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Enhanced SALT Tax Break Will Help Many Homeowners

The One Big Beautiful Bill Act (OBBBA), enacted on July 4, will allow more taxpayers to fully deduct their state and local tax (SALT) expenses (including property tax). Here are the details.

SALT Deduction Expanded

Under the Tax Cuts and Jobs Act, the itemized deduction for SALT was limited to $10,000 ($5,000 for married individuals who file separately) beginning in 2018.

This limitation negatively affected taxpayers living in locations with high state income tax rates and those who pay high property taxes because:

• They live in a high-property-tax jurisdiction,
• They live in a location with high property values,
• They own an expensive home, or
• They own both a primary residence and one or more vacation homes.

Under the OBBBA, for 2025 through 2029, the SALT deduction limit increases from $10,000 to $40,000 (or $20,000 for separate filers) with 1% annual inflation adjustments. So, for 2026, the cap will be $40,400 ($20,200 for separate filers).

But unless Congress takes further action, the SALT deduction limit is scheduled to revert to the prior-law limit of $10,000 ($5,000 for separate filers) in 2030.

Note: Several states have established SALT deduction workarounds for pass-through entities. These workarounds aren’t addressed or limited by the OBBBA.

Smaller Benefit for Some Taxpayers

Under the OBBBA, for 2025, the higher SALT limit begins to be reduced for taxpayers with modified adjusted gross income (MAGI) over $500,000 ($250,000 for separate filers). These thresholds will also be increased by 1% annually for 2026 through 2029.

When a taxpayer’s MAGI exceeds the applicable threshold, the otherwise allowable SALT deduction limitation is reduced by 30% of MAGI above the threshold, but not below $10,000 ($5,000 for separate filers). Here’s an example: Greg and Tina are a married couple who file jointly and live in a high-tax state. For 2025, their combined SALT expenses are $60,000. Their MAGI is $550,000 for 2025, which is $50,000 above the applicable threshold. Therefore, their SALT deduction for 2025 is limited to $25,000 [$40,000 minus (30% times $50,000)].

Because of the 30% reduction, the expanded SALT deduction doesn’t benefit taxpayers with MAGI at or above $600,000 ($300,000 for separate filers).

Deducting State and Local Income vs. Sales Tax

The SALT deduction continues to be available for property taxes plus the total state and local income taxes or the total of all sales taxes. Choosing to deduct sales taxes is a helpful option if you owe little or nothing for state and local income taxes or you made a major purchase that causes your sales tax to exceed your state and local income tax.

If you opt to deduct sales tax, you don’t have to save all of your receipts for the year and manually calculate your sales tax; you can use the IRS Sales Tax Calculator on the IRS website to determine the amount of sales tax you can claim. (It includes the ability to add actual sales tax paid on certain big-ticket items, such as a car.)

Start Planning Now

If you have high SALT expenses, to get the maximum benefit from the increased deduction limit, you need to plan carefully between now and year end. For example, you may want to take steps to keep your MAGI under the reduction threshold. Or you might want to accelerate property tax payments into 2025. Contact the office for help determining the right strategy for your specific situation.

2 Important Changes for Businesses under the New Tax Law

The One Big Beautiful Bill Act (OBBBA) introduces a range of tax changes that will impact businesses. Many provisions set to expire this year are now being extended or made permanent. Below is a snapshot of two important changes to help you with tax planning in the fourth quarter of 2025 and going forward.

How the Deduction for R&E Expenses Has Changed

Under the Tax Cuts and Jobs Act (TCJA), businesses had to amortize deductions for Section 174 research and experimentation (R&E) costs over five years for expenses incurred in the United States or 15 years for those incurred abroad. This provision used a mid-year rule that effectively stretched write-offs over six years. The OBBBA changes that by permanently allowing full, immediate deductions for domestic R&E expenses starting in the 2025 tax year. Foreign R&E expenses will still be amortized over 15 years.

In addition, the OBBBA lets “small businesses” (in 2025, those with average annual gross receipts of $31 million or less for the past three years) claim R&E deductions retroactively to 2022. A business of any size with domestic R&E costs from 2022 to 2024 can choose to speed up the remaining deductions for those years over a one- or two-year period.

How the Business Interest Deduction Has Changed

Generally, the TCJA limited business interest deductions to 30% of the taxpayer’s adjusted taxable income (ATI) for the year. Before the OBBBA, ATI generally referred to earnings before interest and taxes. For tax years beginning after December 31, 2024, the OBBBA increases the cap on the business interest deduction by excluding depreciation, amortization and depletion when calculating ATI. This change typically increases ATI, allowing taxpayers to deduct more business interest expense.

But it’s important to note that, in 2025, taxpayers with average annual gross receipts for the last three years that don’t exceed $31 million are exempt from the interest deduction limitation.

Rethink Tax Planning

For business owners, the OBBBA helps resolve tax planning uncertainty. Keep in mind, these are just two of the key changes for businesses in this tax legislation.

Contact the office to discuss the full range of tax provisions covered by the new law. We can help you optimize any extended or new provisions that are relevant to your situation and reduce your tax obligations for 2025 and beyond.

Tax Breaks for Medical Expenses

Depending on your situation, you may be able to claim certain medical expenses as deductions on your tax return. However, you must itemize deductions, and having enough expenses to qualify can be challenging. Here are five tips to keep in mind:

1. Consider “bunching” expenses. You can only deduct unreimbursed medical costs that exceed 7.5% of your adjusted gross income (AGI). If your 2025 itemized deductions will be higher than your standard deduction, consider moving or “bunching” nonurgent medical procedures and other controllable expenses into the same year. This strategy may help you surpass the 7.5% threshold and maximize your deduction.

2. Include insurance premiums. Premiums can add up to thousands of dollars annually, even if you pay only part of the cost yourself. (But first check that they aren’t already coming out of your paycheck pretax.) Long-term care insurance premiums also qualify, subject to age-based limits.

3. Claim travel costs for medical care. For 2025, you can deduct travel expenses for medical treatment, including taxi fares, public transit, or 21 cents per mile (plus tolls and parking) if driving. Be sure to carefully document your mileage.

4. Time certain medical purchases strategically. Qualifying expenses that you may be able to time include eyeglasses, hearing aids, specific dental work, and prescription drugs (including insulin). However, over-the-counter items, such as aspirin and vitamins and federally illegal treatments (for example, medical marijuana) aren’t deductible, even if allowed by state law.

5. Don’t overlook smoking-cessation and weight-loss programs. You can deduct costs for smoking-cessation programs and prescribed medications to reduce nicotine withdrawal, but not over-the-counter gum or patches. Weight-loss programs qualify if prescribed to treat a physician-diagnosed disease. Deductible costs include program fees and meeting charges, but not the cost of diet food.

If you still have questions, see IRS Publication 502 for complete details, or contact the office for personalized guidance.

Can Your Business Benefit from the WOTC?

Employers who hire new workers may qualify for a tax benefit, but they shouldn’t wait too long. The Work Opportunity Tax Credit (WOTC) is a valuable federal tax credit that incentivizes employers to hire from certain targeted groups that face employment barriers. But it will expire after 2025 unless Congress acts to extend it.

Targeted groups include qualified veterans, recipients of certain aid programs, ex-felons and qualified long-term unemployment recipients. Employers must file a form with their state workforce agency to prescreen and certify individuals they wish to hire.

Say Goodbye to Paper Checks

Beginning Sept. 30, 2025, the federal government will generally no longer issue paper checks, including those for tax refunds, Social Security benefits and more. Also, certain federal agencies, such as the IRS and the Dept. of Labor (DOL), will generally stop accepting payments by paper check. This is part of a program to modernize payments, improve efficiency in processing payments and reduce administrative burdens. Historically, the government stated that checks issued by the Dept. of the Treasury are more likely to be lost, stolen or subject to other forms of fraud.

The IRS will publish detailed guidance for 2025 tax returns before the 2026 filing season begins. Until further notice, taxpayers should continue using existing forms and procedures, including those filing their 2024 returns on extension of a due date prior to Dec. 31, 2025. Contact the office with questions.

Dependent Care Flexible Spending Accounts for Your Business

Employers seeking to offer family-friendly benefits may want to consider flexible spending accounts (FSAs) for dependent care. These FSAs let employees make pre-tax contributions through payroll withholding to help cover eligible expenses. Because of the major tax bill enacted on July 4, 2025, the annual contribution limit, currently $5,000, will rise to $7,500 in 2026.

FSA contributions reduce employees’ income tax and payroll tax and employers’ payroll tax. Withdrawals used to pay qualified expenses are tax-free. These include expenses for care for a child under age 13 or another dependent unable to care for themselves due to physical or mental limitations. Contact the office with questions.

Do You Sell Products? QuickBooks Can Help You Manage Inventory

If your business sells products, you already know how critical it is to accurately monitor stock levels. Stay balanced, and you’ll avoid running out of bestsellers and not tie up cash in items that sit on shelves.

You may have a general feel for what’s selling just by filling orders, but instincts aren’t enough. You need real data so that you’ll know when to reorder, when to discount and when to discontinue slow movers.

QuickBooks can take much of the guesswork out of inventory management. It:

• Allows you to create detailed records for your items,
• Updates quantities automatically and alerts you when stock is low, and
• Provides specialized reports that show you exactly where things stand.

Getting Ready

Before you begin adding inventory, check that QuickBooks is set up properly. Open to the Edit menu, select Preferences, and choose Items & Inventory. If you’re the administrator, click the Company Preferences tab to see your options here, as shown in the image below.

Make sure the option Inventory and purchase orders are active is checked. If your version supports sales and purchase orders, select the settings that make sense for your workflow. We recommend checking Warn if not enough inventory to sell and choosing When the quantity I want to sell exceeds Quantity Available so committed items aren’t oversold. Click OK when you’re finished.

Creating Product Records

Even if your inventory is small, build a thorough record for every item. That way, you always know what you have without hunting for it. Running short on stock during an order could mean losing a customer to a competitor.

To create a record, open the Lists menu. Select Item List, then click the drop-down next to Item and choose New. In the new window, select Inventory Part as the Type so QuickBooks knows to track quantities. If you assemble products with multiple parts, setup is more complex. Contact the office for guidance.

Enter an Item Name/Number, then fill in purchase and sales details, including cost, price and description for transactions. The default COGS Account often works fine, but if you’re unsure, contact the office. You can also choose a Preferred Vendor and assign a Tax Code. If sales tax isn’t set up yet you can contact the office for help with that as well. For most retailers, the Income Account should be Retail Sales.

In the Inventory Information section, confirm the default Asset Account, enter a Reorder Point, and type in the On Hand quantity. QuickBooks calculates the total inventory value automatically. Click OK to save.

Built-In Safeguards

What if you try to sell more than you actually have? QuickBooks will stop you. Imagine a customer wants 120 of your multicolor bracelets. Two safeguards apply: QuickBooks displays a warning on the invoice (as shown below). You can also run the Inventory Stock Status by Item report for a real-time snapshot (Reports | Inventory).

QuickBooks does a solid job of handling standard inventory tracking, but you’re still responsible for reviewing reports and adjusting buying decisions. Reports like Sales by Item Detail can help.

10 Tips for Managing Inventory

Knowing how QuickBooks handles inventory can save money, minimize stock imbalances and help you plan for the future. We’ve discussed some of the actual theory of inventory management. Here’s a recap and some additional tips:

1. Keep your storage area well-organized. Use labels where you can.
2. Make your product records in QuickBooks as thorough as possible.
3. Monitor stock levels closely. This can keep you from tying up too much money in products that aren’t moving. You’ll also be less likely to run out of popular items, which can cause you to lose sales — and customers. QuickBooks’ Inventory Stock Status by Item report can help.
4. Set a realistic reorder point. This may require trial and error. Build in shipping times.
5. Do a full inventory count annually. Spot-check regularly and prioritize high-value items.
6. Cultivate preferred vendors. You may eventually get discounts for high order volumes.
7. Minimize the number of vendors you order from. Keep this in mind when you’re selecting them. Can you order multiple types of items from the same vendor?
8. QuickBooks can’t help you forecast future needs. But you can do some of this on your own by using reports to track your sales flow.
9. Always have a backup vendor for each product. You never know when a company is going to stop stocking your items or cease operations. You want a quick turnaround if this happens.
10. If you sell one-of-a-kind items, all of these rules are equally important. Create a smart storage system to save time as you’re filling orders.

Do You Need More Advanced Inventory Management?

If your business grows beyond the capabilities of QuickBooks Pro or Premier, you can invest in a more advanced inventory solution. Contact the office to discuss options and get answers to any questions about the basics outlined here.

Upcoming Tax Due Dates

October 15

Individuals: File a 2024 income tax return (Form 1040 or Form 1040-SR) if an automatic six-month extension was filed (or if an automatic four-month extension was filed by a taxpayer living outside the United States and Puerto Rico). Pay any tax, interest and penalties due.

Individuals: Make contributions for 2024 to certain existing retirement plans or establish and contribute to a SEP for 2024 if an automatic six-month extension was filed.

Individuals: File a 2024 gift tax return (Form 709) and pay any tax, interest and penalties due if an automatic six-month extension was filed.

Calendar-year bankruptcy estates: File a 2024 income tax return (Form 1041) if an automatic six-month extension was filed. Pay any tax, interest and penalties due.

Calendar-year C corporations: File a 2024 income tax return (Form 1120) if an automatic six-month extension was filed. Pay any tax, interest and penalties due.

Calendar-year C corporations: Make contributions for 2024 to certain employer-sponsored retirement plans if an automatic six-month extension was filed.

Employers: Deposit Social Security, Medicare and withheld income taxes for September if the monthly deposit rule applies.

Employers: Deposit nonpayroll withheld income tax for September if the monthly deposit rule applies.

October 31

Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2025 (Form 941) and pay any tax due if all of the associated taxes due weren’t deposited on time and in full.

November 10

Individuals: Report October tip income of $20 or more to employers (Form 4070).

Employers: Report Social Security and Medicare taxes and income tax withholding for third quarter 2025 (Form 941) if all of the associated taxes due were deposited on time and in full.

Smart Saving Strategies for First-Time Homebuyers

Buying your first home is an exciting milestone, but it can also feel overwhelming, especially when it comes to saving for it. Between rising housing prices, loan requirements, and unexpected costs, it’s easy to wonder how you’ll ever afford that down payment. The good news is that with the right strategies and a clear plan, you can build your savings and move closer to homeownership with confidence. Whether you’re aiming to buy in the next year or a few years down the road, starting early and staying consistent will make all the difference.

Set a Realistic Savings Goal

The first step in your savings journey is knowing how much you need. Many first-time buyers think they need a 20% down payment, but that’s not always the case. Depending on the type of mortgage you choose, you may be able to put down as little as 3-5%. Still, the more you can contribute upfront, the less you may pay in interest and mortgage insurance over time.

In addition to the down payment, remember to account for:

• Closing costs (typically 2-5% of the purchase price)
• Home inspections and appraisals
• Moving expenses
• Initial repairs or furniture

Once you have an estimate, break your goal down by timeline. For example, if you want to save $30,000 in three years, you’ll need to set aside $833 per month.

Automate Your Savings

Consistency is key when saving for a major goal like a home. One of the most effective ways to stay on track is to automate your savings. Set up a direct deposit or recurring transfer that moves money from your checking account to a separate savings account each month, or even every payday. By treating your savings like a non-negotiable expense, you reduce the temptation to spend it elsewhere. Over time, even small contributions can grow into something substantial.

Open a High-Yield Savings Account

If you’re still keeping your savings in a standard account with minimal interest, it may be time to upgrade. High-yield savings accounts or money market accounts offer better returns while keeping your funds accessible.

Look for an account with:

• No monthly fees
• Competitive interest rates
• FDIC or NCUA insurance
• Easy online access

These accounts help your savings grow passively while you continue to contribute.

Reduce Discretionary Spending

Cutting back on expenses doesn’t mean you need to stop enjoying life, but identifying areas where you can spend less, at least temporarily, can help you reach your savings goal faster. Cooking at home more often instead of dining out is one easy way to save. You might also consider canceling unused subscriptions or memberships and holding off on non-essential purchases while you’re focused on buying a home.

For entertainment and travel, look for more budget-friendly alternatives. Free local events, streaming services, or weekend activities close to home can reduce your monthly costs without sacrificing fun. Even small adjustments, like choosing a less expensive coffee habit or shopping with a list, can add up over time. Redirecting just a few of these everyday expenses toward your savings account each month can bring you closer to homeownership with less stress.

Take Advantage of First-Time Buyer Programs

Many local, state, and federal programs offer assistance to first-time buyers. These may include grants, forgivable loans, tax credits, or reduced down payment options. A few places to start include:

• FHA loans
• USDA and VA loans (if eligible)
• Local housing agencies or nonprofit organizations
• Employer-sponsored housing programs

Your mortgage lender or financial advisor can help you explore which programs you qualify for and how to apply.

Stay Focused on Your Long-Term Goal

Saving for your first home is a big commitment, and it won’t happen overnight. But with clear goals, smart financial habits, and the right resources, it is absolutely achievable. Keep checking in on your progress, celebrate milestones along the way, and make adjustments when needed. Remember, every dollar you save brings you one step closer to opening the door to your own home. Stay patient, stay consistent, and trust that your efforts will pay off.

The post Smart Saving Strategies for First-Time Homebuyers first appeared on www.financialhotspot.com.

How Selling Investments and Stocks Impacts Your Taxes

If you’re planning to sell stocks or other investments, it’s important to understand how those transactions will affect your taxes. Many investors are surprised by how much they owe after a profitable sale. Whether you’re investing for retirement, a home, or long-term wealth, knowing the tax rules can help you make better decisions and avoid unexpected bills during tax season.

Selling investments is more than just clicking “sell” in your account. It’s a financial transaction that has real tax consequences, and those consequences vary depending on timing, profit, and how long you held the asset.

Capital Gains: The Basics

When you sell an investment for more than you paid, the profit is considered a capital gain. If you sell for less, it’s a capital loss. Gains are taxable, while losses can sometimes help reduce your tax bill.

There are two types of capital gains:

• Short-term capital gains: These apply to assets held for one year or less. They are taxed at your ordinary income tax rate, which could be as high as 37% depending on your income.
• Long-term capital gains: These apply to assets held for more than one year. They are taxed at a reduced rate, usually 0%, 15%, or 20% depending on your income bracket.

Offsetting Gains With Losses

If you sold some investments at a loss, you may be able to use those losses to offset gains. This strategy, called tax-loss harvesting, is especially useful for reducing taxable income.

Let’s say you made $10,000 in gains from one stock but lost $4,000 on another. You would only pay tax on the $6,000 net gain. If your losses exceed your gains, you can deduct up to $3,000 of the excess from your regular income. Any remaining losses can carry over to future tax years.

The Wash Sale Rule

If you’re thinking about selling a losing investment and then buying it back right away, be careful. The IRS has a rule known as the wash sale rule, which disallows the deduction of a loss if you repurchase the same or substantially identical investment within 30 days before or after the sale. To claim the loss, you’ll need to wait out the 30-day window.

Dividends and Distributions

In addition to capital gains, you may also owe taxes on dividends and fund distributions. It’s essential to review all the documents provided by your investment platform or broker, including Form 1099-DIV and Form 1099-B, to know whether your dividends or distributions meet these criteria:

• Qualified dividends are taxed at long-term capital gains rates.
• Ordinary (non-qualified) dividends are taxed at your regular income rate.
• Mutual fund distributions may also trigger capital gains taxes, even if you did not sell any shares.

Keep Good Records

Proper documentation can make tax season much easier. In order to avoid mistakes when filing, make sure to:

• Track purchase dates and prices (your cost basis) for every investment.
• Record dates and sale prices when you sell.
• Keep copies of any dividend or capital gain distributions.

Your brokerage may report this for you, but it’s still your responsibility to make sure the data is correct when you file your return.

When to Consult a Professional

If you have a complex portfolio, high-value assets, or are selling shares in a business, it’s wise to consult a financial advisor or tax professional. Tax laws change frequently, and personalized advice can make a major difference in how much you owe or save. They can help you:

• Maximize tax efficiency
• Avoid penalties
• Understand your reporting obligations

When to Consult a Professional

If you have a complex portfolio, high-value assets, or are selling shares in a business, it’s wise to consult a financial advisor or tax professional. Tax laws change frequently, and personalized advice can make a major difference in how much you owe or save. A financial professional can help you understand your reporting obligations, avoid penalties, and maximize your overall tax efficiency.

Be Prepared for the Tax Impact

Selling investments can be a powerful part of your financial plan, but the tax impact should never be an afterthought. By understanding capital gains rules, timing your sales strategically, and maintaining accurate records, you can make more informed choices and avoid surprises. With the right preparation, your investment success can remain a positive outcome, not a tax-time headache.

The post How Selling Investments and Stocks Impacts Your Taxes first appeared on www.financialhotspot.com.

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