Tax Reform 2025
Breaking Ground on Better Business
Let ' s talk about what ' s ahead for your business . With significant tax changes both confirmed and proposed for 2025 and beyond , you ' re likely wondering how to position your company for success . Whether you ' re in manufacturing , distribution , construction , or real estate , these changes will affect your business plan . As partners invested in your business success , Rea wants to help you navigate these changes confidently .
What ' s Changing Right Now
First , let ' s address the immediate changes affecting your business . If you ' re planning any major equipment purchases or real estate improvements , you ' ll want to pay close attention to the bonus depreciation phase-down . While we can still claim 60 percent bonus depreciation in 2024 , this benefit decreases to 40 percent in 2025 and 20 percent in 2026 . The good news ? Section 179 expensing remains strong with a $ 1,220,000 deduction limit for 2024 , offering another valuable tool for managing your capital investments and property improvements . This includes certain business vehicle deductions like heavy SUVs , cargo vans , and other qualified vehicles used primarily for business purposes .
For our manufacturing clients , the current draft of form 6765 Credit for Increasing Research and Activities includes significant changes from previous years .
Requiring enhanced qualitative and quantitative business components , research activities , and qualified expenditures . Despite these added reporting requirements , Research & Development ( R & D ) tax credits are still available and can provide substantial benefits when properly documented .
Construction and real estate developers should note that the treatment of qualified improvement property ( QIP ) continues to provide opportunities for accelerated depreciation , making renovations and improvements more financially attractive .
Distribution companies should pay attention to inventoryrelated tax provisions . The uniform capitalization ( UNICAP ) rules continue to evolve , potentially affecting how you account for storage and handling costs . Additionally , last-in , first-out ( LIFO ) inventory methods may need review as supply chain dynamics shift .
Looking Ahead : Proposed Changes That Could Impact Your Business
President Trump has proposed several business-focused initiatives that could significantly affect your planning . Most notably , there ' s a proposed 15 percent corporate tax rate specifically for companies operating domestically . This could substantially impact decisions about facility locations , development projects , and supply chain structure .
For real estate investors and developers , proposed changes to like-kind exchanges and opportunity zones could reshape investment strategies . Construction companies should watch for infrastructure initiatives that might create new project opportunities while affecting labor and material costs .
Distribution businesses should prepare for significant tax policy shifts affecting their operations . A possible return to 100 percent bonus depreciation could accelerate fleet modernization , while renewable fuel incentives may reshape fleet planning .
The proposed increase in tariffs on imported vehicle parts and potential changes to estate tax exemptions could affect both immediate operations and succession planning . Additionally , proposed modifications to state nexus rules could affect multi-state distribution operations .
Think about your current business footprint . Are you positioned to take advantage of domestic incentives ? Would your development pipeline or supply chain need restructuring under the proposed changes ?
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