One Big Beautiful Bill Overview
The world of taxation is notorious for its shifting landscape, and staying ahead can be a challenge. Enter the “One, Big, Beautiful Bill Act,” which has just passed the House of Representatives and is now making its way to the Senate. This significant piece of legislation has the potential to reshape tax planning strategies, particularly for businesses and clients looking to maximize tax credits and incentives.
For CPAs, understanding the key provisions and their potential impact is crucial. This guide unpacks the highlights of the bill, focusing on changes to R&D tax credits, cost segregation, the 45L tax credit, and renewable energy incentives. We’ll also discuss how these changes could influence your clients and why now is the time to take a proactive approach to tax planning.
Why This Bill Matters to CPAs
The “One, Big, Beautiful Bill Act” has raised considerable interest among accounting professionals for its ambitious reforms to the tax landscape. It offers opportunities for substantial tax savings but also introduces key deadlines and phase-outs that call for immediate attention. With provisions affecting a wide range of industries—from renewable energy to real estate and manufacturing—this bill could impact a significant portion of your client base.
For CPAs, the ability to stay informed and prepared is more than just a competitive advantage; it’s a necessity. Proactive planning now could mean significant tax savings for your clients down the line.
Breaking Down the Key Provisions
R&D Tax Credits
The bill restores the immediate expensing of domestic research expenses (Section 174 expenses) starting in tax year 2025, continuing until 2029. Unfortunately, businesses will not see a retroactive reversal of amortization requirements for tax years 2022 through 2024.
What this means for you:
Clients involved in research and development (R&D) activities have a critical window to optimize their operations starting in 2025. You’ll want to prepare strategies now to maximize these expenses as soon as the changes take effect.
Cost Segregation
One of the standout provisions of the bill is the restoration of 100% bonus depreciation for assets placed in service on or after January 20, 2025, through 2029. This means businesses can claim the full cost of eligible assets as deductions in their first year of use.
How this impacts clients:
This provision can significantly benefit real estate and construction clients. Encourage clients to plan their asset placements strategically to take full advantage of this revived incentive.
45L Tax Credit
The 45L energy-efficient home credit will sunset at the end of 2025. Initially part of the Inflation Reduction Act, this credit offered substantial benefits to builders and developers of energy-efficient residential properties.
Call-to-action for CPAs:
Discuss with real estate clients how to capitalize on this credit in the remaining timeframe. With the clock ticking, it’s a critical area to address in planning sessions.
Renewable Energy Tax Credits
The bill proposes phasing out green energy incentives from the Inflation Reduction Act for projects that begin construction after 60 days or are placed in service beyond December 31, 2028.
Key takeaway:
For clients invested in renewable energy projects, these phase-outs could have long-term impacts. Now is the time to evaluate current and future projects to determine how they align with these updated guidelines.
Employee Retention Credit
No new ERC claims can be filed after January 31, 2024. The IRS is increasing penalties for abusive or fraudulent claims. Audits can now occur through 2030, significantly extending the period for IRS review.
Key takeaway:
The IRS is increasing enforcement around ERC claims, meaning even valid filings may face more scrutiny. Businesses and advisors should proactively review any claims submitted before the cutoff to ensure they’re fully compliant.
Tip for CPAs:
Perform a pre-audit review of any ERC claims you’ve submitted for clients. Verify documentation, eligibility criteria, and ensure compliance now—before the IRS comes knocking.
What CPAs Should Do Now
- Start Client Planning Early
The Senate is targeting a July 4 deadline for the bill’s passage. While details may change, now is the time to start discussing potential scenarios with your clients. Proactive planning can ensure clients are ready to capitalize on provisions that affect them.
- Stay Updated on Legislative Developments
The bill has cleared a significant hurdle in the House, but changes are likely as it moves through the Senate. Staying informed will position you as a trusted advisor for your clients. Set up alerts and subscribe to reputable tax news sources to track the latest developments.
- Identify Affected Clients
Review your client list to determine who will benefit most from these provisions. Clients in industries like R&D, real estate, and renewable energy are obvious candidates, but don’t overlook smaller businesses with potential opportunities in cost segregation or energy efficiency credits.
- Leverage Technology
Now is the perfect time to utilize tax planning tools and software. Enhanced data visualization platforms can help you assess client opportunities and communicate potential benefits more effectively.
- Educate Your Team
Ensure your entire team is up to speed on the implications of the bill. Host internal training sessions or workshops to discuss each provision in detail. Knowledgeable staff will be better equipped to handle client inquiries and deliver accurate advice.
The Countdown to Action
With the Senate eyeing a July 4 deadline, CPAs have a short window to prepare. The “One, Big, Beautiful Bill Act” holds both opportunities and challenges, making it critical to adopt a forward-thinking approach to tax planning now.
Whether it’s immediate expensing for R&D, bonus depreciation for assets, or helping clients take advantage of the 45L credit while it lasts, your guidance can make a world of difference. By staying ahead of the curve, you cement your role as a trusted advisor and ensure your clients are well-positioned for success.
Not sure where to start? Don’t go it alone. Tri-Merit is here to help you make sense of complex tax codes and maximize opportunities for your clients. Contact us today to discuss how our services can streamline your tax planning and secure your clients’ financial futures.
