By Ted Stricker, CFP®
Changes in tax legislation are poised to bring significant changes to the tax landscape, whether due to the scheduled sunset of many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) or via the One Big Beautiful Bill Act (OBBBA) still winding its way through Congress. Regardless of how the “tax wind blows,” it’s crucial for individuals, investors, and business owners to understand these potential changes and plan accordingly.
At Bernath + Rosenberg, we continually recommend that everyone be “tax aware” throughout the year, not just at tax time. Here are some tips for getting ahead in preparing to file your 2025 taxes in 2026, even considering the potential changes with the OBBBA.
For Investors
- Consider tax-aware asset location: Different investment accounts have different tax implications. For example, minimize current taxes by allocating income-generating taxable assets to tax-deferred or tax-exempt accounts like IRAs. Consider non-taxable assets like municipal bonds in taxable accounts.
- Utilize tax-loss harvesting: Don’t wait until December to offset capital gains with capital losses to potentially lower your overall tax liability. Excess capital losses can be carried forward indefinitely to offset future capital gains.
- Maximize retirement plan contributions: Make sure you’re on track to maximize contributions to pre-tax accounts like 401(k)s and traditional IRAs, as contributions can lower your current taxable income.
- Estate and gift tax planning: The federal estate and gift tax exemption amounts are scheduled to decrease significantly in 2026, but could remain the same if the OBBBA provisions are adopted. Consider gifts to family members in 2025 to take advantage of the higher current exemption and consult with your attorney and tax advisor as to how your estate plan could be affected either way.
- Consider Roth conversions: If you are in the highest tax bracket(s), your tax rate may increase with new tax legislation. It may be advantageous to convert pre-tax traditional IRA funds to a Roth IRA. Withdrawals in retirement will be tax-free.
- Time charitable deductions: Consider delaying charitable gifts until 2026, especially if you anticipate being in a higher tax bracket, as the deductions may be more valuable.
- Take advantage of opportunity zones: Investigate the potential for investing in Opportunity Zone funds to potentially defer and reduce capital gains taxes until 2026.
For Business Owners
- Be aware of the QBI deduction: The Qualified Business Income (QBI) deduction, which allows certain pass-through businesses to deduct up to 20% of their QBI, is scheduled to expire in 2026. The OBBBA would make this deduction permanent and increase the deduction to 23% of QBI.
- Maximize retirement contributions: Set up and contribute to retirement plans for yourself and employees. Contributions by yourself and your employees may be tax-deductible and matching contributions by you as the employer are deductible for the business.
- Accelerate capital expenditures: Consider whether purchasing business equipment would be advantageous for bonus depreciation. Under the OBBBA, bonus depreciation would remain at 100% for short-lived assets through 2029.
- Explore tax credits: Investigate eligible small business tax credits, such as those for retirement plans, energy-saving upgrades, and solar panels.
- Track expenses carefully: Maintain detailed records of business expenses to maximize deductions, including home office expenses, meals, travel, and depreciation.
- Seek professional advice: Consult with a tax professional to utilize all available deductions and credits and to navigate the complexities of changing tax laws.
For Families
- Child tax credit changes: Be aware that the Child Tax Credit will revert to pre-TCJA levels in 2026 unless it continues to be included in the OBBBA. This tax item continues to be hotly debated in Congress.
- Itemized deductions vs. standard deduction: The standard deduction was to decrease in 2026, but the new tax legislation would make these permanent and increase the standard deduction by $2,000 for joint filers, $1,500 for head of household filers, and $1,000 for all other filers from 2025 through the end of 2028.
- SALT cap elimination: As we mentioned in our previous post about the OBBBA, the SALT cap was a highly contested item in the House. As it stands now, the highest threshold would be $40,000 with phase-downs from there.
- Mortgage interest deduction changes: Previously, the mortgage interest deduction would revert to pre-TCJA levels, but the OBBBA would make the $750,000 limitation and the exclusion of interest on home equity loans for the home mortgage interest deduction permanent.
- Return of miscellaneous itemized deductions: Certain miscellaneous itemized deductions would remain permanent, but limited to 32 to 35 percent of the item expense for those in the highest bracket.
- Casualty and theft loss deduction expansion: The deduction will apply to a broader range of events beyond federally declared disasters.
- Education tax provisions: Be aware of potential changes to education tax provisions, such as 529 plan eligibility and the tax exclusion for employer-provided educational assistance.
- Consider health savings accounts (HSAs): Contributions to HSAs can reduce your taxable income, and withdrawals for qualified medical expenses are tax-free.
- Review wealth and estate plans: The decreasing estate and gift tax exemption limits in 2026 warrant a review of your wealth plan and estate planning strategies.
General Tax Filing Tips
- Organize your records: Keep detailed records of income, expenses, and deductions throughout the year. (Your tax professional will thank you!)
- Use tax software or a professional: Consider using tax software or working with a tax professional to ensure accuracy and maximize deductions, especially if your tax situation is complex.
- Stay informed: Keep up to date with tax law changes by consulting reliable sources and professionals such as the tax professionals at Bernath + Rosenberg.
We Can Help You Develop a 2025 Tax Strategy
Tax planning is a core service we offer at Bernath + Rosenberg, and we’re here to help!
Our experienced team of Certified Public Accountants and CERTIFIED FINANCIAL PLANNER® professionals stays current with the latest in tax laws and planning strategies to help you pursue a rewarding and comfortable retirement, save on tax liability, and plan for your your family’s future, according to your unique and special objectives.
To get started and make the most of your hard work, schedule a meeting by calling (212) 221-1140 or email tstricker@brwealth.com.
About Ted
Ted Stricker is a partner and financial advisor at Bernath + Rosenberg, a full-service accounting, tax, and wealth management firm with offices in Monsey, NY, Lakewood, NJ, Cedarhurst, NY, and Miami Beach, FL. The firm demonstrates a personalized approach to custom-tailored solutions and an unwavering commitment to client service. With over 26 years of experience in the financial services industry, Ted manages the firm’s wealth management team, and specializes in designing financial plans for business owners and affluent families. Since joining the team in 2015, he provides practical and sound advice, combining innovative approaches and solutions that reflect clients’ personality, lifestyle, and goals.
Professionals associated with Bernath & Rosenberg P.C. may be either (1) registered representatives with, and securities and advisory services offered through LPL Financial, Member FINRA/SIPC, a registered investment advisor; or (2) solely tax professionals of Bernath & Rosenberg P.C., and not affiliated with LPL Financial. Tax/accounting/CPA-related services offered through Bernath & Rosenberg P.C. is a separate legal entity and not affiliated with LPL Financial. LPL Financial does not offer tax advice or tax/accounting/CPA-related services.
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