INSIGHTS ON CHANGES & PLANNING STRATEGIES
Listen in or watch as host David Mandell sits down with Carole Foos, CPA from OJM Group and Greg Heimkreiter, JD, CPA from Howard, Nunn & Bloom, Inc.
David asks both Carole and Greg to give their key insights on the 2025 tax landscape for the new year with a new party in control of both the White House and Congress. Carole begins with a discussion of potential changes to individual tax rates and Greg mentions the SALT limitations and dives into estate tax issues as well.
(Video Available February 5, 2025 at 6 AM Eastern)
Listen in or watch as host David Mandell sits down with Carole Foos, CPA from OJM Group and Greg Heimkreiter, JD, CPA from Howard, Nunn & Bloom, Inc.
David asks both Carole and Greg to give their key insights on the tax landscape as we enter 2025 with a new party in control of both the White House and Congress. Carole begins with a discussion of potential changes to individual tax rates and Greg mentions the SALT limitations and dives into estate tax issues as well.
David then chats with Carole about retirement plan changes due to the Secure Act, new planning opportunities coming online in 2025, and the continued importance of tax diversification.
Greg then shifts the discussion to corporate taxation, including the possibility that C corporations may come back into more utility for medical practices and other small businesses.
Carole and David then discuss Qualified Opportunity Zone investments and how the deferred tax is going to be coming up for payment soon and what that means for 2025 tax planning.
David concludes asking both Carole and Greg for their input on the changes in the accounting industry and why so many physicians and practices are having difficulty finding good firms who want to provide tax return preparation services.
TAKEAWAYS:
Takeaway 1: Potential changes in tax legislation may impact retirement planning and practice taxation.
A considerable focus was on the future of retirement planning, with both experts agreeing that changes in tax legislation could make a significant impact.
Foos notes, “So, part of the tax law that passed in the first Trump administration included this deferral of capital gains if you sold an investment and you invested those proceeds into a qualified opportunity zone investment.” This, she points out, has implications for tax planning as the deferral of the tax was temporary and is due either when the investment is subsequently disposed of or by December 31st 2026.
Heimkreiter adds, “One thing that was looking at in ’24 and now also in ’25…tax rates are lower…for ’25, if nothing happens, it might be worthwhile. The inherited IRAs you now have to take out within 10 years with a few exceptions, but primarily most beneficiaries have to take them out within 10 years.”
Takeaway 2: Changes in tax rates might influence business entity selection.
The discussion also revolves around potential changes in business tax rates and how they might influence the selection of business entities. Both Foos and Heimkreiter agree that a significant reduction in tax rates for corporate entities could make them more appealing.
Heimkreiter explains, “So, in the past on the campaign trail, there was talk of lowering the corporate tax rate, which was at 21% to 15%. And so, there’d be a new tax change.” He further notes that if such a change occurred, it could potentially swing the business entity selection back to C corporations.
Foos adds, “I think it’s also important to remember that qualified business income deduction for many of our listeners that are medical practices, they’re not eligible for that unless as individual taxpayers. Their taxable income is below certain threshold amounts…it’s going to become some interesting planning if we see a huge rate difference between either pass-throughs and C corps or between individual tax rates and C corporation rates.”
Takeaway 3: The accounting industry is facing challenges that impact tax preparation services.
The experts also touch on the current state of the accounting industry and why it is becoming increasingly difficult for individuals and businesses to secure quality tax preparation services. Both Foos and Heimkreiter note that there’s a shortage of accounting graduates and many firms are outsourcing their work.
Foos observes, “Accounting firms in general, they’re having trouble hiring people and keeping people. Not as many college students are going into accounting because currently to sit for the CPA exam, you have to have 150 hours of certain types of credits in college. So, for a lot of kids, that means a master’s degree, right?”
Heimkreiter noted, “I would say the industry’s constantly changing, and I think the firms that want to handle individual income tax clients are getting fewer and fewer as we go through time.” He recommends that clients ask their accountants about succession plans, especially if their accountant is nearing retirement.
INSIGHTS
- Tax Uncertainty in 2025: With potential changes to tax laws due to a new administration, tax planning remains a “wait and see” process, especially for individuals and businesses.
- Expiring Tax Cuts: Key provisions of the 2017 tax reforms, including lower individual income tax rates and increased standard deductions, are set to expire at the end of 2025 unless extended.
- Estate Tax Exemptions: Current estate tax exemptions of $13 million+/- per individual ($27 million for married couples) could be halved if laws revert in 2026, raising planning concerns.
- SALT Deduction Limit: The $10,000 cap on state and local tax (SALT) deductions is a significant pain point, particularly for taxpayers in high-tax states like California and New York.
- Retirement Plan Changes: The Secure Act 2.0 introduces supersized catch-up contributions for ages 60-63 in 2025 and expands options for Roth contributions, encouraging tax diversification.
- Opportunity Zones: Taxes deferred through qualified opportunity zone investments will become due in 2026, requiring proactive liquidity planning for investors.
- Inherited IRA Rules: New rules require most beneficiaries to withdraw inherited IRA funds within 10 years, potentially accelerating tax liability.
- Business Tax Considerations: Proposed reductions in C corporation tax rates from 21% to 15% and changes in bonus depreciation rules could shift entity structuring decisions.
- Qualified Business Income (QBI): The QBI deduction benefits pass-through entities but is not available to most high-income professionals, particularly medical practices.
- Industry Shifts in Tax Preparation: A shortage of accountants and outsourcing trends have made finding quality tax preparation services more challenging for individuals and small businesses.
- Roth IRAs and RMDs: Funding Roth accounts now can reduce future required minimum distributions (RMDs), offering long-term tax benefits.
- Accelerated Depreciation: Businesses, including medical practices, may benefit from restored 100% bonus depreciation for assets like equipment.
- Tax Diversification for Retirement: Balancing assets in different tax treatment “buckets” (e.g., Roth, traditional accounts) enhances flexibility and minimizes tax burdens in retirement.
- Future of C Corporations: Lower corporate tax rates could make C corporations more attractive, but double taxation remains a potential downside.
- Challenges in Accounting Industry: Many firms are shifting away from individual tax returns, emphasizing the importance of finding specialized services that align with clients’ needs.