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2025 Tax Reform Preview: Breaking Down Trump's Proposed Changes for Business Owners

Writer's picture: Rick RubergRick Ruberg

Close-up of a $100 bill shows Benjamin Franklin and the text "United States of America."

Let's break down the proposed tax legislation that could reshape the business landscape in 2025. AKA the "one big, beautiful bill," this comprehensive tax reform package offers benefits for small business owners and real estate investors.


Let's take a look into what this could mean for your business and investment strategy.


Big Wins for Small Business


The proposed legislation reinforces what many of us in the tax world have long known: Owning a small business remains one of the best tax advantages in America. The new plan aims to strengthen these benefits even further.


First and foremost, the bill preserves the valuable 20% Qualified Business Income (QBI) deduction. This deduction has been a crucial for small business owners, effectively lowering their tax burden on business income. Its preservation ensures continued tax efficiency for pass-through entities.


Real estate investors, pay close attention: The plan makes 100% bonus depreciation permanent is what we have been waiting for. This is particularly significant for commercial real estate investors, allowing immediate expensing of qualified improvement property and accelerated depreciation benefits.


For those in manufacturing, the corporate tax rate could drop to 15-20% for U.S.-based operations, potentially creating new opportunities for business restructuring and expansion. Additionally, Section 179 expensing limits are set to increase to $1.25 million in 2025, providing greater flexibility in equipment and property investments.


Individual Tax Benefits: More Than Just Business


The proposed reforms extend beyond business benefits. High-income earners in states like California and New York will appreciate the elimination of the $10,000 SALT (State and Local Tax) deduction cap. The plan maintains the current lower tax brackets and preserves the estate tax exemption at $13.99 million, crucial for succession planning.


Two notable additions are the proposed zero tax on Social Security benefits and the elimination of taxes on tips. These changes could significantly impact retirement planning and service industry businesses.


Tax Reform Timeline and Implementation


While Speaker Johnson aims for passage by April through reconciliation, Kiplinger's reporting suggests these changes would take effect in 2025/2026, following the natural phase-out of the Tax Cuts and Jobs Act (TCJA).


Importantly, these changes are not expected to be retroactive to 2024.


Who's going to pay for all of this?


As with any major tax reform, the question of funding looms large. The package requires $5.3 trillion in cuts to remain revenue neutral and pass through budget reconciliation.


The proposed cuts include:


The plan outlines significant reductions across various sectors...

  • $2.3 trillion in Medicaid reform

  • $420 billion in healthcare

  • $468 billion from climate programs

  • $347 billion from social programs


Opportunities to Optimize


Prepare yourself for tax reform and focus on strategies to optimize your financial position:


Scenario Planning

Begin modeling different tax scenarios for 2024-2026. This includes considering various business structure options and timing of major investments or dispositions.

Maintain Flexibility

Stay Liquid

One Big, Beautiful Conclusion


While this legislation isn't finalized, it represents a significant potential shift in the tax landscape. The more you are informed, the more you are prepared. Once tax reform is passed, there will be numerous opportunities to optimize your tax position, and those who have planned ahead will be best positioned to take advantage.


Tax planning is not a one-time event but an ongoing process. Stay in touch with your tax advisor to ensure you're ready to act when these changes take effect.


Leave your thoughts in the comments below.


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✌️ out. -Rick

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