Doing your taxes this year will feel a lot more like it did before the pandemic however, there are some significant changes that you would need to keep in mind and some changes that may have to seem to be forgotten or to be picked up later on, maybe on the next presidential election. But what kind of changes are we looking at and which ones have lost their steam?
One major change is that President Joe Biden wants to tax billionaires. This particular change has seemed to be put on hold. We won’t be seeing any progress on this until a re-election in 2024.
Which Tax Changes Have Been Put On Hold?
In President Biden’s State of the Union Address, he talked about wanting to tax billionaires more. Biden urged congress to pass the new billionaire tax. However, we won’t see anything until the upcoming re-election.
While former President Trump was in office there were tax changes made in 2017. The majority of them expire in 2025, and while we don’t have an update on them, they are probably going to get extended past the 2025 tax year. Lawmakers will probably make an announcement about this as the date draws close. Which is definitely not something ideal for all of us.
Another change that has been put on hold was the $80 billion funding the IRS was supposed to receive over a span of 10 years. Congress is now going back and forth trying to withhold these funds when the IRS has already made necessary changes to improve their service and improve enforcement.
We also won’t be seeing changes in the State and Local Taxes (SALT). Right now, we have a $10,000 cap on that deduction for your personal tax return. The plan on making any adjustments to that cap can potentially happen in 2026. We’ll probably see progress when the 2017 tax reform laws expire.
What Tax Changes Can We Expect?
There are significant tax changes happening within the year and here’s what we can expect.
Hopefully in the next few months or within the year we see some progress on bonus depreciation. Right now, the bonus depreciation is down to 80% and we’re banking on it getting bumped back up to 100% for the 2023 tax year and that it stays that way in future years.
Another item on this list is research and development. Prior to the change if you had research and development expenses, you can deduct them all in the same year, now those expenses must be amortized and deducted over 5 years if done in the United States or 15 years if done overseas.
And finally, the change in the 1099 K form. These forms were to be issued by PayPal, Cash App, Venmo, and the like for any individual that receives or earns from a business with over $600 worth of goods and services. It was supposed to be rolled out this year but with all the complexities involved, it looks like it will be postponed to the 2023 tax year. Expect to see the 1099 K form by 2024.