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.
MSA, MST | In-Charge Staff Accountant
On December 2, 2025, the Internal Revenue Service (IRS) released a draft of the new Form 4547, titled Trump Account Election(s). This form allows authorized individuals (typically parents or guardians) to elect to open a “Trump Account” for eligible minors. These accounts are part of a new federal initiative designed to help children build financial assets early in life. One of the most notable features of Form 4547 is the option to receive a $1,000 “Pilot Program Contribution” from the U.S. Treasury for children born between 2025 and 2028.
According to the IRS instructions, the the most efficient way to file Form 4547 is by submitting it with the authorized individual’s electronically filed current-year federal income tax return. For the initial rollout, this would likely coincide with the filing of the 2025 tax return.
If the form is not filed with the tax return, it may still be filed separately using paper filing.
The IRS has announced plans to launch an online portal at trumpaccounts.gov in mid-2026. This portal may eventually allow authorized individuals to make Trump Account elections online. However, it is important to note that contributions to Trump Accounts will not be allowed before July 4, 2026.
In early December, the Michael & Susan Dell Foundation announced a $6.25 billion philanthropic commitment to fund 25 million Trump Accounts. Through this initiative, the foundation plans to contribute $250 per account for children who:
This program is intended to support children who do not qualify for the $1,000 federal Pilot Program Contribution. Parents can assess potential eligibility by entering their zip code into Census Reporter which provides median income data from the U.S. Census Bureau. Additional details about the Dell Foundation contribution aren’t available yet but we will provide an update as soon as more substantive information becomes available.
To learn more about how Trump accounts, Form 4547 or related contribution programs may impact your family, please contact one of the trusted advisors at Cray Kaiser. We can help you navigate new developments and plan accordingly.
CPA | CK Principal
As it does every year, the Internal Revenue Service recently announced the inflation-adjusted 2026 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Additionally, tax professionals and their clients may use the optional standard mileage rate to calculate the deductible costs of operating vehicles for moving purposes for certain active-duty members of the Armed Forces, and now, under the One, Big, Beautiful Bill, certain members of the intelligence community.
Beginning on Jan. 1, 2026, the standard mileage rates for the use of a car (van, pickup or panel truck) are:
The business standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set (it can only be changed by Congressional action) and has been 14 cents per mile for over 15 years.
Taxpayers always have the option of calculating the actual costs of using their vehicle for business rather than using the standard mileage rates. Notice 2026-10 contains additional information.
If you have questions about the standard mileage rate or calculating the actual cost of using your vehicle for business, please contact Cray Kaiser.
CPA | Tax Manager
Beginning January 1, 2026, the rate for the Chicago Personal Property Lease Transaction rate increased from 11% to 15%. This change applies to invoices for all leases, including non-possessory leases for computers to manipulate data supplied by customers. The tax impacts businesses and individuals within the City of Chicago who are leasing personal property used in Chicago.
Understanding how this tax works and whether or not it applies to you is important to avoid compliance issues and unexpected costs.
This tax rate increase may impact you if:
Unless your customer qualifies as an exempt lessee, you must ensure the tax is calculated, charged and remitted at the new rate beginning January 1, 2026.
As part of its 2026 budget the City of Chicago approved additional tax changes, including:
These changes may affect both businesses and consumers.
The City of Chicago has published more details about all 2026 tax rate changes, including the Personal Property Lease Transaction Tax on its website.
Chicago tax rules, especially those involving leased property and software, can be complex. If you are concerned about these tax increases, unsure how they impact your business or how to properly calculate them, the tax team at Cray Kaiser is here to help. Contact us to ensure your business remains compliant and is prepared for the 2026 Chicago tax changes.
CPA | CK Principal
The “One Big Beautiful Bill” signed into law over the July 4th weekend introduces major updates to estate and gift tax rules that could significantly affect your estate planning strategy. Prior to the Act, the gift and estate tax exemptions were slated to scale back to about $7 million per taxpayer in 2026.
The following are the highlights involving the estate and gift tax:
Beginning January 1, 2026, the federal estate and gift tax exemption will increase to:
This increased from $13.99 million per individual exemption available in 2025. This new amount will also be adjusted annually for inflation after 2026. This exemption is made “permanent” by the Act, but as history reminds us, a future change in control of the government means nothing is ever truly permanent.
The annual gift exclusion remains at $19,000 per recipient for 2025. This means you can give up to $19,000 per individual without reducing your lifetime estate tax exemption. The annual exclusion will continue to adjust for inflation each year.
This portability feature remains a powerful estate planning tool for married couples aiming to preserve wealth and minimize estate taxes.
Prior to OBBBA, the federal exemption was expected to drop to about $7 million per taxpayer in 2026. This pending “sunset” led many individuals to accelerate estate planning strategies before the deadline.
With the new, higher $15 million exemption, that state of urgency has eased. But strategic estate planning is still essential, especially for individuals or couples with estates near or above the new thresholds.
For taxpayers residing in Illinois, the federal exemption is not the only number that matters. Illinois imposes its own estate tax on estates over $4 million.
We recommend speaking to your advisors to make sure your trusts are structured to maximize federal and state tax benefits.
Even though OBBBA extends and expands the federal exemptions, estate planning remain crucial for individuals and families of all wealth levels. Laws can change, so the best way to protect your legacy is to keep your estate plan current, flexible and aligned with your goals.
If you have questions about the OBBBA affects your estate, gift or trust planning, contact the team at Cray Kaiser to help you evaluate your options and ensure your plan is up to dat
CPA | Tax Manager
In June 2025, Illinois enacted major tax reforms as part of the 2026 Illinois Budget bill. The changes have a direct impact on how businesses, particularly multi-state and privately-held companies, calculate, report, and allocate taxes.
If your company is operating in Illinois or conducting business remotely within the state, it’s essential to understand these updates and adjust your tax strategy now. The new legislation includes the following key provisions:
Effective for tax years ending on or after December 31, 2025, Illinois will replace the Joyce apportionment rule with the Finnigan rule for unitary combined reporting.
What This Means:
Why It Matters:
This is a major shift from the old Joyce rule, which only included sales from group members with an Illinois nexus. The result? Many multi-state businesses will see a higher Illinois apportionment percentage and, consequently, potentially higher Illinois tax liability.
Starting with tax years ending on or after December 31, 2025, corporate taxpayers can only deduct 50% of the amount of global intangible low-taxed income (GILTI) under IRC Section 951A from taxable income.
Previously, businesses could deduct 100% of GILTI. This change effectively increases Illinois’ taxable income for corporations with foreign operations or subsidiaries.
Effective for tax years ending on or after June 16, 2025, Illinois will change how capital gains and losses from the sale or exchange of S corporation shares or partnership interests are sourced.
How It Works:
What Changed:
Previously, capital gains and losses from selling or exchanging an interest in a pass-through entity generally were sourced based on the taxpayer’s state of residence. Now, non-residents selling Illinois-based business interests may owe Illinois tax and should confirm whether their home state allows a credit for taxes paid to Illinois.
The new Advancing Innovative Manufacturing (AIM) for Illinois Tax Credit aims to encourage investment in domestic manufacturing facilities.
Key Details:
Remote Retailer Transaction Threshold Eliminated
Starting January 1, 2026, Illinois will remove the 200- transaction threshold used to determine nexus for sales and use tax.
From now on, remote retailers, marketplace facilitators, and marketplace sellers will need to collect and remit Illinois sales tax if their Illinois sales exceed $100,000 annually, regardless of transaction count.
Service Occupation and Service Use Tax Expansion
Also beginning January 1, 2026, the Leveling the Playing Field for Illinois Retail Act will expand to cover service providers. Service businesses with nexus in the state will be responsible for collecting both state and local sales taxes when a service is provided from outside the state to an Illinois customer. The applicable tax rate is calculated based on the customer’s location (destination basis). Prior to this change, out of state service businesses collected only the state 6.25% tax rate.
The 2026 Illinois Budget Bill introduces some of the most significant tax law changes in recent years. From combined apportionment rules to GILTI limitations and new manufacturing credits, these updates will reshape how businesses plan and report taxes in Illinois.
At Cray Kaiser, we specialize in helping business owners navigate these complex changes. Our team can help you update your strategy and ensure compliance while optimizing your Illinois tax position. Contact Cray Kaiser to discuss how the 2026 Illinois tax changes may affect your business and how to prepare effectively.
Taxes are a fact of life, but thoughtful and timely planning can help to reduce their impact. By estimating your liability, exploring potential savings and making timely decisions, you can better manage your tax burden. That’s why we are excited to offer our 2025-2026 Tax Planning Guide to assist you.
In this latest episode of Small Business Focus, Tax Manager, Eric Challenger, breaks down the fundamentals of self-employment tax, including what it is, who it applies to and how it’s calculated. Whether you’re a freelancer, sole proprietor or a new business owner, understanding self-employment tax is essential to avoiding surprises at filing time and planning effectively for your finanacial success.
Transcript
Congratulations. You finally started your own business. Years of working for somebody else are finally over. Now you set your own schedule and reap 100% of the profits from your hard work. Unfortunately, what they don’t tell you is that even though you don’t have any traditional payroll, you still have to pay payroll taxes on your self-employment income in the form of the dreaded self-employment tax. Many new business owners are unaware of this tax and feel bamboozled by their accountants when they go to file their returns for the first time and are notified of this extra tax.
Self-employment income is the earned income derived from the business operations for people who operate as independent contractors, freelancers, sole proprietors, single -member LLCs, and some other small business owners. All SE income is subject to SE taxes. Typically, this applies to all business owners who are either disregarded entities or partners in a service partnership. Disregarded entity is a business that, one, has a single owner or two, not organized as a corporation or three, not elected to be taxed as a separate business entity. Even if you have elected to be treated as a partnership, you may still be subject to SE taxes on your flow through SE income.
SE tax is essentially payroll tax, charged at the individual level on Form 1040 to disregarded entities and partners receiving flowed through SE income. SE tax is comprised of two parts, Social Security tax and Medicare tax. As an employee, you would consistently see those extra withholdings on each check in tandem with your income tax withholdings. What you didn’t see was that your former employer was paying a matching amount on those taxes to the government. What? They were paid twice? Yes. And as the owner of your business, acting as the employer and the employee, you now get to pay both sides to a whopping total of 15.3%. The Social Security tax makes up 12.4 % and the Medicare tax makes up 2.9% for the total 15.3. However, there is some relief as the Social Security tax is capped annually after achieving a certain wage base. For 2025, that limit is $176,100. But you still have to pay the 2.9 % on the amount over that, and the Medicare tax bumps up to an additional 3.8 % for people making over $200,000 if you’re single or $250,000 if you’re filing jointly.
SE tax is calculated on your net income from operations of your business. Net income includes all of your offsets and proper business deductions, including one half of the SE tax, the employer’s side. Net income for disregarded entities is calculated on your Schedule C, profit, or loss from business. For partners in a partnership, it is flowing through your K-1, line 14, and reported on Schedule E, page 2. The tax itself is calculated on Schedule SE and includes all your SE income from all sources.
Although the tax is calculated on your return, you are required to pay as you go using the estimated tax payment system. For more information on how to make estimated taxes, please check out our other newsletters and audio blogs on the subject. Hopefully you’ve stumbled on to this article while doing your homework for starting your own business. For those of you researching after you’ve already gotten your tax bill, I’m sorry. For next year, seek out the small business experts at CK to help you better understand your SE tax requirements and how to prepare for them in advance. For more information, on small business tax topics, please visit our website at www.craykaiser.com or give us a call at 630-953-4900. Thank you for listening.
The recently signed “One Big Beautiful Bill” brings tax changes for employees and business owners, especially when it comes to the reduction of taxes on tips and overtime. While most people have heard about those changes, the law includes several important details that will affect your taxes in both 2025 and continue through 2028.
Here are some of the key takeaways for the new rules on tips and overtime pay:
Under OBBB, employees and self-employed individuals working in tip-based industries may now qualify for a tax deduction on tips. Here’s what you need to know:
The OBBB also adds a deduction for overtime pay, designed to give relief to middle-income workers. Here’s how it works:
If you earn tips or overtime pay:
If you manage payroll or own a business:
As with any new tax law, expect there to be clarifications as we near year-end. The professionals at Cray Kaiser can help you understand how OBBBA may impact your 2025 taxes, whether you are an employee, contractor or business owner. Contact us today to prepare your tax strategy for 2025.
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.
