain nimble to respond to unexpected changes in the marketplace.

What’s your game plan?

Financial reporting is more than an exercise in compliance with accounting rules. Financial statements can be a valuable management tool. However, many business owners focus solely on the income statement without monitoring the other bases. That makes operational errors more likely.

Play smart by keeping your eye on all three financial statements. We can help — not only by keeping score — but also by analyzing your company’s results and devising strategic plays to put you ahead of the competition. Contact us for more information.

The One Big Beautiful Bill Act (OBBBA) includes numerous provisions affecting the tax liability of U.S. businesses. For many businesses, the favorable provisions outweigh the unfavorable, but both kinds are likely to impact your tax planning. Here are several provisions included in the new law that may influence your business’s tax liability.

Qualified business income (QBI) deduction

The Tax Cuts and Jobs Act (TCJA) created the Section 199A deduction for QBI for owners of pass-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships. The deduction had been slated to expire after 2025, putting many business owners at risk of higher taxes.

The OBBBA makes the QBI deduction permanent. It also expands the deduction limit phase-in ranges for specified services, trades or businesses, and other entities subject to the wage and investment limitation. For these businesses, the deduction is reduced when taxable income falls within the phase-in range and is eliminated when taxable income exceeds the range. The new law expands the phase-in thresholds from $50,000 to $75,000 for individual filers and from $100,000 to $150,000 for joint filers.

The OBBBA also adds an inflation-adjusted minimum QBI deduction of $400, beginning in 2025. It’s available for taxpayers with at least $1,000 of QBI from one or more active businesses in which they materially participate.

Accelerated bonus depreciation

The OBBBA makes permanent 100% first-year bonus depreciation for the cost of qualified new and used assets acquired and placed into service after January 19, 2025. Under the TCJA, the deduction was limited to 40% for 2025, 20% in 2026 and 0% in 2027.

The new law also introduces a 100% deduction for the cost of “qualified production property” (generally, nonresidential real property used in manufacturing) placed into service after July 4, 2025, and before 2031. In addition, the OBBBA increases the Sec. 179 expensing limit to $2.5 million and the expensing phaseout threshold to $4 million for 2025, with each amount adjusted annually for inflation.

Together, the depreciation changes are expected to encourage capital investments, especially by manufacturing, construction, agriculture and real estate businesses. And the permanent 100% bonus depreciation may alleviate the pressure on companies that didn’t want to delay purchases due to a smaller deduction.

Research and experimentation expense deduction

Beginning in 2022, the TCJA required businesses to amortize Sec. 174 research and experimentation (R&E) costs over five years if incurred in the United States or 15 years if incurred outside the country. With the mandatory mid-year convention, deductions were spread out over six years. The OBBBA permanently allows the deduction of domestic R&E expenses in the year incurred, starting with the 2025 tax year.

The OBBBA also allows “small businesses” (those with average annual gross receipts of $31 million or less) to claim the deduction retroactively to 2022. Any business that incurred domestic R&E expenses in 2022 through 2024 can elect to accelerate the remaining deductions for those expenditures over a one- or two-year period.

Clean energy tax incentives

The OBBBA eliminates many of the Inflation Reduction Act’s clean energy tax incentives for businesses, including the:

Qualified commercial clean vehicle credit,
Alternative fuel vehicle refueling property credit, and
Sec. 179D deduction for energy-efficient commercial buildings.

The law accelerates the phaseouts of some incentives and moves up the project deadlines for others. The expiration dates vary. For example, the commercial clean vehicle credit can’t be claimed for a vehicle acquired after September 30, 2025, instead of December 31, 2032. But the alternative fuel vehicle refueling property credit doesn’t expire until after June 30, 2026.

Qualified Opportunity Zones

The TCJA established the Quality Opportunity Zone (QOZ) program to encourage investment in distressed areas. The program generally allows taxpayers to defer, reduce or exclude unrealized capital gains reinvested in qualified opportunity funds (QOFs) that invest in designated distressed communities. The OBBBA creates a permanent QOZ policy that builds off the original program.

It retains the existing benefits and also provides for investors to receive incremental reductions in gain starting on their investment’s first anniversary. In the seventh year, taxpayers must realize their initial gains, reduced by any step-up in basis, the amount of which depends on how long the investment is held. The first round of QOFs available under the permanent policy will begin on January 1, 2027.

The OBBBA also introduces a new type of QOF for rural areas. Investments in such funds will receive triple the step-up in basis.

International taxes

The TCJA added several international tax provisions to the tax code, including deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). It also established the base erosion and anti-abuse tax (BEAT) on U.S. corporations that 1) have average annual gross receipts greater than or equal to $500 million for the prior three tax years, and 2) have made deductible payments to related non-U.S. parties at or above 3% of all deductible payments.

The OBBBA makes permanent the FDII and GILTI deductions and adjusts the effective tax rates for FDII and GILTI to 14%. It also makes permanent the minimum BEAT, increasing the tax rate to 10.5%. These changes take effect beginning in 2026.

Employer tax provisions

The new law makes permanent the exclusion from gross income (for employees) and from wages for employment tax purposes (for employers) for employer payments of student loans. It also provides that the maximum annual exclusion of $5,250 be adjusted annually for inflation after 2026.

In addition, the OBBBA permanently raises the maximum employer-provided child care credit from 25% to 40% of qualified expenses, up to $500,000 per year. (For eligible small businesses, these amounts are 50% and up to $600,000, respectively.) The maximum dollar amount will be adjusted annually for inflation after 2026.

The OBBBA also makes permanent the employer credit for paid family and medical leave (FML) after 2025. Employers will also be allowed to claim the credit for a portion of premiums for paid FML insurance.

Employee Retention Tax Credit

If you filed an Employee Retention Tax Credit claim after January 31, 2024, you may not see your expected refund. The OBBBA bars the IRS from issuing refunds for certain claims submitted after that date. It also gives the IRS at least six years from the date of filing to challenge these claims.

Miscellaneous provisions

The OBBBA increases the limit on the business interest deduction by excluding depreciation, amortization and depletion from the computation of adjusted taxable income (ATI), starting in 2025. The deduction is generally limited to 30% of ATI for the year.

The new law also makes permanent the excess business loss limit, which was set to expire in 2029. And it permanently extends the New Markets Tax Credit, which was scheduled to expire in 2026.

What’s next?

Since the OBBBA is simply extending or making relatively modest modifications to existing tax law, it probably won’t result in the years-long onslaught of new regulations and IRS guidance that followed the TCJA’s enactment. But we’ll keep you informed about any new developments.

Ever since the Tax Cuts and Jobs Act (TCJA) was signed into law in 2017, estate planners have had to take into account a looming date: January 1, 2026. While the TCJA effectively doubled the unified federal gift and estate tax exemption to $10 million (adjusted annually for inflation), it also required the amount to revert to its pre-TCJA level after 2025, unless Congress extended it. This caused uncertainty for wealthy individuals whose estates may be exposed to gift and estate taxes if the higher exemption amount were to expire.

The One Big Beautiful Bill Act (OBBBA), recently signed into law, provides a great deal of certainty for affluent families. Beginning in 2026, it permanently increases the federal gift and estate tax exemption amount to $15 million ($30 million for married couples). The amount will continue to be adjusted annually for inflation. If your estate exceeds, or is expected to exceed, the exemption amount, consider implementing planning techniques today that can help you reduce or avoid gift and estate taxes down the road.

What if you’re not currently ready to give significant amounts of wealth to the next generation? Perhaps you want to hold on to your assets in case your circumstances change in the future.

Fortunately, there are techniques you can use to take advantage of the higher exemption amount while retaining some flexibility to access your wealth should a need arise. Here are two ways to build flexibility into your estate plan.

1. SLATs

If you’re married, a spousal lifetime access trust (SLAT) can be an effective tool for removing wealth from your estate while retaining access to it. A SLAT is an irrevocable trust, established for the benefit of your children or other heirs, which permits the trustee to make distributions to your spouse if needed, indirectly benefiting you as well.

So long as you don’t serve as trustee, the assets will be excluded from your estate and, if the trust is designed properly, from your spouse’s estate as well. For this technique to work, you must fund the trust with your separate property, not marital or community property.

Keep in mind that if your spouse dies, you’ll lose the safety net provided by a SLAT. To reduce that risk, many couples create two SLATs and name each other as beneficiaries. If you employ this strategy, be sure to plan the arrangement carefully to avoid running afoul of the “reciprocal trust doctrine.”

Under the doctrine, the IRS may argue that the two trusts are interrelated and leave the spouses in essentially the same economic position they would’ve been in had they named themselves as life beneficiaries of their own trusts. If that’s the case, the arrangement may be unwound and the tax benefits erased.

2. SPATs

A special power of appointment trust (SPAT) is an irrevocable trust in which you grant a special power of appointment to a spouse or trusted friend. This person has the power to direct the trustee to make distributions to you.

Not only are the trust assets removed from your estate (and shielded from gift taxes by the current exemption), but so long as you are neither a trustee nor a beneficiary, the assets will enjoy protection against creditors’ claims.

Hold on to your assets

These strategies are just two that you can include in your estate plan to take advantage of the newly permanent exemption amount while maintaining control of your assets. Contact us for more details.

This webinar has concluded. You can watch the webinar on-demand here.

The One Big Beautiful Bill Act (OBBBA) is now law, ushering in sweeping tax changes. Join David Jewell, CPA, Principal and Tax & Consulting Service Line Leader at Yeo & Yeo, for a webinar covering key provisions of the OBBBA, what’s changing, and how to prepare.

You’ll gain insights into:

Overview of the OBBBA
Significant tax changes for individuals and businesses
How these changes may affect your 2025 tax filings
Planning strategies to consider now
Compliance considerations and potential challenges

Understanding the new provisions now can help you avoid costly missteps later. Don’t miss this opportunity to learn what the changes mean for your business or personal tax plan.

Watch the Webinar On-Demand

Presenter:

David Jewell, CPA, leads the firm’s Tax & Consulting Service Line. He specializes in tax strategy and planning for businesses and individuals. With deep expertise in navigating federal tax law changes, Dave helps clients understand complex legislation and apply it to real-world decisions.