Member of Russell Bedford International, a global network of independent professional service firms.
Member of Russell Bedford International, a global network of independent professional service firms.
Senior Tax Accountant
The President signed the “One Big Beautiful Bill”, a piece of legislation that cements many tax provisions for individuals and families.
If you’ve been following tax policy, you know that many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) were originally set to expire at the end of 2025. This new bill changes that and makes several tax benefits permanent and introduces new deductions.
Below we break down the key individual tax changes you need to know for 2025 and beyond.
Before the TCJA, the highest federal income tax rate was 39.6%. The TCJA temporarily lowered it to 37%. Under the OBBBA, that rate and the entire tax bracket structure has been made permanent.
What does this mean for you? If you’ve been planning around a possible rate increase in 2026, you can breathe easier because these brackets are here to stay.
The enhanced standard deduction, originally increased under the TCJA and indexed for inflation, will remain permanent and has been increased again for 2025:
Beginning in 2025, a new, temporary federal deduction is available for seniors aged 65 and older. This deduction will phase-out at higher income levels and is available whether you claim the standard deduction or itemize:
Families with children will see an increase in their Child Tax Credit. Beginning in tax year 2025, the credit will increase by $200 per qualifying child, bringing the total to $2,200 per child. This change is permanent.
Beginning in 2026, taxpayers who don’t itemize deductions can still claim up to $1,000 for individuals and up to $2,000 for Married Filing Jointly for certain charitable contributions.
Now is the time to review your 2025 tax plan. With lower rates and new deductions, you may be able to reduce planned tax payments for the remainder of 2025.
At Cray Kaiser our team is here to help you navigate these changes. Contact us today to discuss how these 2025 tax updates might impact your unique financial situation.
Welcome to the first episode of Small Business Focus with CK, where we explore practical topics to help entrepreneurs and self-employed individuals navigate the financial side of running a small business. In this episode, Tax Manager, Eric Challenger discusses the essentials of estimated taxes, including what they are, who needs to pay them, how to calculate them and when they’re due. Whether you’re a freelancer or a business owner, understanding estimated taxes can help you avoid penalties and better manage your cash flow throughout the year.
Transcript
Hi everyone and welcome to another edition of Small Business Focus with CK. I’m Eric Challenger, a tax manager here at CK and today’s focus topic is estimated taxes. Estimated taxes are payments made throughout the year to the government for income that is not already subject to automatic withholding. These payments help taxpayers avoid a large tax bill when they go to file their return.
As an employee, estimated tax payments are normally not needed. That’s because employers are required to withhold and remit taxes to the IRS on behalf of employee wages. Normally, this automatic withholding fulfills the burden of paying in taxes and eliminating the need for estimated tax payments. However, individuals that earn income not subject to withholding such as freelancers, self-employed persons, business owners, or others with income from investments, rental properties, or other sources will need to make estimated tax payments.
Estimated taxes are calculated based on projected current year taxable income. This requires understanding of your estimated income, deductions, and then applying related IRS tax tables to the estimated amount. You can use online calculators, tax software, or a tax professional to assist you with determining your estimated tax liability.
The IRS is a pay-as-you-go system. For wages, this means every check you earn will have your share of taxes withheld and then remitted by your employer. For all other taxpayers, the IRS requires that you make quarterly estimated tax payments based on the following schedule. First quarter, April 15th, second quarter, June 15th, third quarter, September 15th, and fourth quarter, January 15th of the following year. Any remaining balance must be paid by the return filing deadline of April 15th of the following year. Although you may extend the filing date of your return, you cannot extend the payment due date.
Yes, as we stated before, the IRS is a pay-as-you-go system, and you must pay in taxes quarterly if you do not have any other withholding mechanism. Failure to pay your taxes timely will result in the IRS charging you underpayment penalties. This is really just another form of interest on the underpaid balance. This is applied at the current IRS interest rate multiplied by the number of days late. In addition, if you fail to make any payment by the filing deadline or fail to file your return timely, you may also be subject to late payment penalty and failure to file penalty. Each have a maximum penalty of an additional 25% of the unpaid balance due.
Yes. The IRS understands that tracking your current and your income in related taxes isn’t always easy or an exact science, especially for small taxpayers. To help ease this burden, the IRS has a safe harbor policy. Under the safe harbor, you have two ways to meet the exception for being assessed underpayment penalties. There are as follows. Number one, the current year safe harbor exception. If you pay in at least 90% of your current year tax and make the remaining 10% by the filing deadline of April 15th, then you will avoid underpayment penalty. However, this requires accurate tracking of your current year income and tax. This may be hard to do if you’re not a tax expert. Number two, the prior year safe harbor exception. The IRS will not assess underpayment penalties for taxpayers that paid 100% of their prior tax. For taxpayers with prior year adjusted gross income, AGI, greater than $150,000, this amount needs to be 110% of your prior tax.
Well, in years of rising income, it’s best to use the prior year rule to ensure that you at least meet the prior year test. Any remaining amount due will not be penalized if you pay by the filing deadline of April 15th. In years of declining income, it’s best to use the 90% of the current year income, although this requires additional planning and accurate calculations. In most cases, it is better than overpaying the government and reducing your working capital or cash flow.
In summary, estimated taxes are designed to spread out to tax burden over the year. They apply mainly to self-employed individuals or people with income not subject to withholding. By making quarterly estimated tax payments based on your income, you can avoid underpayment penalties and manage your taxes more effectively. This has been another edition of the CK Small business focus. We hope our discussion on estimated taxes has given you some guidance you can implement in your tax planning for next year. For additional knowledge and understanding please visit our website at www.craykaiser .com.
CPA | Senior Tax Accountant
As you know, the President signed the One Big Beautiful Bill Act on July 4, 2025. This brought significant changes in the areas of depreciation and related deductions that will impact your taxes in 2025 and beyond.
Below we’ll summarize the most important depreciation changes under OBBBA, including bonus depreciation, Section 179 expensing and a new 100% depreciation election for certain real property.
Note: For a more comprehensive overview of bonus depreciation and section 179, see our previous blog post on the topic here.
Bonus depreciation allows businesses to deduct a large portion or all of the cost of assets in the year they’re purchased.
Key Details:
The Section 179 deduction allows businesses to immediately expense the full cost of qualifying assets purchased, subject to annual limits.
OBBA Changes:
OBBBA introduces a new 100% deduction for qualifying real property used in production facilities that produce qualified tangible personal property (TPP).
Application of this provision will be complex and IRS guidance will need to be issued. In short, if a taxpayer produces tangible goods and begins building a new manufacturing facility after January 20, 2025, then 100% of the cost of the portion of that facility dedicated to manufacturing can be deducted in the first year.
Key Details:
The IRS is expected to issue guidance and clarifications on these provisions, which could take months. While we usually start looking at year-end tax planning in Q4, now is the time to talk with your advisor about the impact of the bill on your specific situation. In particular, you may be able to reduce planned tax payments for the remainder of 2025 given the benefits you’ll see in the bill. At Cray Kaiser we’re here to help you understand how these changes may affect your business and ensure you make the most of these new depreciation opportunities. Contact us here or call us at 630.953.4900.
In this video, Brian Kot, a Principal at CK, shares valuable insights into the most common questions clients ask about tax planning, document retention, business sales and financial reporting. From strategies to reduce your tax liability and organize your financial records to best practices when selling your business and improving accounting processes, Brian highlights the importance of proactive planning and collaboration with your CPA.
Transcript
My name is Brian Kot and I am a principal with Cray Kaiser Ltd. I’m often asked by my clients, “How can I reduce my tax liability?” The answer to this question comes with a lot of strategic planning between the client and your CPA. You want to at least minimally have an annual meeting with your CPA to discuss your tax situation and your financial planning on what’s going on with your business.
There are many suggestions typically that are offered such as contributing to an IRA or a sub-contribution or vehicle expenses might be missed or maximizing the depreciation deductions and purchasing certain assets within your business. In that conversation, it’s also very important to discuss the current tax rates and future tax planning. For example, you may want to try to defer income, or you might want to accelerate certain income to maximize current tax rates that are in effect today, for example, the capital gains tax rate. So having an effective meeting with your CPA in discussing these strategies is the optimal way of reducing your taxes, and it’s different between each individual and organization.
I’m often asked how long should I keep my documents for, especially in this age of digital world. The answer depends on the type of organization and also the type of documents that we’re discussing. Some documents you need to keep indefinitely, such as your corporate resolutions, your bylaws, your tax returns, your financial statements. We should always keep those forever and never destroy those and keep them in a digital format. There are other documents such as a lot of payroll documents need to be kept for a minimum of seven years and then there’s other documents especially on the individual side that you only need to keep for only three years and it also depends on the statute of limitations on how long you need to keep these documents for. I definitely recommend you check out our website if you click on the resource tab and search document retention. We have a guide that explains and gives an example of what documents you should keep either indefinitely or for seven years and remember that’s just a guide but it can be used as a rule of thumb.
You’re considering selling your business and often I’m asked how much do I owe in taxes? That’s a very challenging question to answer right off the bat, and a lot of planning needs to go involved. The first thing is to determine the market value of your business. And we recommend that you use an outside third party to assist you in determining the market value. Once the market value is determined, the way that the deal is structured and the sale is put together will significantly have an impact on how much you will pay in taxes, along with your personal tax situation. So we recommend before you, at any time, sign any agreement or sell your business. You consult with your tax advisor to go over that agreement in detail to determine if it is the most cost and tax efficient way for you to sell your business. Too often, we hear after the fact that our clients may have sold their business, or for that matter, entered into any type of a transaction. And if you would have consulted your tax advisor before entering that transaction, you may have saved a significant amount of taxes, as the transaction could have been structured differently.
Often, my clients will ask me, “How can I improve my financial reporting or get more timely reports, or I’ve lost my accountant, what do I do?” Here at Cray Kaiser, we have a dedicated team to assist you in your financial reporting. If you use a software such as QuickBooks or similar to QuickBooks, we can offer training on the program to ensure your employees properly know how to use the software. And we can also offer customization and create customized reports to help you understand your business. Having timely and accurate financial information available to you will enable you to make business decisions and help you grow your business.
Please consult a member of Cray Kaiser to understand the benefits that we can offer your organization to help you improve your financial reporting. Please review our website at craykaiser.com as we recently launched our Client Accounting Advisory Services webpage. You can find more information there and you can contact a member of our team at 630-953-4900.
CPA | Senior Tax Accountant
The One Big Beautiful Bill Act was signed into law on July 4th, introducing significant tax changes that could directly affect your 2025 tax return. Two key deductions that you will want to take advantage of starting in 2025 are the new interest deduction on auto loans, and the increased state and local tax (SALT) deduction. Below we break down exactly how each deduction works, who qualifies and how they may impact your overall tax strategy.
Beginning January 1, 2025, individual taxpayers may deduct up to $10,000 of interest paid on qualifying auto loans.
To be eligible for this deduction, autos must:
This deduction does not apply to:
The deduction phases out for taxpayers with:
Phaseout formula: The $10,000 maximum deduction is reduced by 20% of the amount your income exceeds the applicable modified AGI.
Example:
If you are single and have a modified AGI of $120,000, you exceed the threshold by $20,000.
For tax years beginning after December 31, 2024, the SALT deduction cap increases from $10,000 to $40,000 for individual taxpayers who itemize.
Full deduction applies if your modified AGI is below:
Beginning in 2026, the cap will increase by 1% annually through 2029. The $40,000 maximum deduction is reduced by 30% of the amount your income exceeds the applicable modified AGI.
Example:
A couple filing jointly with a modified AGI in 2025 of $510,000 exceeds the limit by $10,000.
This deduction will return to a $10,000 limitation in 2030.
Many states have introduced Passthrough Entity Tax (PTET) credits to bypass the old $10,000 SALT cap. With the cap now higher, states may reconsider their PTET policies, potentially impacting how your state taxes are calculated if you own a partnership or S-corporation.
If you have questions about these new deductions or any of the provisions in the OBBB Act, the team at Cray Kaiser is ready to help you understand the potential impact on your personal or business taxes. You can contact us here or call us at (630) 953-4900.
CPA | Tax Manager
As we highlighted in a previous blog, beginning September 30, 2025, the U.S. Treasury will stop issuing paper checks for most federal payments, including Social Security, Veterans Affairs benefits, and federal tax refunds. Instead, payments will be made electronically, usually by direct deposit into your bank account.
This change stems from Executive Order no. 14247, “Modernizing Payments to and From America’s Bank Account,” signed by President Trump in July, 2025. The government explained that the move is designed to reduce fraud, prevent lost or stolen checks, and deliver funds faster.
If you already receive payments electronically, no action is needed. However, if you still receive paper checks, you must switch to direct deposit before the deadline.
Here are 6 ways to enroll in direct deposit:
You can read the Treasury’s full announcement here.
Most taxpayers already use electronic payment methods, but if you haven’t transitioned, now is the time to act.
This change is part of a larger plan. In the future, the government will also require payments to the federal government, like income taxes, to be made electronically. For now, paper checks for payments such as the September 15, 2025, estimated tax payment are still accepted, however, expect changes in the near future.
At CK, we recommend using electronic methods whenever possible for both filings and payments. Benefits include:
If you’re not sure how to make the switch, reach out to your CK team for help with transitioning your tax payments, refunds, and estimates to secure electronic systems.
As accountants, we know that unresolved tax liabilities can lead to escalating penalties and interest but the Illinois Department of Revenue is offering a rare opportunity for a clean slate. Effective soon, the 2025 Illinois Tax Delinquency Amnesty Act provides a window for eligible taxpayers to settle outstanding state tax debts and wipe away associated penalties and interest.
Per bulletin FY 2026‑01, the Illinois Tax Delinquency Amnesty Act allows eligible taxpayers to pay overdue state tax liabilities without incurring penalties or interest, as long as they settle in full during the amnesty window.
Individuals and businesses with unpaid liabilities for state taxes administered by the Illinois Department of Revenue during the eligible period qualify for the amnesty program.
1. File any missing returns or amend incorrect filings for the eligible periods. Include any supporting documentation.
2. Pay the full tax amount due during the amnesty window (Oct. 1 – Nov. 17, 2025).
3. If your liability has already been referred to a private collection agency, you must pay through that agency, do not pay IDOR directly.
4. Use MyTax Illinois for convenient payment but if you need an account, request a Letter ID, which may take up to 10 days to receive. If your account isn’t ready by November 17, you’ll need an alternative payment method.
Tax liabilities can quietly compound. What might begin as a modest underpayment can balloon with added penalties, interest, and collection costs. This amnesty program offers relief: an opportunity to settle past issues cleanly and efficiently.
If you’re unsure whether you qualify or how to rectify your filings, now is a great time to reach out. At Cray Kaiser, we’re here to help guide you step by step. Contact us to discuss how the Illinois Announces Tax Amnesty Program may impact your tax situation.
MSA, MST | Assurance In-Charge
On July 4, 2025, President Trump signed the “One Big Beautiful Bill” Act into law, introducing one of the most talked-about provisions: Trump Accounts. This new type of tax deferred account aims to help children in the U.S. build long-term wealth from birth into adulthood.
A Trump Account is a federally created tax-deferred investment account designed to give children a financial head start through both government contributions and private investments.
Qualified withdrawals (Allowed starting at age 18)
Taxation & Penalties
Many details will be clarified through future regulations, including IRS interpretations. Even though year-end tax planning usually begins in Q4, now is the ideal time to talk to your tax advisor and evaluate whether a Trump Account makes sense for your family.
At Cray Kaiser, we’re here to help you navigate the One Big Beautiful Bill Act and plan not just for this year, but for the years ahead. Contact us to discuss how these new rules could impact your tax and financial future.
CPA | Tax Manager
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law, bringing sweeping changes to federal tax provisions. While much attention has been focused on electric vehicle (EV) tax credits, the legislation also includes a wide range of energy-related tax incentives that could impact both individuals and businesses.
If you want to take advantage of these benefits, timing will be critical, many of these provisions have short windows before they expire. Here’s what’s changing and what you should be doing now to prepare.
The One Big Beautiful Bill Act includes several incentives designed to encourage the adoption of clean energy solutions in homes and vehicles. However, these credits are set to expire soon:
Businesses will also see notable changes to clean energy incentives, some ending soon, others phasing out gradually:
While many details are still pending clarification through regulations, here’s how you can stay ahead:
At Cray Kaiser, we’re here to help you navigate these changes and plan not just for this year, but for the years ahead. Contact us to discuss how the One Big Beautiful Bill may impact your tax situation.
MSA, MST | Assurance In-Charge
The One Big Beautiful Bill Act (OBBB) introduces significant updates to Section 174A, which governs the treatment of research and experimentation (R&E) expenses. These changes aim to boost domestic innovation in the United States by modifying how businesses can deduct and capitalize R&E costs. Whether you’re a startup investing in cutting-edge technology or an established company developing improved products or processes, the new Section 174A rules bring welcome opportunities for immediate tax savings and improved cash flow.
Historically, Section 174 of the Internal Revenue Code (IRC) permitted businesses to immediately deduct all R&E expenditures. However, the Tax Cuts and Jobs Act of 2017 (TCJA) removed this option and required taxpayers to capitalize R&E expenditures and amortize them over a five-year period for R&E performed within the United States, or a fifteen-year period for R&E performed outside the United States for tax years beginning after December 31, 2021.
New Code Section 174A restores the taxpayer’s option to immediately deduct domestic R&E expenditures incurred in connection with a trade or business for work performed in the U.S. This applies to tax years beginning after December 31, 2024. Taxpayers may still make the election to amortize R&D costs over a 5-year period or ratably over a 10-year period for certain Section 174A expenditures.
Under the OBBB, eligible small businesses, those with less than $31 million in average gross receipts over the past three tax years, receive expanded benefits:
The OBBB Act does not modify rules for foreign R&E expenditures. These costs must continue to be capitalized and amortized over a fifteen-year period.
The restoration of full expensing for domestic R&E expenditures represents a major win for U.S. businesses. Your company has the opportunity to gain greater control over cash flow, improved tax planning, and increased investment capacity. However, the decision to expense immediately or amortize isn’t one-size-fits-all. Fully capitalizing on the new law requires thoughtful evaluation of available elections and possible changes to accounting methods. Factors such as refund timing, IRS processing risks, state tax conformity, and ownership changes must all be considered. Our team at Cray Kaiser is closely monitoring IRS guidance on these changes.
If your business invests in research and development, these changes could have a major impact on your tax strategy. To learn how these provisions apply to your specific situation, contact your trusted advisors at Cray Kaiser.
