In preparation for the December Tax Planning Sessions that I have with all of my clients who get their work in, I’ll be writing a series of columns to get everyone ready.
The information included here and the columns that will follow are by no means a comprehensive list of all of the changes we face this year. But I’ve handpicked the ones that will affect entrepreneurs, in my humble opinion, the most.
There’s a ton of changes, so buckle up because this will be a wild ride. Those changes include…
1 – Increased State and Local Tax Deduction (SALT)
Beginning in Tax Year 2025, the SALT Deduction has the following changes.
• For all filers except MFS, the cap is $40,000. For MFS returns, the cap is $20,000.
• The deduction will be indexed for inflation through 2029.
• To limit the benefit for higher earners, the OBBBA introduces a phase-out mechanism based on income.
For all filers except MFS, a phase-out begins at $500,000in income. For MFS filers, the deduction phase-out is 50% of the annual threshold. The law also includes a floor that the SALT Deduction cannot be below of $10,000, regardless of income or filing status.
Note: The OBBBA does nothing to affect the ability of certain pass through entities to deduct SALT.
2. Full Health Insurance Deduction For Pass Through Entity Owners
Medical Insurance Deductions on Schedule A of your 1040 have been problematic for a long time. They’re subject to a limitation of 7.5% of your Adjusted Gross Income (AGI).
But it’s now possible to receive a full deduction for the amount your company pays for you and your family inside its group policy. In order to do this, we must piggy-back the self-employed health insurance deduction offered to Sole Proprietors on Schedule 1 of Form 1040. The amount must also be included on your W-2.
3 – Extension Of Reduced Individual Income Tax Rates
The OBBBA makes permanent the reduced tax rates introduced by the Tax Cuts and Jobs Act (TCJA) in 2018.
• The 10% and 12% brackets will now be indexed from 2016.
• The 22%, 24%, 32%, 35%, and 37% brackets continue to be indexed from 2017.
4 – Extension Of Increased Standard Deduction
The OBBBA extends and provides an additional increase to the standard deduction starting in tax year 2025. For the years after 2025, the standard deduction will be annually adjusted for inflation.
Filing Status 2024 Amount 2025 Amount
Married filing jointly (MFJ) $29,200 $31,500
Single 14,600 15,750
Head of Household (HOH) 21,900 23,625
Married filing separately (MFS) 14,600 15,750
Let me leave you with this…
If you haven’t sent in your work, please do so today. I won’t be able to do tax planning for you in December if we don’t have a nailed down set of November Financials because I won’t have anything to work with.
All of these changes mean something else, as well.
Your tax returns are going to be substantially different this year. Refunds may go up or down depending on your individual circumstances. Those of you who are used to getting a refund of X are certainly not going to be pleased when you get Y.
Before you call us, please understand that your elected officials have done this to you. We didn’t. If you want to call anyone, call Washington, Springfield, or the Civil Servant of your choice.
If you need their numbers, I’ll be happy to provide them.
As we go into the long Thanksgiving Weekend please enjoy yourselves, get some rest, don’t eat too much turkey…
And may whatever God you pray to bless you, your families, and your businesses this holiday season.
We’re all going to get through this. Let’s get through it together.
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
www.SalarySolutions.net
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.
On Wed, Nov 26, 2025 at 10:20 AM Chris Amundson
OBBBA’s SALT Increase And A Full Health Insurance Deduction For Entrepreneurs
In preparation for the December tax Planning Sessions that I have with all of my clients who get their work in, I’ll be writing a series of columns to get everyone prepared.
The information included here and the columns that follow are by no means a comprehensive list of all of the changes we face this year. But it is a handpicked list of the ones that will affect entrepreneurs in my humble opinion the most.
There’s a ton of changes this year, so buckle up. This is going to be a wild ride. THose changes include…
1 – Increased State and Local Tax Deduction (SALT)
Beginning in tax year 2025, the SALT deduction has the following changes.
• For all filers except MFS, the cap is $40,000. For MFS returns, the cap is $20,000.
• Deduction is indexed for inflation through 2029.
• To limit the benefit for higher earners, the OBBBA introduces a phase-out mechanism based on your income.
For all filers except MFS, the deduction begins to phase-out at $500,000 MAGI. For MFS filers, the deduction phase-out is 50% of the annual threshold. The law also includes a floor that the SALT deduction cannot be below $10,000, regardless of income or filing status.
Note. The OBBBA does nothing to affect the ability of certain pass through entities to deduct SALT.
2. Full Health Insurance Deduction For Pass Through Entity Owners
Medical Insurance Deductions on Schedule A of your 1040 have been problematic for a long time. They’re subject to a limitation of 7.5% of your Adjusted Gross Income (AGI).
But it’s now possible to receive a full deduction for the amount your company pays for you and your family inside its group policy. In order to do this, we must piggy-back the self-employed health insurance deduction offered to Sole Proprietors on Schedule 1 of Form 1040. The amount must also be included on your W-2.
3 – Extension Of Reduced Individual Income Tax Rates
The OBBBA makes permanent the reduced tax rates introduced by the Tax Cuts and Jobs Act (TCJA) in 2018.
• The 10% and 12% brackets will now be indexed from 2016.
• The 22%, 24%, 32%, 35%, and 37% brackets continue to be indexed from 2017.
4 – Extension Of Increased Standard Deduction
The OBBBA extends and provides an additional increase to the standard deduction starting in tax year 2025. For the years after 2025, the standard deduction will be annually adjusted for inflation.
Filing Status 2024 Amount 2025 Amount
Married filing jointly (MFJ) $29,200 $31,500
Single 14,600 15,750
Head of Household (HoH) 21,900 23,625
Married filing separately (MFS) 14,600 15,750
Let me leave you with this…
If you have sent in your work, please send it in today. I won’t be able to do tax planning for you in December if we don’t have a nailed down set of November Financials.
I just won’t have anything to work with. All of these changes mean something else, as well.
Your tax returns are going to be substantially different this year. Refunds may go up or down. Those of you who are used to getting a refund of X are certainly not going to be pleased with Y.
Before you call us, please understand that your elected officials have done this to you. We didn’t. If you want to call anyone, call Washington, Springfield, or the Civil Servant of
your choice.
As we go into the long Thanksgiving Weekend please enjoy yourselves, get some rest, and don’t eat too much turkey. May whatever God you pray to bless you, your families, and your businesses this holiday season.
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
www.SalarySolutions.net
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