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.
CPA | Tax Manager
As the ink dries on the One Big Beautiful Bill Act (OBBBA), many taxpayers are wondering: What does this mean for me, my business and my bottom line?
While much of the discussion focuses on federal tax changes, state tax laws are also affected. State legislators must decide whether to align to the new federal rules. It’s unknown how quickly state legislators will respond to the changes. Because of this, taxpayers could see difference in how their income, deductions and credits are treated from state to state.
Here’s a breakdown of the key areas where OBBBA could impact state taxes and what you should watch for.
The state tax deduction (SALT) cap, originally limited to $10,000 under the Tax Cuts and Jobs Act of 2017 (TCJA), has been increased under OBBBA to $40,000 for joint filers and $20,000 for certain individuals.
In response to the old cap, 36 states enacted a Pass-Through Entity Tax (PTET), where flow through entities were allowed to pay state tax on behalf of owners and deduct them as business expenses.
Now that the SALT limit has increased, some business owners may want to reconsider PTET elections. Additionally, some state PTET provisions are set to expire at the end of 2025, and it’s unclear which states will extend the PTET.
What this means for you: If you currently use or are considering a PTET election, it’s a good time to re-evaluate your strategy with your tax advisor.
Under TCJA, bonus depreciation, which allows businesses to deduct the full cost of qualifying assets, has been phasing out from 100% down to 40% in 2025, and ultimately to zero in 2027. The OBBBA reverses this trend by reinstating 100% bonus depreciation for assets acquired after January19, 2025.
However, many states do not allow this deduction. Businesses will need to continue to track state differences in depreciation rules to avoid surprises when filing state returns.
What this means for you: Be aware that even though you may get the full deduction at the federal level, your state may not conform.
Beginning in 2025, the limitation on business interest expense will be expanded to apply to EBITDA (earnings before interest, taxes, depreciation and amortization).
Because each state chooses whether to follow the federal rule (Section 163(j)), conformity varies widely. This means your allowable interest deductions may differ by state.
What this means for you: Businesses with multi-state operations should carefully review where and how these new limitations apply.
The OBBBA reinstitutes immediate expensing of R&E costs. It also allows for accelerated deductions for costs that were capitalized between 2022-2024.
Since each state handles R&E costs differently, you’ll need to identify which states plan to conform to the new rules beginning in 2025.
What this means for you: If your business invests in research or development, this change could offer significant tax savings, but only if your state follows the new federal approach.
Each state decides whether to adopt federal tax changes, ignore them or modify them. This can be overwhelming for business owners, especially those operating in multiple states.
Analyzing these differences can be complex and time-consuming, but it’s crucial to ensure accurate tax filings and avoid penalties.
Navigating federal and state tax changes under the One Big Beautiful Bil Act doesn’t have to be overwhelming. The team at Cray Kaiser can help you analyze the effect on your business. Although 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 state taxes. Contact Cray Kaiser and learn how these changes may impact your bottom line.
In this video, Nick Ashmore, an in-charge accountant at Cray Kaiser, share his experiences and insights about working at the firm. He discusses the diverse opportunities, the supportive and collaborative work environment and the personalized growth plans that help team members explore different areas of interest.
Transcript:
My name is Nick Ashmore. My current position at Cray Kaiser is an in-charge accountant and I am a hybrid between the accounting services and the tax departments. First off, there are a lot of opportunities and they want you to work on what you want to work on. So as I mentioned for the first years or people just coming into this firm they have an idea of what they want to work on or even if they don’t have an idea just try everything and Cray Kaiser will make that possible for them so that you can kind of really figure out what you’re good at develop a niche if that’s what you want to focus on and you could grow from there.
Every time I have an annual review or as we call them now growth plans we set goals for the year that you want to meet and you know you have the standard like billable hours and things like that but then you get to throw some oddballs in there and for me I usually try to include something I haven’t done before. So for instance this year is working on a nonprofit. I know that the nonprofit accounting is a little bit different. I have never done it. Maybe I’ll like it, maybe I won’t, but I at least want to try it and have a general understanding of it.
So they do a good job at meeting the things that you want, which in turn helps you grow because they’re doing things that you like to do or are interested in versus things you’re not interested in.
Their expectations of me were very clear but they also made the path to get them very clear. This stuff’s really easy to follow. As I said, I had a lot of different mentors for different challenges I faced. They helped me get over each and every hurdle. It’s very collaborative and I would also say empowering just because everybody wants to help you, you know, you don’t feel beaten up when you don’t know something. You have somebody you can go ask, they’ll sit with you and make time for you to really break it down and learn it. My learning style is not really being told how to do something, but it’s actually doing it with somebody kind of looking over my shoulder, guiding me through it. That’s how I learn. You know, somebody could tell me you just need to do this, this, and this, and I could get that done, obviously, but I wouldn’t fully understand it until I’ve actually taken and start to finish.
In accounting services, we all sit in the same section. That’s like, I guess, my home department, I would say. You know, we’re kind of talking back and forth over the cubicles, running ideas by each other. We all help each other out. We kind of all have our things that we have handled in the past, so when a problem arises with somebody else, you know, we can easily help them. So those are kind of the goals and values we have at Cray Kaiser here and I think it’s very beneficial for everybody.
The saying goes, “Call a spade a spade.” But in the world of mergers and acquisitions, it’s more like calling a spade a shovel. The terms are not interchangeable. Rather, they’re most often used together, or merger is stated when the accurate term is actually acquisition.
Technically, there’s a considerable distinction between mergers and acquisitions. While both are the blending of two entities, the difference between the two revolves around the processes of how the two organizations are combined.
A true merger in which neither company’s processes take over the other’s is fairly uncommon, partially because it is costly to keep both companies’ processes alive.
The blending of two entities is frequently communicated both internally and externally as a merger, even when it’s technically an acquisition, likely because the term merger is more palatable to the seller and seller’s team. The term acquisition often bears negative connotations for the company that was purchased, even with a successful, desirable sale.
When you read about a merger in the news, take a closer look. You may discover that in the purest sense, it’s truly an acquisition. However, the companies and people involved may benefit from the positive associations with the term merger, making it acceptable, and even constructive, to call it a merger. In the end, sometimes calling a spade a shovel is the right thing to do.
