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Dear Client,

We hope this message finds you well. At SK Financial CPA, we are committed to keeping you informed about the latest tax developments and financial strategies that can make a real difference for you and your business. In this edition, we’re highlighting proven ways to maximize deductions, new opportunities for education savings through expanded 529 plan benefits, and important reminders about tax credits that are set to expire soon. Our goal is to ensure you stay prepared, compliant, and positioned to take advantage of every opportunity available.

New From SK Financial: Save Big With a Home Office Deduction

Are you running your S corporation from home? You could be missing out on over $1,295 in yearly tax savings. With our new Home Office Deduction Plan, we make it easy to claim what you deserve the right way.

Here’s what you’ll get:

✅ Deduct internet, utilities, and rent properly
✅ Stay audit-ready with organized records
✅ Set up a compliant Accountable Plan in minutes

Real Example:
One freelancer saved $1,200 in a single year, while a small business owner reduced taxes by $4,900 annually. In fact, with a typical home office setup, you could deduct $4,318 and save $1,296/year at a 30% tax bracket.

Download Your Home Office Deduction Plan Today.

529 Plans: Expanded Benefits for 2025

Starting in 2025, 529 plans are more flexible than ever:

Contribute up to $19,000 per beneficiary per year or $95,000 with the 5-year option
Withdrawals remain tax-free for tuition, books, computers, internet, and housing (on- or off-campus, within allowance)
New from July 4, 2025: Covers K-12 tuition ($10k/year, rising to $20k in 2026), tutoring, test fees, online curricula, and therapies for students with disabilities (excludes homeschooling)
If unused: apply $10k lifetime to student loans, transfer to another 529/ABLE account, or roll over up to $35k lifetime to a Roth IRA (with limits)

529 Plan – 2025 Rules
Feature	2025 Rule
Annual contribution limit	$19,000 per beneficiary
5-year lump sum option	$95,000
K-12 tuition	$10,000 per year (increases to $20,000 in 2026)
Student loan repayment	$10,000 lifetime cap
Roth IRA rollover	$35,000 lifetime cap ($7,000 annual limit in 2025)
New rules effective	July 4, 2025

Green-Energy Tax Breaks Ending Soon
Several popular energy-related tax incentives are coming to a close under the One Big Beautiful Bill (OBBB), so now is the time to act if you want to benefit.

Credit	Deadline	Key Requirement
EV Credit	Sept. 30, 2025	A binding contract and payment before the deadline
Residential clean-energy (30%)	Dec. 31, 2025	Project completed before Jan. 1, 2026
Energy-efficient home improvements	Dec. 31, 2025	Work must be completed before Jan. 1, 2026

💵 SALT Deduction Cap Raised

The OBBB raises the SALT cap from $10,000 to $40,000 for 2025–2029, then it drops back in 2030. The cap phases out above a $500k income ($250k MFS), with both limits indexed annually by 1%. State pass-through entity (PTET) workarounds remain available, preserving a key planning tool.

🤖 AI’s Economic Impact

AI spending contributed 0.3% to GDP in Q2, with tech giants driving much of the growth. Adoption is skyrocketing: 25% of IT job postings now require AI skills, and app downloads hit 60M in March 2025. Still, risks loom; some analysts see parallels to the 1990s fiber-optic bubble.

💳 Fed Outlook & Consumer Trends

The Fed is likely to cut rates in September after softer jobs data. Consumer spending remains resilient, though lower-income households are under strain from wages lagging inflation.

Debt Stress: Credit card delinquencies are the highest since 2011, and auto loans are rising, but mortgage delinquencies remain historically low.

Housing Market Shows Modest Recovery

Lower mortgage rates and slower price growth helped existing-home sales rise 2% in July, reversing June’s decline. Inventories are up 15.7% from last year, putting supply at 4.6 months, close to prepandemic levels. While affordability has improved, sales remain capped near 4 million annually.

OBBBA Extends Tax Cuts but Adds Complexity

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, makes the TCJA tax reforms permanent, locking in many compliance savings. But it also introduces new breaks, like a senior deduction, no tax on tips or overtime, and car loan interest deductions that add more complexity. Americans are expected to spend 7.1 billion hours and $536 billion on tax compliance this year.

Final Regulations on Roth Catch-Up Contributions

Starting in 2027, employees 50+ earning more than $145,000 must make catch-up contributions as Roth (after-tax). Workers aged 60–63 will benefit from higher limits at 150% of the standard. SEPs and SIMPLE IRAs are exempt, and the IRS has added flexibility for plan administrators to correct errors. 🔗Read More Information

IRA Basics: Save for Retirement with Tax Benefits

Planning for retirement can feel overwhelming, but Individual Retirement Accounts (IRAs) make it easier by offering tax advantages that help your money grow. Earnings in an IRA are tax-deferred, meaning you only pay taxes when you withdraw funds. Some contributions may even be deductible on your federal tax return.

Type of IRA	Key Features
Traditional IRA	Contributions may be deductible; taxes are paid on withdrawals. Early withdrawals (before 59½) may face a 10% penalty. Required minimum distributions (RMDs) usually start at age 73.
Roth IRA	Contributions are made with after-tax money; qualified withdrawals are tax-free. No RMDs during the owner’s lifetime.
SEP IRA	Employer-funded plan, designed for small businesses or self-employed individuals.
SIMPLE IRA	Allows both employer and employee contributions; ideal for small businesses.
Payroll Deduction IRA	Employees contribute directly through payroll to either a traditional or Roth IRA.

Key Business Tax Breaks in the OBBB

100% Bonus Depreciation: Permanent full write-off for qualifying assets placed in service after Jan. 19, 2025.
Production Facility Expensing: Full deduction allowed for manufacturing facilities (temporary, with restrictions).
Section 179 Expensing: Limit raised to $2.5M (phases out after $4M); deduction limited by business income.
Domestic R&D Costs: U.S. based R&D costs can again be fully expensed immediately; small firms with annual revenues under $31 million may apply retroactively to 2022 (see Rev. Proc. 2025-28).
20% QBI Deduction: Made permanent for self-employed, pass-throughs, farmers, and landlords (with income thresholds).

Retirement Funds and Bankruptcy Protection

Most 401(k)s and up to $1.71M in IRAs are creditor-protected, but inherited IRAs (except spousal) often are not. A recent case confirmed that improperly contributed funds do not receive protection.

Tax Break for Qualified Small-Business Stock (QSBS)

You can hold qualified small-business stock for 5+ years and exclude 100% of capital gains, up to $10M (or $15M for stock bought after July 4, 2025).

Supreme Court to Review Trump Tariffs
The Supreme Court will decide whether many of former President Trump’s tariffs are legal. A federal appeals court previously struck them down, ruling that the International Emergency Economic Powers Act (IEEPA) doesn’t authorize the president to impose tariffs. Oral arguments are scheduled for November, but a final decision likely won’t come until early 2026. In the meantime, the government will continue collecting these tariffs. If the Court rules against the administration, roughly half of this year’s $159 billion in tariff revenue may need to be refunded.

Industry/Topic

Key Updates

Effective Year

Marijuana Businesses

Support for moving cannabis to Schedule III, allowing deductions and banking access. Rulemaking is underway.

TBD

Gambling Winnings

W-2G reporting thresholds: slots/bingo $1,200, keno $1,500, poker $5,000, and online betting $600. Losses are deductible up to winnings.

2025

Casino Reporting

Slots winnings reporting raised to $2,000; the threshold will adjust for inflation, with fewer players triggering IRS forms.

2026

💵 IRS Interest Rates Unchanged for Q4

For Q4 2025 (starting Oct. 1), IRS interest rates remain the same. Corporate underpayment = short-term rate + 3%; overpayment = short-term rate + 2%. (See Rev. Rul. 2025-18 for details.)

📅 QI, WP, WT Application Deadline Approaching

The IRS set September 30, 2025, as the deadline for Qualified Intermediary (QI), Qualified Derivatives Dealer (QDD), Withholding Foreign Partnership (WP), and Withholding Foreign Trust (WT) applications. Late applications won’t be processed; miss the deadline, and you’ll need to wait until January 1, 2026, to apply for 2026.

Work Opportunity Tax Credit Available Until 2025

Businesses can claim the Work Opportunity Tax Credit for hiring employees from certain groups facing barriers to employment. The program runs through December 31, 2025. Employers must submit Form 8850 to their state workforce agency within 28 days of the employee’s start date. More details here.

Employer Educational Assistance Programs: Tax-Free Benefits
Employers can provide up to $5,250 per employee per year in tax-free educational assistance, covering tuition, books, supplies, and student loan payments. Payments can go directly to the school, lender, or employee.

Additional details: Publication 15-B, Publication 970, Publication 5993

Thank you for continuing to place your trust in SK Financial CPA as your financial partner. Our team is dedicated to helping you navigate complex tax changes with confidence and clarity. If you’d like personalized guidance on applying these strategies or have questions about how upcoming tax law updates may affect your situation, we’re here to help. Reach out by phone or email, and together we’ll ensure your finances remain optimized, compliant, and aligned with your long-term goals. For more updates and weekly reports, visit our social media platforms, follow us, and stay up-to-date with the latest tax news and financial insights.