Overview
Beginning in 2025, the One Big Beautiful Bill Act introduces a temporary deduction that allows taxpayers to deduct up to $10,000 in auto loan interest paid per year.
To qualify, the vehicle must:
Be new and for personal use
Be assembled in the United States
Weigh under 14,000 pounds
Leased or used vehicles, as well as those used for business or fleet programs, do not qualify.
Eligibility and Reporting Requirements
This deduction is available to all taxpayers, whether you itemize deductions or take the standard deduction.
Additional requirements include:
The loan must be secured by a lien on the vehicle.
Lenders must report interest of $600 or more using a new IRS form.
Borrowers must include the vehicle identification number (VIN) on their tax return to verify eligibility.
Income Limitations
The deduction begins to phase out once your Modified Adjusted Gross Income (MAGI) exceeds:
$100,000 for single filers
$200,000 for joint filers
Even if you don’t qualify for the full $10,000 deduction, this provision could still offer valuable savings for eligible car buyers.
Plan Ahead for Potential Savings
If you’re considering purchasing and financing a new car in the next few years, review your eligibility now. This deduction could be a useful tax planning opportunity that lowers your taxable income while helping offset borrowing costs.
For guidance on how this deduction fits into your broader financial strategy, please call us at (401) 921-2000 or contact us here.
Overview
On March 25, 2025, President Trump signed Executive Order 14247, “Modernizing Payments To and From America’s Bank Account.”
Beginning September 30, 2025, the federal government will no longer issue paper checks for payments, including individual tax refunds.
For taxpayers filing 2025 tax returns in 2026, this means direct deposit information must be provided or refund processing could be delayed.
Why Is This Happening?
The Executive Order was created to achieve three main goals:
- Protect taxpayers
- Speed up refunds
- Cut administrative costs
Protecting Taxpayers
As our society becomes increasingly paperless, mailed paper checks are viewed as a higher security risk compared to electronic payments.
- Paper checks are over sixteen times more likely to be lost, stolen, or altered than direct deposits or secure electronic transfers.
- Check fraud cases have nearly doubled in recent years.
- Executive Order 14247 aims to reduce these risks by requiring government payments via direct deposit.
While the IRS intends to eventually require all tax payments to be made electronically, final regulations have not yet been issued.
In the meantime, taxpayers are encouraged to use existing IRS electronic payment options for faster, more secure transactions.
Speeding Up Refunds
Starting September 30, 2025, the IRS will stop issuing paper refund checks. Direct deposit remains the fastest and most reliable way to receive your refund.
Although certain exceptions may apply (to be clarified by the IRS), taxpayers who file without banking information will:
- Receive a follow-up letter from the IRS, and
- Experience delays as their refund is processed manually.
To ensure smooth processing:
- Include your bank account and routing numbers when filing your tax return.
- If you do not currently have a bank account, visit:
- FDIC.gov/GetBanked
- MyCreditUnion.gov
These resources help you find low-cost or no-cost banking options that accept direct deposit.
Cutting Costs
Ending paper checks will also help the government save taxpayer money.
In 2024 alone, the cost of maintaining the infrastructure for digitizing paper records exceeded $657 million nationwide, according to the White House.
Reducing these expenses allows more funds to be directed toward improving electronic systems and fraud prevention.
What Should You Do Next?
Executive Order 14247 represents a major step toward a fully digital payment system for taxpayers. Preparing now will help you avoid refund delays and ensure compliance with new federal requirements.
If you have questions or need guidance on setting up direct deposit or preparing for these changes, please call us at (401) 921-2000 or contact us here.
The “One Big Beautiful Bill Act” ( P.L. 119-21) was signed into law on July 4, 2025. Included in the Bill are two new deductions for American workers that are retroactive to January 1, 2025. The “No Tax on Tips” and “No Tax on Overtime” provisions are designed to provide tax savings to the American worker.
No Tax on Tips (2025–2028)
This provision allows eligible individuals to deduct up to $25,000 annually in qualified tips from their taxable income. Qualified tips include voluntary cash or charged tips received from customers or through tip-sharing arrangements.
Eligibility Requirements:
- Must work in an occupation listed by the IRS as customarily receiving tips as of December 31, 2024. The IRS will publish this list by October 2, 2025.
- For self-employed individuals, the deduction cannot exceed net income from the business in which the tips were earned.
- The deduction begins to phase out for taxpayers with Modified Adjusted Gross Income (MAGI) over $150,000 ($300,000 for joint filers).
- Not available to employees or self-employed individuals involved in Specified Service Trades or Businesses (SSTBs) under section 199A.
- Taxpayers must include their Social Security number on their tax return and file jointly if married.
Important Notes: Both itemizers and non-itemizers can claim this deduction, and employers/payors will need to furnish tip-related statements to the IRS and the employee. Forms W-2, 1099, and other payroll return forms will not be updated for tax year 2025. The IRS is working on new guidance and updated forms for tax year 2026.
No Tax on Overtime (2025–2028)
Under this deduction, individuals may deduct the overtime pay they receive beyond their regular rate of pay, such as the “half” portion in time-and-a-half compensation. The maximum annual deduction is $12,500 ($25,000 for joint filers).
Deduction Details:
- Applies only to compensation reported on a W-2, 1099, or similar statements.
- The deduction begins to phase out for taxpayers with Modified Adjusted Gross Income (MAGI) over $150,000 ($300,000 for joint filers).
- Taxpayers must include their Social Security number on their tax return and file jointly if married.
Employers are required to report total qualified overtime compensation to the IRS and provide statements to employees. The overtime deduction is available for both itemizing and non-itemizing taxpayers.
Transition Relief and Next Steps
For workers in industries where tipping or overtime is common, these deductions represent a significant opportunity to reduce taxable income.
Stay tuned for updates as the IRS publishes more detailed guidance to support taxpayers and employers adjusting to these new reporting requirements ahead of the 2025 tax season. If you have questions about how to prepare or ensure compliance, our team is here to help.
The IRS has released the updated retirement plan contribution limits for 2025, effective as of January 1, 2025. This annual adjustment, designed to reflect cost-of-living changes, provides opportunities for individuals to bolster their retirement savings with slightly higher contribution limits. Here’s a breakdown of the key changes.
401(k), 403(b), and Most 457 Plans
The employee contribution limit for 401(k), 403(b), and most 457 plans will increase to $23,500 in 2025, up from $23,000 in 2024. This $500 increase may seem modest but is a valuable step up, offering employees a chance to put away a bit more in tax-advantaged savings over the coming year.
Catch-Up Contributions for Employees Aged 50 and Over
For individuals aged 50 and older, the catch-up contribution limit remains at $7,500. This means those eligible for catch-up contributions can contribute a total of $31,000 to their 401(k), 403(b), or 457 plan in 2025. This steady limit ensures that older employees still have ample opportunity to maximize their retirement savings.
As part of a change made in the SECURE 2.0 Act of 2022, there is a higher catch-up contribution for employees aged 60, 61, 62, and 63. For 2025 this catch-up amount is $11,250 instead of $7,500.
Individual Retirement Accounts (IRAs)
The contribution limits for Individual Retirement Accounts (IRAs) hold steady at $7,000 for 2025. Although there’s no increase this year, IRAs continue to offer a valuable option for individuals to build tax-deferred (or tax-free, in the case of Roth IRAs) retirement funds outside of employer-sponsored plans.
IRA Catch-Up Contributions
Individuals aged 50 and over can make an additional catch-up contribution of $1,000 to their IRAs, maintaining the total annual IRA contribution limit at $8,000 for this age group. This consistent catch-up provision remains an essential component for those looking to strengthen their retirement savings as they approach retirement.
Saver’s Credit Income Limits
The IRS has also adjusted the income thresholds for the Saver’s Credit, an incentive that provides a valuable tax credit to low- and moderate-income taxpayers who save for retirement. With these thresholds increasing for 2025, more individuals may qualify for this credit, further supporting retirement savings for those in lower income brackets.
What These Changes Mean for You
The 2025 updates reflect the IRS’s commitment to adjusting retirement savings opportunities to keep pace with inflation. For those already committed to retirement saving, the increased contribution limits provide a small but meaningful boost. For those just beginning or resuming contributions, the Saver’s Credit and catch-up provisions offer opportunities to build retirement security.
Remember, the 2025 contribution changes go into effect on January 1, 2025—an ideal time to review and adjust your retirement savings strategy to take full advantage of these updates.
If you have any questions about how these changes may apply to you, please call us at (401) 921-2000 or contact us here.
As part of the Fiscal year 2025 budget recently signed by the governor on July 29, 2024, the Massachusetts personal income tax code now conforms to the Internal Revenue Code as amended as of January 1, 2024.
The following six provisions are new or have been amended as a result of this legislation effective January 1, 2024.
Limitation on Noncorporate Excess Business Loans. Noncorporate taxpayers have been able to benefit from being able to deduct excess business losses up to $250,000, or $500,000 in the case of a joint return, since 2018 (adjusted for inflation). Under the Inflation Reduction Act of 2022, the loss limitation was extended through 2028 for federal tax instead of 2026. This limitation is also extended for Massachusetts personal income tax purposes through 2028 as well.
Change to Eligibility Requirements for Federal Charitable Contribution Deductions. Due to a code update Massachusetts conforms to any federal changes with respect to the charitable contribution deduction. Recent changes impact the eligibility requirements for qualified conservation contributions made bypass-through entities. Unless certain requirements are met, these contributions will not be treated as Qualified Conservation Contributions made bypass-through entities after December 29, 2022.
Repeal of Deduction of Interest and Dividends from Massachusetts Banks. Massachusetts will be repealing the deduction of interest and dividends from banks located in the state. This previously allowed for a deduction of $200 for a joint return or $100 for all other filing statuses. For tax years starting January 1st, 2024, the deduction will no longer be available.
Clarification on the Availability of the Title 5 Credit for Mandated Septic System Repairs, Replacements, Upgrades, or Sewer Connections. This provision provides clarity on what qualifies as eligible repairs, replacements, upgrades, or sewer connections that can be taken as a credit. Note to claim the credit the taxpayer must obtain a verification letter from the city or town in order to claim credit for the year the work was done.
Exemption from Joint Filing Requirement for Certain Married Couples. Amended the rule that a joint return had to be filed in Massachusetts if the couple were to file a joint federal return. If at least one spouse’s Massachusetts gross income did not exceed $8,000, a joint return does not have to be filed. This takes effect for tax year 2024.
Repeal of the Sales Tax Exemption for Certain Publications of Tax-Exempt Organizations. This provision repeals the sale tax exemption for sales of publications of any corporation, foundation, or institution organized under Code § 501(c)(3). This applies on all items except where the publications are produced in accessible format for individuals who cannot read print due to a disability. This is effective September 27, 2024.
Tax Amnesty Program for FY2025. This Act, which runs from November 1st through December 30, 2024, allows taxpayers to file any delinquent tax returns or pay unpaid tax debts with the benefit of penalties such as those for late filing or payment to be waived. During the 60-day period taxpayers can file proper returns but must pay the tax owed in a timely manner. This program will help benefit taxpayers who have not filed or have previously filed incorrect returns to get in compliance. Please review our other blog on this matter for further information.
For more information from the Commonwealth of Massachusetts website, click here.
If you have any questions about how this new legislation may apply to you, please call us at (401) 921-2000 or contact us here.
Massachusetts governor Maura Healey has signed into law the 2025 fiscal year budget which includes a new tax amnesty program set to go into effect in Fiscal Year 2025. This program offers a unique opportunity for taxpayers to clear their outstanding tax debts while avoiding most penalties. Here’s what you need to know about this upcoming initiative.
What is the Tax Amnesty Program?
The tax amnesty program is a 60-day initiative established by the Massachusetts Commissioner of Revenue. The program is designed to encourage taxpayers who have fallen behind on their taxes to come forward and settle their debts. Eligible taxpayers will be able to file delinquent or amended returns to take advantage of the program. This allows taxpayers to pay any outstanding tax and interest in exchange for the commissioner waiving most penalties.
When Does the Program Start?
The program will run from November 1, 2024, through December 30, 2024. This gives eligible taxpayers a short window to take advantage of the program before it expires at the end of the year.
Who is Eligible?
The amnesty program is available to any individual, business, trust, or estate not excluded under Section VII.A. This includes taxpayers who:
- Have failed to file a Massachusetts Tax Return due before December 31, 2024, or have not reported the full amount of tax properly due on previously filed tax returns before 2024-year end.
- Have filed an incorrect or insufficient Massachusetts return or has an assessment issued by the Commissioner of one of the following types:
- An unpaid and self-assessed tax liability before December 30, 2024; or
- A tax liability assessed by the Commissioner that remains unpaid on or before December 30, 2024.
All tax types (including sales, use, meals, and room occupancy) are eligible except for a few types. These include the deeds excise, abandoned bottle deposit, jet fuel excise, paid family and medical leave contributions, underground storage tank delivery fee, and health care coverage penalties.
Taxpayers who are participating in payment agreements currently will also be able to take advantage of the program. Any penalties already associated with the payment agreement plan will not be waived.
What are the Benefits?
Participating in the tax amnesty program can provide significant benefits to taxpayers. Most notably, the program allows taxpayers to pay their outstanding tax debts without incurring the usual penalties, such as late filing and late payment penalties on most types of tax. Note the commissioner does not have the authority to waive interest.
The program also includes a limited look-back period for eligible non-filers who choose to participate. This look-back is limited to a three-year window which means taxpayers who have failed to file or pay taxes that were due before January 1, 2022. Eligible taxpayers will not be required to file or pay any taxes due for periods before January 1, 2022, if they participate in the amnesty program. The Massachusetts DOR will also not initiate any audits for those periods.
Procedures
In general, the DOR will issue letters (Tax Amnesty Eligibility Letter) to eligible taxpayers with existing tax liabilities, interest or penalties. Taxpayers who do not receive the letter will still be eligible if they meet the requirements listed in section III of the program.
All requests must be submitted via the MassTaxConnect portal. The request must be submitted by tax type, and multiple requests can be submitted during the period. Proper documentation, including unfiled tax returns for all applicable tax types, must be submitted electronically.
Limitations
The Amnesty program has a few limitations as to who can participate. This includes taxpayers already in any litigation process with the Commissioner, those seeking refunds of overpayments, taxpayers who submitted fraudulent amnesty requests, those who do not owe any Massachusetts taxes, taxpayers who have already entered into a settlement agreement with the Commissioner, taxpayers who have previously been granted amnesty with respect to the same tax type, or those who are in bankruptcy.
Conclusion
The new Massachusetts tax amnesty program represents a valuable opportunity for taxpayers to resolve their outstanding tax liabilities and avoid most penalties. However, it is important to act quickly, as the program is only available for a limited time during the 60-day window starting November 1st through December 30th. You can read more about the Amnesty program in this article.
If you have any questions about how the amnesty program may apply to you, please call us at (401) 921-2000 or contact us here.
In order to enhance transparency in the financial statement presentation and disclosure of supplier finance programs, the Financial Accounting Standards Board (FASB) issued ASU 2022-04, Disclosure of Supplier Finance Program Obligations and related amendments.
Supplier finance programs (AKA structured payables, payables finance, or reverse factoring) allow buyers to offer early payment for goods or services purchased from a supplier by way of an intermediary, which is essentially a third-party lender.
While each of the three parties involved have various motivations for participating in these agreements, the key advantage to a buyer is the ability to obtain extended payment terms and potential monetary benefits passed down to the buyer from the intermediary.
FASB Requires the Following Disclosures
Qualitative Disclosures
- Key terms of the program, including a description of the payment terms (i.e. payment timing and basis for determination).
- Assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider.
- A description of where the obligations are presented in the balance sheet.
Quantitative Disclosures
- Amounts outstanding that remain unpaid by the buyer as of the end of the period.
- Rollforward of obligations stated in the balance sheet. This includes the amount confirmed and outstanding at the start of the period, the amount added during, the amount settled during, and the amount outstanding at period end.
These required disclosures do not impact the recognition, measurement, or financial statement presentation of the obligations covered by supplier finance programs.
The majority of these required disclosures became effective in 2023. Disclosure of the rollforward information described above became effective in 2024.
Questions on Supplier Finance Programs?
Are you looking for more information on supplier finance arrangements, and related tracking and reporting of these programs? If so, you may contact us at (401) 921-2000, or fill out our contact form.
The rules of 401(k) plan eligibility for Long-Term Part-Time employees (LTPT) have significantly changed. This is a result of the SECURE Act of 2019 and SECURE Act 2.0 of 2022. The new rules took effect at the beginning of 2024 and have widened the circle of eligible 401(k) plan participants for many employers. This includes part-time employees on their payroll.
To stay compliant, employers are required to closely scrutinize, and perhaps modify, how payroll and labor hours are tracked. Under the old rules, employees who completed one full year of employment (~1,000 hours of service) were eligible to participate in a 401(k) plan.
401(k) Plan Updates for LTPT Employees
As of January 2024, part-time employees over 21 who work for at least 500 hours over three consecutive years are permitted to contribute to a 401(k). Beginning in 2025, the consecutive annual requirement drops to over two years.
While the rule change will affect many employers, certain exclusions from LTPT qualification do apply. These include:
- Employees covered by a collective bargaining agreement.
- Non-resident aliens who receive no US sourced earned income.
The rules related to employer contributions have not changed. Though free to do so, employers aren’t required to make employer contributions through matching or non-elective contributions for LTPT employees.
Questions?
Need information on whether any of your employees qualify as LTPT, when they become eligible to participate in your 401(k) plan, or related reporting requirements? Call us at (401) 921-2000 or fill out our contact form.
Massachusetts governor Maura Healey has signed into law the 2025 fiscal year budget which includes a new tax amnesty program set to go into effect in Fiscal Year 2025. This program offers a unique opportunity for taxpayers to clear their outstanding tax debts while avoiding most penalties. Here’s what you need to know about this upcoming initiative.
What is the Tax Amnesty Program?
The tax amnesty program is a 60-day initiative established by the Massachusetts Commissioner of Revenue. The program is designed to encourage taxpayers who have fallen behind on their taxes to come forward and settle their debts. In exchange for their participation and compliance, the commissioner will waive most penalties.
When Does the Program Start?
While the exact start date has not been announced, the program is set to run in FY 25 and will end by June 30, 2025. This gives taxpayers a limited window to take advantage of this opportunity.
Who is Eligible?
The amnesty program applies to tax returns due on or before December 31, 2024. The specific tax types, tax periods covered, and applicable look-back periods will be determined by the tax commissioner.
What are the Benefits?
Participating in the tax amnesty program can provide significant benefits. Most notably, the program allows taxpayers to pay their outstanding tax debts without incurring the usual penalties, including late filing and late payment penalties. Note the commissioner does not have the authority to waive interest.
Conclusion
The new Massachusetts tax amnesty program represents a valuable opportunity for taxpayers to resolve their outstanding tax liabilities and avoid most penalties. However, it’s important to act quickly, as the program is only available for a limited time.
If you have any questions about how the amnesty program may apply to you, please call us at (401) 921-2000 or contact us here and stay tuned for more updates as we get closer to the launch of the program.
As part of the budget recently signed by the governor on June 17, 2024, Rhode Island announced legislative changes to several tax laws. The majority of these legislative updates will go into effect on January 1, 2025, and cover a variety of areas.
For pass-through businesses in the State, such as S Corporations and Partnerships, there will be a significant change to the pass-through entity (PTE) credit. The percentage that an owner receives for the tax paid by the entity has been lowered from 100% to 90%. This change aligns with neighboring states’ treatment of similar pass-through credits. Since the pass-through entity tax is elective in Rhode Island, the federal tax savings from the resultant deduction will need to be reevaluated in 2024 to ensure the benefit continues to outweigh the cost.
The Net Operating Loss (NOL) Carryforward period will be increased to 20 years from 5 years. Rhode Island will continue to limit the NOL deduction amount to the federal NOL allowed in that tax year.
For individual tax filers, the Pensions and Annuity Income Modification will increase from $20,000 to $50,000 (or $100,000 for Married Filing Jointly filers). However, the qualifying income thresholds already established will not be impacted.
The $50 fee associated with filing RI Estate Tax returns will be eliminated starting January 2025, along with the $25 application fee for the certificate of exemption for Sales and Use tax for certain Tax-exempt organizations.
Many Rhode Island tax credits have also been extended, clarified, or expanded under the current legislative updates effective July 1, 2024. This includes the popular Motion Picture Production Tax Credit and the Historic Preservation Tax Credit.
If you have any questions about how this new legislation may apply to you, please call us at (401) 921-2000 or contact us here.