New York State has enacted a new annual tax surcharge — known as the Pied-à-Terre Tax — targeting non-primary residences in New York City. Signed into law on May 28, 2026, as part of the 2026–2027 New York State Budget Bill, the tax adds Sections 1350–1356 to the New York State Tax Law. Here are the key facts:
What Is It?
- The Pied-à-Terre Tax applies to any “covered owner” of a “covered property” that does not qualify as a primary residence.
- Covered owners include owners of Class 1 residential property (1–3 family homes), co-op shareholders, condo unit owners, and in some cases, majority or beneficial owners of entities or trusts that hold covered residential property.
Who May Be Exempt?
Your property generally will not be subject to the surcharge if it is used as the primary residence of:
- One or more covered owners;
- An immediate family member of a covered owner; or
- A tenant or subtenant who occupies the property under a bona fide, arm’s-length lease with a term of at least one year.
Tax Rates and Thresholds
- Phase 1 (July 1, 2026 – June 30, 2028): Class 1 homes valued at $5 million or more face rates from 0.8% to 1.3%; condos and co-ops valued at $1 million or more face rates from 4% to 6.5%.
- Phase 2 (July 1, 2028 – June 30, 2031): The threshold rises to $5 million for all property classes, with rates aligning to the Class 1 structure.
Revenue and Concerns
- The tax is projected to generate at least $500 million annually for New York City.
- The City Comptroller’s report notes that actual revenue could fall to $340–$380 million depending on behavioral changes such as renting, selling, or occupancy shifts.
- Significant administrative, valuation, and legal challenges remain unresolved, and litigation.
What This Means for You
If you own a high-value second home, co-op, or condo in New York City, this law may directly affect your tax obligations beginning July 1, 2026. Proactive tax planning is critical. In addition, for taxpayers who have received correspondence relating to possibly being subjected to the surcharge tax there is a surcharge exemption application that can be submitted online via NYC Department of Finance by September 18, 2026. This applies to residential homes and condos, including cooperative units.
Contact DiSanto, Priest & Co. today to discuss how the Pied-à-Terre Tax may impact your real estate holdings and overall tax strategy. Please call us at (401) 921– 2000 or contact us here.
As part of the Fiscal Year 2027 state budget, Rhode Island has enacted a new tax on high-income individuals. Commonly referred to as the “Millionaires Tax,” the new law imposes an additional tax on Rhode Island taxable income exceeding $1 million, beginning with the 2027 tax year.
How the New Tax Works
The legislation creates a fourth Rhode Island Individual tax bracket, increasing the top marginal tax rate from 5.99% to 8.99% through a three-year phase-in. The new rates on Rhode Island taxable income over $1 million are:
- 6.99% for tax year 2027
- 7.99% tax year 2028
- 8.99% for tax year 2029
Importantly, the higher tax rate applies only to Rhode Island taxable income exceeding $1 million. Income below that threshold continues to be taxed at the applicable lower rates.
Estates and Trusts
The legislation also applies the phased-in surtax to estates and trusts, but at a substantially lower taxable income threshold of $36,427 (adjusted annually for inflation). The additional tax will be phased in as follows:
- 1% beginning in 2027
- 2% beginning in 2028
- 3% beginning in 2029 and thereafter
Why Was the Millionaires Tax Enacted?
The General Assembly enacted the surtax to generate additional revenue to fund several priorities included in the FY 2027 budget, including:
- Rhode Island’s first Child Tax Credit
- Expansion of the Social Security income tax exemption
- Increased investments in K-12 and higher education
- Funding for healthcare initiatives
- Investments in housing and infrastructure
Planning Ahead
Although the new tax will affect a relatively small percentage of Rhode Island taxpayers, those who expect significant business income, investment income, or gains from the sale of appreciated assets should evaluate how the changes may impact their overall tax liability.
With the new tax taking effect in 2027, taxpayers have an opportunity to begin planning now. Depending on your circumstances, strategies such as accelerating or deferring income, timing the sale of appreciated assets, maximizing available deductions, or reviewing entity structures may help reduce the impact of the higher tax rate.
We’re Here to Help
If you expect your Rhode Island taxable income could exceed $1 million in future years, now is the time to begin planning. Our tax professionals can help you understand how the new law may impact your situation and develop strategies to minimize its effect.
For more information or to discuss your tax planning options, please call us at (401) 921-2000 or contact us here.
A business valuation can be one of the most significant financial issues in a divorce, and understanding the valuation process can help you navigate the financial complexities involved. Below are answers to key questions that many business owners face during a divorce.
Q: Who determines what my business is worth?
A: In a divorce, the value of your business is most often determined by a qualified business valuation expert. The expert performs an independent analysis using accepted valuation methodologies and the specific facts of your business. Ultimately, if the parties cannot reach an agreement, the court determines the value after considering the evidence presented.
Q: What goes into determining the value of my business?
A: A business valuation considers many factors, including the company’s historical and expected financial performance, assets and liabilities, industry conditions, economic trends, ownership structure, and the risks associated with the business. The valuation expert also considers the purpose of the valuation and the applicable legal standard of value.
Q: What financial documents will the valuation expert need?
A: While every engagement and every business is different, common requests include tax returns, financial statements, general ledgers, bank statements, payroll records, depreciation schedules, loan documents, ownership records, customer or vendor information, and other documents needed to understand the company’s operations, financial performance, and risk profile.
Q: How do personal expenses paid by the business affect the valuation?
A: Personal expenses paid through the business can affect the value of the business by understating its true earnings. While these expenses are typically adjusted during the valuation process, significant personal expenditures or questionable transactions may require a separate forensic accounting analysis to determine the company’s normalized earnings.
Q: Why does the valuation expert adjust the company’s financial information?
A: Financial records often contain items that are not representative of normal business operations. Adjustments, referred to as normalization adjustments, remove unusual, nonrecurring, or discretionary items so the valuation reflects the company’s ongoing earning capacity.
Q: Will my salary affect the value of my business?
A: It can. If an owner’s compensation is significantly above or below what would be paid to someone performing similar duties, the valuation expert may adjust compensation to a market-based amount. This helps estimate the business’s true profitability independent of the owner’s personal compensation decisions.
Q: How long does a business valuation typically take?
A: The timeline depends on the complexity of the business and how quickly necessary documents are provided. Many valuations are completed within several weeks, while more complex matters involving multiple entities, incomplete records, or extensive forensic analysis may take several months.
Q: What happens if my accounting records are incomplete or inaccurate?
A: Incomplete records do not necessarily prevent a valuation from being performed. The valuation expert may use alternative sources of information, perform additional analyses, or make reasonable assumptions where appropriate based on the information available. However, incomplete records can increase the time, cost, and complexity of the engagement.
Q: Can the value of my business change while the divorce is pending?
A: Yes. Business value can change as the company’s financial performance, industry conditions, or the broader economy changes. In most divorce matters, however, the valuation date is established based on applicable law, agreement of the parties, or court order, and the valuation is performed as of that date.
Q: How can I prepare for a business valuation and help the process go more smoothly?
A: Organize your financial records, respond promptly to document requests, and be prepared to explain how your business operates. Providing complete and accurate information early in the process may reduce delays and allow the valuation expert to perform a more efficient analysis.
Q: Can I use the valuation that was prepared for another purpose, such as (estate planning, SBA loan, buy-sell agreement, etc.?
A: Usually not. A valuation prepared for another purpose may use a different standard of value, valuation date, or assumptions than those required in a divorce matter. While a prior valuation may provide useful background information, a new valuation is often necessary to address the specific legal requirements of the case.
Q: What happens if my business had an unusually good or bad year?
A: A valuation expert typically considers multiple years of financial performance rather than relying on a single year. If a particular year was affected by unusual or nonrecurring events, appropriate adjustments may be made; consequently, the valuation reflects the business’s ongoing earning capacity rather than a temporary spike or decline.
Conclusion
To ensure you are fully informed during this process, it is important to work with an experienced valuation professional. At DiSanto, Priest & Co., our Business Valuation, Forensic and Litigation Support team has extensive experience providing independent business valuations and forensic accounting services in matrimonial matters. We are committed to delivering well-supported analyses and guiding clients and their attorneys throughout the valuation process.
To learn more, please call us at (401) 921-2000 or contact us here.
What You Need to Know for Upcoming Tax Filings and Payments
Beginning December 24, 2025, the U.S. Postal Service (USPS) implemented a significant change to how postmark dates are determined. While this change does not alter tax law itself, it can affect whether mailed tax forms and payments are considered timely filed. This update is especially important for taxpayers who still rely on mailing paper returns, extension requests, or tax payments.
What Changed?
Historically, a postmark generally reflected the date you dropped mail in a USPS mailbox or handed it to a postal employee. Under the new rule, the postmark date now will reflect the date the item is first processed at a USPS sorting facility, which can occur one or more days after mailing.
Why This Matters for Taxes
The IRS and many state taxing authorities rely on the postmark date to determine whether a tax return, extension, or payment was submitted on time. This is known as the “mailbox rule.”
With the new USPS process:
- A return mailed on the due date (such as April 15) may receive a postmark dated after the deadline.
- Payments that appear late based on the postmark could be subject to penalties and interest, even if you mailed them on time.
- Extension requests, estimated tax payments, amended returns, and refund claims may also be affected.
Common Situations at Risk
You may be impacted if you mail:
- Individual or business income tax returns
- Extension requests (Forms 4868 or 7004)
- Estimated tax payments
- Balance due payments with a paper return
- State or local tax filings that rely on postmarks
How to Protect Yourself
To reduce the risk of late filing or payment issues, we recommend the following best practices:
- Consider Electronic Filing and Payment: E-filing and electronic payments provide immediate confirmation and eliminate postal timing concerns entirely.
- Use Certified or Registered Mail: These options provide proof of mailing and an acceptance date, which can be critical if a deadline is questioned.
- Request a Counter Postmark: If you mail time sensitive documents, take them to a USPS counter and request a same day postmark.
- Obtain a Certificate of Mailing: This inexpensive USPS service provides official proof of the date you mailed an item.
- Mail Early: Avoid mailing tax documents on the due date. Send them several days in advance to allow for processing time.
Our Recommendation
If possible, electronic filing and electronic payment methods are the safest and most reliable options under the new USPS rules. If you prefer mailing documents, planning ahead is now more important than ever.
If you have questions about how this change may affect your specific situation, or if you would like help transitioning to electronic filing or payments, please call us at (401) 921-2000 or contact us here.
The IRS has released the updated retirement plan contribution limits for 2026, effective January 1, 2026. These annual cost-of-living adjustments give taxpayers the opportunity to increase retirement contributions and strengthen long-term financial planning. Below are the most important changes to consider as you prepare for the upcoming year.
401(k), 403(b), and Most 457 Plans
The employee contribution limit for 401(k), 403(b), and most 457 plans will increase to $24,500 in 2026 (up from $23,500 in 2025).
While a $1,000 bump may appear modest, it still provides:
More tax-advantaged space to save
Additional room to build long-term retirement security
Catch-Up Contributions (Age 50 and Over)
For individuals aged 50 and older, the catch-up contribution limit increases to $8,000, allowing a total contribution of $32,500 to a 401(k), 403(b), or 457 plan in 2026.
Special Catch-Up Rule for Ages 60–63
Under the SECURE 2.0 Act, individuals aged 60, 61, 62, and 63 get an even higher catch-up amount:
$11,250 in 2026 (instead of $8,000)
Designed to maximize savings during peak earning years
IRA Contribution Limits
The annual IRA contribution limit will rise to $7,500 in 2026. IRAs remain a strong tool for building tax-deferred or tax-free (Roth) retirement savings outside of employer plans.
IRA Catch-Up Contributions
Individuals aged 50 and over may contribute an additional $1,100, bringing their total IRA limit for 2026 to $8,600.
This long-standing catch-up allowance is especially beneficial for taxpayers looking to accelerate savings in the years leading up to retirement.
Higher Income Limits for the Saver’s Credit
The IRS has raised the income thresholds for the Saver’s Credit, helping more low- and moderate-income taxpayers qualify for this valuable retirement incentive. These expanded limits may increase eligibility and make retirement savings more accessible.
What These Changes Mean for You
The 2026 updates show the IRS’s continued commitment to ensuring retirement savings options keep pace with inflation. This means:
Current savers can boost contributions and take advantage of increased limits.
New or returning savers may benefit from expanded credits and catch-up provisions.
Now is an excellent time to review and adjust your retirement strategy ahead of the new limits.
If you’d like help evaluating your retirement plan or maximizing contribution opportunities, please call us at (401) 921-2000 or contact us here.
Overview
Rhode Island’s 2026 Budget Bill introduces a new statewide tax on non-owner-occupied residential properties, widely referred to as the “Taylor Swift Tax.”
The nickname stems from Taylor Swift’s well-known Watch Hill mansion, a high-value Rhode Island vacation home that is typically unoccupied for much of the year. State legislators designed the tax to ensure that owners of luxury homes who do not primarily reside in them contribute more toward municipal and state services funded by real estate taxes.
Beginning July 15, 2025, and for every tax year thereafter, the State of Rhode Island will identify properties that meet the new criteria. The tax officially begins on July 1, 2026, requiring additional planning, record keeping, and financial strategy for affected owners.
Why the New Tax Was Created
According to the statute, owners of high-value, non-owner-occupied properties:
Do not always contribute a proportionate share of state and local service costs
Benefit from essential services funded by real estate taxes
Should be encouraged to use their properties in ways that prevent deterioration and support viable housing stock
The law is designed to incentivize productive use of properties and increase revenue from luxury homes not serving as primary residences.
Who Is Subject to the “Taylor Swift Tax”?
Not all non-owner-occupied properties qualify. To fall under the tax, a property must meet all of the following:
Qualifying Criteria
Assessed value exceeds $1,000,000, adjusted annually for CPI
Not used as the owner’s primary residence
Not occupied by the owner for at least half of the year
Example: If the property is rented for more than 183 days, the tax does not apply, and landlord-tenant rules govern instead
Tax starts July 1, 2026
Tax Rate and Example Calculation
Tax Rate
$2.50 per $500 of assessed value above $1,000,000
This tax is in addition to existing property taxes
Example
Assessed value: $3,000,000
$3,000,000 − $1,000,000 = $2,000,000
$2,000,000 ÷ $500 = 4,000 units
4,000 × $2.50 = $10,000 annual tax due
Payment Schedule
Paid quarterly, beginning March 15 of each taxable year
As of now, the State has not yet released regulations or forms, so further guidance is expected.
Preparing for the New Tax
If you own multiple properties or high-value vacation homes, this law could affect your long-term tax planning. Early preparation will help you understand eligibility, calculate potential tax impact, and explore planning opportunities.
Our team can help you evaluate your properties and prepare for compliance. For guidance, please call us at (401) 921-2000 or contact us here.
Expanded Deductions for Standard Deduction Filers
Beginning in 2026, the One Big Beautiful Bill Act makes it easier for individuals to support charitable organizations while receiving meaningful tax benefits.
Taxpayers can now claim a charitable deduction even if they take the standard deduction, with the following annual limits:
$1,000 for individuals
$2,000 for married couples filing jointly
This provides new flexibility and rewards taxpayers who want to give back without needing to itemize.
Higher AGI Limit for Cash Contributions
The law also raises the limit on cash contributions to public charities:
Previous cap: 50% of Adjusted Gross Income (AGI)
New cap: 60% of AGI
This increase gives taxpayers more room to make larger charitable gifts and potentially reduce their taxable income even further.
Encouraging Generosity Through Tax Savings
These updates are designed to:
Support nonprofit organizations
Encourage greater charitable giving
Offer meaningful tax savings to donors
Whether you’re planning small donations or larger year-end contributions, these changes can help you structure your giving more strategically.
Need Help Planning Your Charitable Giving?
If you’re planning donations or want to align your charitable goals with your tax strategy, our team is ready to assist.
For guidance, please call us at (401) 921-2000 or contact us here.
Immediate Expensing Begins in 2025
Starting in 2025, the One Big Beautiful Bill Act allows businesses to immediately deduct domestic Research and Development (R&D) expenses. This marks a major shift from the prior rules, which required companies to amortize R&D costs over multiple years.
This change:
Simplifies tax treatment
Reduces up-front tax burdens
Improves cash flow
Supports ongoing innovation and development
The provision applies through 2029 and benefits companies investing in new products, technologies, and process improvements.
Cash Flow Benefits and Accounting Considerations
With immediate expensing restored, businesses with eligible R&D activities should:
Review current accounting methods
Update expense tracking procedures
Confirm documentation supports qualification
Prepare to claim the full deduction once the law takes effect
Proactive planning ensures smooth implementation and maximized tax benefits.
Treatment of Previously Capitalized R&D Costs
The Act also provides relief for expenses incurred in earlier years. All taxpayers may elect to deduct their remaining unamortized R&D expenses beginning in tax years after December 31, 2024, over a one- or two-year period.
Additionally, certain small taxpayers may file amended returns for 2022–2024 to deduct R&D expenses that were previously required to be capitalized.
Get Guidance for Your R&D Tax Strategy
If you need help evaluating your R&D costs, adjusting accounting methods, or planning for these changes, our advisors are ready to assist.
For support, please call us at (401) 921-2000 or contact us here.
Overview
Beginning in 2025, the One Big Beautiful Bill Act significantly increases the cap on the State and Local Tax (SALT) deduction: from $10,000 to $40,000, with annual inflation adjustments through 2029.
This change provides long-awaited relief for taxpayers in high-tax states, who were previously limited under the old $10,000 cap.
Who Benefits from the Expansion
The increased deduction is expected to help:
Homeowners who pay high property taxes
Taxpayers in states with above-average income or sales taxes
Families who itemize deductions rather than take the standard deduction
However, the benefit phases out for higher-income taxpayers with Modified Adjusted Gross Income (MAGI) above $500,000.
What This Means for You
With the higher cap, itemizing deductions may once again make sense for many taxpayers who previously chose the standard deduction.
If you live in a high-tax state, this adjustment could translate into thousands of dollars in potential tax savings depending on your income level, home ownership status, and other deductible expenses.
Plan Ahead for 2025
Tax planning will be key to maximizing this new opportunity. Consider reviewing your 2024 and 2025 income, property tax, and state tax obligations early to see how the expanded cap might impact your filing strategy.
If you’d like help running the numbers or determining whether itemizing is the right move for you, please call us at (401) 921-2000 or contact us here.
What is the One Big Beautiful Bill (Public Law 119-21)?
On July 4th of 2025, Congress signed the One Big Beautiful Bill Act (OBBBA) into law. The bill introduced many tax changes impacting federal individual, trust, estate and corporate taxation.
Key Features of the OBBBA:
- New tax treatment of overtime and voluntary tips (Learn more about “No tax on tips and overtime”)
- Temporary additional deduction for seniors (Learn more about additional deduction for seniors)
- Deduction for qualified car loan interest paid
- Ability to fully expense certain business property
- Ability to fully expense domestic research and experimental expenditures
- Modification of limitation on business interest
- Extension and enhancement of deduction for qualified business income
- Increased dollar limitations for expensing of certain depreciable business assets
While Massachusetts typically adopts changes to the provisions of the federal tax code, there are some exceptions to its conformity. On October 21, 2025, the Massachusetts Department of Revenue issued a Working Draft (DRAFT) of a Technical Information Release (TIR) on whether the Massachusetts tax law will conform or not to the OBBBA.
Key Differences between Massachusetts and Federal Tax Code
Massachusetts has chosen to decouple from the Internal Revenue Code (IRC) and not adopt the new tax treatment of overtime and tips, nor will it be implementing the deduction for qualified car loan interest paid. They also will not be following the full expensing of business property or the deduction for qualified business income (QBI). However, Massachusetts will be conforming to the full expensing of domestic research and development expenses and modification of limitation of business interest. Additionally, the state will follow federal provisions for many of the changes in treatment of depreciable assets, including, but not limited to, the increased dollar limitations for expensing Section 179 property and bonus depreciation for qualified production property.
Keep in mind that this TIR is issued in DRAFT form and is subject to change.
Federal and state tax codes can be complex, but it is important to understand the differences and how they affect you and your business. If you need assistance in navigating these new changes to federal and state tax laws, our team is committed to helping you prepare for the upcoming tax season and your long-term tax outlook. For guidance, please call us at (401) 921-2000 or contact us here.