Key Tax Law Changes You Should Know About

As 2025 unfolds, new tax laws and phase-outs are reshaping the landscape for individuals, entrepreneurs, and small businesses alike. Understanding these changes can help you reduce liability, avoid penalties, and optimize your financial strategy.

Major Federal Tax Code Changes (2025)

1. Sunsetting of Trump-Era Tax Cuts (TCJA) Provisions

• Several provisions from the Tax Cuts and Jobs Act (TCJA), passed in 2017, are set to expire after 2025, but some phase-downs begin now.
• Child Tax Credit, standard deduction, and lower income tax rates are under review by Congress for extension.

2. Bonus Depreciation Phase-Down

• IRC §168(k) bonus depreciation decreases to 40% in 2025 (was 60% in 2024).
• Business asset purchases no longer get full immediate write-off, impacting capex-heavy startups.

3. Section 174 R&D Capitalization Rules

• Since 2022, R&D expenses must be capitalized and amortized over 5 years under IRC §174.
• Many were hoping for a repeal—but as of now, the rule remains in place for 2025.

4. Section 163(j) Interest Limitation Tightens

• Deductible business interest is now limited to 30% of EBIT, not EBITDA.
• Businesses with high debt or losses may be more heavily impacted.

5. Energy Incentives Expanded

• The Inflation Reduction Act (IRA) introduces and expands credits like:
  • §45L New Energy Efficient Home Credit
  • §30C Electric Vehicle Charging Station Credit
  • §48C Advanced Manufacturing Investment Credit

New IRS Forms and Reporting

• Form 1099-K Threshold: The IRS again postponed the $600 threshold enforcement, keeping the 2023 de minimis rule of $20,000 and 200 transactions, but platforms must still report.
• Form 7205: Required for energy-efficient commercial building property deductions.
• Form 8938 & FBAR: Continued emphasis on global account reporting; penalties remain steep.

Examples

Example 1:
A SaaS company in California invests $120,000 in software development in 2025.

• Under §174, they must capitalize and amortize it over 5 years, claiming only $24,000 per year.
• This delays tax benefits unless Congress changes the law.

Example 2:
An HVAC contractor purchases $300,000 in new machinery in 2025.

• They can claim only 40% bonus depreciation ($120,000) upfront.
• The rest must follow MACRS schedules under §168.

Step-by-Step Guide to Stay Compliant

1. Meet with a CPA Before Major Transactions
   Especially if you plan to buy assets, raise capital, or restructure.
2. Track Expenses with Proper Categorization
   Especially R&D and energy-related outlays.
3. Prepare for Reduced Deductions
   Adjust cash flow and budgets to reflect amortization and phase-downs.
4. File the Correct Forms
   Use forms like 4562 (Depreciation), 7205 (Energy Deductions), and 6765 (R&D Credit).
5. Stay Informed About Legislative Updates
   Congress may act late in the year to retroactively adjust provisions.

Conclusion

2025 brings important tax changes that affect nearly every U.S. taxpayer—especially business owners. With bonus depreciation phasing down, R&D rules tightening, and new incentives emerging, proactive tax planning has never been more crucial.

Call to Action

Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant in the United States, admitted to practice before the IRS as an Enrolled Agent. He represents clients in tax litigation and specializes in cross-border tax planning for American businesses and Indian founders in the U.S.

Schedule a meeting with Anshul Goyal to discuss your tax strategy in light of 2025 changes.

Disclaimer

This content is for educational purposes only and does not constitute legal or tax advice. Always consult a licensed tax professional for personalized guidance.

FAQs

1. Is bonus depreciation still available in 2025?
Yes, but it’s reduced to 40% under IRC §168(k).

2. Are R&D expenses fully deductible?
No. Under IRC §174, they must be capitalized and amortized over 5 years (15 for foreign R&D).

3. What’s the new 1099-K rule for 2025?
The $600 threshold enforcement is delayed, but platforms may still report amounts over $600 voluntarily.

4. Can I still claim the EV charger credit?
Yes, under §30C, provided you meet location and installation criteria.

5. What if I file late and miss out on these incentives?
Late filing may result in penalties and lost deductions. Stay timely and consult a CPA.

About Our CPA

Anshul Goyal, CPA EA FCA is an IRS-authorized Enrolled Agent and U.S. Certified Public Accountant with 15+ years of experience. He helps individuals, startups, and businesses Manage IRS tax changes, credits, audits, and cross-border compliance between the U.S. and India.