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Member of Russell Bedford International, a global network of independent professional service firms.
CPA | CK Principal
The One Big Beautiful Bill Act was signed into law on July 4th. The law significantly expands the Qualified Small Business Stock (QSBS) exclusion under Internal Revenue Code 1202 for stock acquired after July 4, 2025.
Below is a concise summary of the changes:
Stock acquired before July 4, 2025
Stock acquired on/after July 4, 2025
Tiered gain exclusion based on holding period:
Stock acquired before July 4, 2025
Stock acquired on/after July 4, 2025
Stock acquired before July 4, 2025
Stock acquired on/after July 4, 2025
Federal QSBS benefits don’t always apply at the state level. Cray Kaiser can provide guidance on state conformity regarding QSBS.
QSBS planning is time-sensitive and documentation-heavy. There are qualifications that must be met to qualify for this gain exclusion. Have QSBS questions? Contact Cray Kaiser today. We will help you navigate through these hurdles.
CPA | Tax Manager
The Qualified Opportunity Zone (QOZ) program was originally introduced as part of the Tax Cuts and Jobs Act (TCJA) of 2017 to encourage long-term investments in economically distressed communities. The One Big Beautiful Bill Act (OBBBA), is bringing major updates to this tax incentive program, giving investors and developers new benefits and rules.
Here’s a breakdown of what’s new, why it matters and how you can prepare for what’s next.
A Qualified Opportunity Zone is a designated economically distressed area in the U.S. The goal is to encourage private investments in these zones by offering tax breaks to investors to stimulate growth and development in these areas.
Under the original rules, investors could benefit from:
However, these benefits were set to expire on December 31, 2026, which limited long term planning.
The One Big Beautiful Bill Act gives the Opportunity Zone program new life by removing the expiration date and introducing a set of enhancements designed to focus investment in the areas that need it most.
Here are the key updates:
The Program is Permanently Extended
The QOZ program is no longer set to expire in 2026. Instead, it’s been extended indefinitely, providing long-term stability for investors and developers.
New Zones Every 10 Years
Stricter Eligibility Requirements for Zone Designation
To better target areas in need:
Updated Tax Incentive
There are a few important adjustments to how tax breaks work:
New Opportunities for Rural Investors
For the first time, there’s a special focus on rural America through the creation of Qualified Rural Opportunity Funds. These funds come with extra perks, including:
Unfortunately, these exciting changes do not take effect until January 1, 2027. This means all investments prior to then will fall under the old QOZ rules. Under the old rules gains are only deferred until 2026, at which point you must report and pay tax on them. A one-year deferral isn’t much of an incentive for investing prior to 2027. Because of this lag in policy, experts anticipate a slowdown in QOZ funds as investors wait for the new rules and longer deferral periods to kick in.
The Opportunity Zone program has entered a new era. With enhanced benefits, a focus on rural areas, and long-term stability, investors may find fresh reasons to explore these communities and investments. But until the new rules take effect, investors should consider holding off on QOZ opportunities until they can take full advantage of the new benefits starting in 2027.
If you’re wondering how these changes could affect your investment strategy, our tax experts can help you evaluate your options and prepare for the new Opportunity Zone landscape. Contact us to learn how to make the most of these upcoming opportunities.
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.
