In this update, you’ll find highlights of key tax law changes, along with key deadlines, and practical planning strategies to help you make informed, confident year-end decisions.
As you prepare for the upcoming tax season, it’s important to stay aware of the evolving tax landscape and ensure your strategy continues to support your financial goals. This year has brought significant changes — from new tax legislation and economic trends to shifts in how and where we work.
At Allworth Tax Solutions, our goal is to help you understand these changes and position your business for financial success in the year ahead. Whether you’re focused on maximizing deductions, planning for retirement, or adapting to life changes, we’re here to guide you every step of the way.
The 20% Qualified Business Income (QBI) deduction for eligible business income has been made permanent, with expanded phase-in ranges and a minimum deduction of $400 for taxpayers reporting at least $1,000 of qualified business income. These updates may create new opportunities to reduce taxable income.
Beginning January 19, 2025, bonus depreciation allowing 100% expensing of qualifying property is permanently extended. In addition, Section 179 expensing limits will increase to $2.5 million, giving business owners greater flexibility when investing in equipment, technology, and other qualifying assets. To take advantage of these benefits for the 2025 tax year, be sure that qualifying property is bought and placed in service before year-end.
Several federal clean energy tax incentives are set to expire over the next two years. The Clean Vehicle Credit ends for vehicles placed in service after September 30, 2025, while other key incentives are still available a bit longer. These include the Alternative Fuel Vehicle Refueling Property Credit, the New Energy Efficient Home Credit, and the Energy Efficient Commercial Buildings Deduction—all of which are currently scheduled to expire on June 30, 2026, for both beginning construction and placing qualifying property in service. If your business is considering energy-efficient home construction, energy efficient commercial building upgrades, or alternative fuel infrastructure investments, it may be helpful to act while these credits and deductions are still available.
For 2025, the Form 1099-K reporting threshold for third-party settlement organizations reverts to $20,000 and 200 transactions per payee per year. The Form 1099-NEC/MISC reporting threshold for payments to service providers stays at $600 for 2025 but will increase to $2,000 in 2026 and be indexed for inflation going forward. Review your vendor payments and reporting processes now to ensure your systems are ready for these changes and remain fully compliant with IRS requirements.
As the year comes to a close, it’s important to review your income and expenses. Getting caught up on bookkeeping and reviewing your financial statements can give you a more accurate picture of your current tax position — a critical step in effective year-end planning. Focus on areas such as prepaid expenses, major equipment purchases, and income timing, as each can significantly affect your taxable income.
As the holiday season brings more opportunities to connect with customers and employees, it’s a good time to revisit the rules for deducting business meals. While some meals may qualify for a 100% deduction, most business meals are still 50% deductible under current tax law — such as meals with current or prospective clients or meals bought while traveling for business. Starting in 2026, meals provided routinely to employees in on-site break rooms or employer-operated cafeterias for the employer's convenience are no longer deductible, with some exceptions. However, meals provided for social or recreational events — such as a company holiday party — will continue to be 100% deductible, provided the event is primarily for the benefit of non–highly compensated employees. Properly categorizing meal expenses and maintaining clear, detailed records can help ensure your deductions are accurate and compliant.
If your business deductions exceed your income for the year, you may have a Net Operating Loss (NOL). In many cases, an NOL can be used to offset taxable income in other years, helping to smooth out fluctuations in your business results. Currently, the deduction is limited to 80% of taxable business income in any single year.
Starting in 2025, the IRS will require brokers and qualifying platforms to report certain digital asset transactions, such as cryptocurrency, stablecoins, and NFTs. You may receive a new Form 1099-DA in early 2026 if you completed digital asset transactions in 2025. Even if you don’t receive this form, you are still responsible for reporting all taxable digital asset transactions on your tax return. Maintain detailed records of your purchases, sales, and exchanges to ensure accurate reporting.
Beginning with tax years starting after December 31, 2024, domestic Research and Experimentation (R&E) expenses can again be deducted immediately, rather than capitalized and amortized. However, foreign R&E expenses must still be capitalized and amortized over 15 years. These rules are complex, and expenses may face increased scrutiny from taxing authorities.
As the year ends, taking some time to prepare for tax season can help minimize surprises and position your business for long-term financial success. Our team is committed to keeping you updated on changing tax rules, so you know what to expect in the upcoming tax filing season.
Please note that the updates outlined above reflect federal tax rules. State tax laws can vary significantly and may include additional requirements or differences that affect your situation, so it’s important to be aware of the rules that apply in your state.
Thank you for trusting us as your advisor. We look forward to continuing to support you now and in the year ahead.
The information presented is for educational purposes only and is not intended to be a comprehensive analysis of the topics discussed. It should not be interpreted as direct tax or legal advice and should not be relied upon as such.