What the New Law Means for Businesses
The One Big Beautiful Bill Act restores 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025. Prior to this law change, bonus depreciation was set to phase out completely over the next couple of years. The deduction is now permanent at the favorable 100% rate. This means many businesses can immediately deduct the full cost of machinery, equipment, and other eligible assets, which frees up capital and reducing tax liability in the year of purchase.
State Non-Conformity and Tax Planning
Several states, including Rhode Island, do not conform to this law – meaning they do not allow the 100% deduction. We can work with you to maximize your tax savings between bonus depreciation and 179 expense.
If your business is planning a purchase or expansion, we can help structure your investments for maximum tax efficiency. Contact our team today at (401) 921-2000 to get started.
Massachusetts has adopted 830 CMR 62B.2.4, introducing new withholding requirements on the sale of real estate by non-residents when the gross sales price is $1,000,000 or more. These rules are designed to ensure proper collection of state taxes and will take effect for real estate closings on or after November 1, 2025
What Is 830 CMR 62B.2.4?
This regulation requires a withholding agent—often the closing attorney, escrow agent, or title company—to withhold a portion of sale proceeds at closing and remit it to the Massachusetts Department of Revenue (DOR). The withholding applies when the gross sales price meets or exceeds $1,000,000, and the seller is a non-resident.
Key Features and Requirements
- Effective Date: Applies to closings on or after November 1, 2025.
- Threshold: Gross sales price of $1,000,000 or more.
- Withholding Agent: Responsible party for withholding and filing—typically a closing attorney or title company. If no agent exists, the buyer assumes this role.
- Calculation Options:
- Default: Withholding based on gross sales price.
- Alternative: Seller may elect to withhold based on estimated net gain (gross price minus adjusted basis and sale-related expenses).
- Tax Rates:
- For personal income tax: 4% of gross price, or 5% of estimated net gain, plus 4% surtax on amounts exceeding surtax thresholds.
- For corporate excise tax: 4% of gross price, or 8% of estimated net gain.
- Transferor’s Certification: Must be completed by each seller at or before closing. It allows sellers to claim exemption, reduced withholding, or elect the alternative calculation.
- Filing and Remittance: Agent must file Form NRW and remit withheld taxes electronically via MassTaxConnect within 10 days of closing, even if zero withholding applies.
- Exemptions include full-year Massachusetts residents, pass-through entities, publicly traded partnerships, estates of resident decedents, corporations with MA business presence, exempt organizations, government entities, various financial institutions, and certain REITs—provided a Transferor’s Certification is submitted.
- Other Exceptions: Reduced withholding may apply in cases like sales where required withholding exceeds proceeds after debts, foreclosure sales, or involuntary conversions under IRC § 1033—if certified.
Why This Matters to Your Sale
- Significant Cash Flow Impact: Sellers may see sizable withholding at closing, especially for high-ticket properties.
- Planning Is Essential: Knowing whether you qualify for exemptions or wish to use the alternative net gain calculation can materially affect proceeds at closing.
- Increased Administrative Requirements: Transferor’s Certifications and Form NRW must be completed carefully and timely.
- Avoid Surprises: Non-residents, especially former MA residents or entities without a current MA presence, need proactive planning to manage tax and cash flow implications.
Professional Insight
As experienced CPAs, we know that at the time of closing, property sellers may not yet know the precise adjusted basis or net gain—making the gross-price withholding method the path of least resistance. However, electing the alternative method may yield substantial savings when properly supported. The Transferor’s Certification thus becomes a critical document, not only for withholding calculation but also for preserving your rights to exemptions or reductions.
For closing agents, understanding these updated rules is just as important. Failing to withhold, file, and remit properly can result in penalties and interest. Whether you’re a seller or agent, planning ahead with a tax advisor ensures smoother transitions and minimized financial risk.
Take Action Today!
Ensure compliance and support a smoother closing. We can help you:
- Evaluate whether withholding applies to your sale.
- Choose between gross-price or alternative calculation.
- Prepare and submit the Transferor’s Certification.
- File Form NRW and remit withholding through MassTaxConnect.
- Navigate potential exemptions or exceptions strategically.
Contact us at (401) 921-2000 or via our website to safeguard your real estate transaction and financial outcome.
Rhode Island recently launched its Secure Choice Retirement Savings Program, a significant step toward addressing the retirement savings gap in the state. This initiative is designed to provide workers without access to employer-sponsored retirement plans an opportunity to save for their future, ensuring greater financial security in retirement.
What is Rhode Island Secure Choice?
The Rhode Island Secure Choice Retirement Savings Program is a state-administered, low-cost retirement savings solution designed to address the growing retirement savings crisis. Signed into law in 2024, this program mandates certain employers to provide a retirement savings option to their employees through payroll deductions.
Key Features and Requirements
- Purpose: Enables private-sector employees to save for retirement conveniently and affordably.
- Mandatory Participation: Applies to employers with 5 or more employees who do not already offer a retirement plan.
- Phased Implementation: Employers with over 100 employees must comply within 12 months, those with over 50 within 24 months, and all eligible employers within 36 months of the program’s launch.
- Employee-Centric: Employees are automatically enrolled but may opt out anytime. Savings are portable (can be taken to different employers) and owned by the employee.
Benefits for Small Businesses
- Enhanced Employee Retention: Offering a retirement plan helps attract and retain talent, showing employees you value their future.
- Compliance Ease: The program minimizes administrative burdens and legal liabilities for employers, as it is state-managed.
- Cost-Effective Solution: Employers face no setup fees, and the program is structured to reduce ongoing costs.
Why Retirement Savings Matter
Retirement savings programs not only secure employees’ financial futures but also enhance workplace morale and loyalty. With nearly 70% of workers at small businesses lacking retirement savings options, Secure Choice offers a practical solution.
Take Action Today!
Ensure compliance and support your employees’ financial well-being. Let us help you navigate these changes with confidence. For expert guidance on implementing the Rhode Island Secure Choice Retirement Savings Program and aligning it with your business’s financial strategy, please call us at (401) 921-2000 or contact us here.
The Internal Revenue Service has announced the increases in the annual gift tax exclusion and the lifetime estate and gift tax exemption for calendar year 2025.
What are Gift Tax Exclusions?
The annual gift tax exclusion allows taxpayers to transfer gifts to unlimited donees without experiencing gift taxes up to a designated annual amount. The lifetime estate and gift tax exemption provides the limit for lifetime gifts as of the date of the gift or date of death before incurring a gift or estate tax liability.
What’s Changing?
For the 2025 tax year, the annual gift tax exclusion is increased by $1,000 to a total of $19,000. The exclusion covers gifts an individual makes to each donee per year. Married taxpayers can combine their gift tax exclusion as they can share their two annual exclusions. As an example, married taxpayers with three children could potentially transfer $38,000 a year to each child or a total of $114,000 without incurring any gift taxes.
The annual gift tax exclusion is also an important consideration for estate planning purposes. Taxpayers can make gifts up to that amount before utilizing any of their lifetime estate and gift tax exemption. The value of any gifts in excess of the annual gift tax exclusion would then be subtracted from the lifetime exemption. As the lifetime exemption gets used over the taxpayer’s lifetime, the amount that can be excluded from the taxable estate upon death also decreases. For 2025, the lifetime exemption will increase by $380,000 to $13,990,000. The total available to a married couple will be $27,980,000 in 2025.
Questions?
If you have any questions regarding estates, gifts, or any topics in this area, give us a call at (401) 921-2000, or fill out our contact form.
In a move that will be significant to many Massachusetts residents and businesses, Massachusetts Governor Maura Healey signed into law a tax package that will provide benefits of up to $1 billion. The bill was signed into law on October 4, 2023 by the governor, and the package includes provisions that will impact both income taxes and estate taxes. This third, and final, post focuses on changes to Massachusetts corporate income tax. For a deeper understanding of other aspects of this bill, read our previous posts on its impact on Estate Taxes and Individual Income Taxes.
Currently, Massachusetts requires most companies to use a 3-factor apportionment formula of property, payroll, and a double-weighted sales factor. The exception to this apportionment method is in relation to manufacturing companies, qualifying defense contractors, and mutual fund service corporations in which these companies must use a single sales factor apportionment method. The new tax bill in Massachusetts states that starting for tax years that end on or after January 1, 2025, all companies will adopt a single sales factor apportionment method. It is important to note that companies that manufacture in Massachusetts will need to continue to qualify as a manufacturing company under M.G.L CH. 62 s. 42B in order to continue claiming certain exemptions for property and sales/use tax and also the ability to claim the investment tax credit.
For companies that are based in Massachusetts with all or most of their property and payroll located in the state, this could be seen as beneficial in the fact that it could lower their overall apportionment percentage. Consequently, companies that are required to file a tax return in Massachusetts that only have sales in the state would generally experience a higher apportionment percentage than previous years with all facts considered the same. The Massachusetts government hopes that this change will remove a disincentive for companies to hire and place their headquarters in Massachusetts and attract more businesses to move to the state.
DiSanto, Priest & Co. can help you with corporate tax planning and navigate the tax opportunities created by the Massachusetts Tax Bill of 2023. Call us at (401) 921-2000 or submit our contact form to get started.
In a move that will be significant to many Massachusetts residents and businesses, Massachusetts Governor Maura Healey signed into law on October 4, 2023, a tax package that will provide benefits of up to $1 billion. The bill includes provisions that will impact both income taxes and estate taxes. This post highlights significant individual income tax changes. For a deeper understanding of other aspects of this bill, read our posts on its impact on Estate Taxes and Corporate Taxes.
Individuals who are required to file a return in Massachusetts will be subject to tax cuts involving decreases in certain tax rates, increases in deductions, and increases in tax credits that will reduce their income tax liability.
The reductions in certain tax rates include a 3.5% reduction in the tax rate on short-term capital gains, reducing the current rate from 12% to 8.5%. This reduction will go into effect for tax years starting on or after January 1, 2023. However, if a taxpayer is subject to the new Massachusetts “millionaires tax”, the 4% surtax will increase the short-term capital gain rate up to 12.5%.
Also, starting in 2024, married couples must file their Massachusetts tax returns using the same filing status (joint or separate) as their federal returns. This is to eliminate a loophole for taxpayers to separate their Massachusetts return without impacting their federal filings and potentially avoid the 4% millionaire surtax.
Further provisions of the new tax bill will increase various allowable deductions and tax credits for individuals. Most notably, the residents in Massachusetts who pay rent for their primary residence will witness an increase in the cap of the rental deduction from $3,000 to $4,000 starting in 2023. The government estimates that this increase will support around 800,000 renters in the state. Among the increases in tax credits for Massachusetts residents include enhanced benefits to the Earned Income tax credit and the Child and Dependent tax credit. Massachusetts individuals who receive an Earned Income tax credit on their federal return will now be allowed to take 40% of the federal credit as opposed to the previously allowed 30%. The Child and Dependent tax credit for Massachusetts residents will also be increased per dependent from $180 to $310 in 2023 and $440 in taxable years after that.
DiSanto, Priest & Co. can help you navigate the tax opportunities created by the Massachusetts Tax Bill of 2023. Call us at (401) 921-2000 or submit our contact form to get started.
In a move that will be significant to many Massachusetts residents and businesses, Massachusetts Governor Maura Healey signed into law on October 4, 2023 a tax package that will provide benefits of up to $1 billion. The bill includes provisions that will impact both income taxes and estate taxes. This post highlights estate tax implications and benefits. For a deeper understanding of other aspects of this bill, read our posts on its impact on Individual Income Taxes and Corporate Taxes.
Previously, Massachusetts estates that were valued at up to $1 million were exempt from the Massachusetts estate tax. In comparison to other states, this was tied for the lowest exemption threshold for states that impose an estate tax. There are currently many states that do not tax estates at all and those that do typically have exemption thresholds significantly higher than $1 million.
The new tax bill raises the threshold for estates to be taxed from the current $1 million threshold up to $2 million. In addition, the bill changes the current estate tax structure from a cliff test to a true exemption. Under the prior cliff test, if an estate exceeded $1 million the entire estate was taxable. By switching to a $2 million exemption, estates are now only taxed on the value of the estate above the $2 million exemption.
The changes are retroactive and apply to estates of residents who die on or after January 1, 2023, and continue forward for the foreseeable future as the $2 million exemption is not indexed for inflation.
For illustration purposes, below is an example of the impact of the new estate laws:
- Estates of Massachusetts residents with a value of $2 million who died before January 1, 2023, would be subject to a Massachusetts estate tax equaling $103,920.
- Estates of Massachusetts residents with a value of $2 million who die on or after January 1, 2023, would NOT be subject to a Massachusetts estate tax.
Although the threshold has doubled, it is still low in comparison to most other states. This new exemption threshold ranks 3rd lowest in the country above only Oregon and Rhode Island.
DiSanto, Priest & Co. can help you with estate tax planning and navigate the tax opportunities created by the Massachusetts Tax Bill of 2023. Call us at (401) 921-2000 or submit our contact form to get started.
The Inflation Reduction Act of 2022 (IRA) created Section 45X‒the Advanced Manufacturing Production Credit of the Internal Revenue Code. The IRA is the most significant climate legislation in U.S. history‒offering funding, programs, and incentives to accelerate the transition to a clean energy economy‒and will likely drive significant deployment of new clean electricity resources.
The credit is available for businesses that produce components related to clean energy and sell to an unrelated person or company. Products must be produced in the United States. Eligible component categories include solar energy components, wind energy components, inverters, end-products suitable to convert direct current electricity from one or more solar modules, qualifying battery components, and applicable critical minerals.
The credit for each eligible component varies and can be calculated based on the value of the component size or weight, the value per electric capacity, or a percentage of the cost of production.
For example, eligible wind energy components include a blade, nacelle, tower, offshore wind foundation with fixed or floating platform, and offshore vessel. Among these components, the credit varies. The credit for an offshore wind vessel can be an amount equal to ten percent of the sales price of such vessel. However, for any other wind energy component, there will be various fixed amounts multiplied by the total rated capacity expressed on a per watt basis of the completed wind turbine for which the component is designed.
There are three ways a business can realize the benefit of the credit:
- The credit can be applied on a federal income tax return against a federal tax liability with any amount of the credit that exceeds a current tax liability eligible for carry forward to future years.
- A business can transfer or sell the credit.
- There is also a direct pay election for certain eligible entities to receive payment.
There is a phase-out of the credit for eligible components sold after December 31, 2029.
Section 45X is one of many credits and incentives created by The Inflation Reduction Act of 2022, and there can be many complex layers of calculations to reach the credit amount.
DiSanto, Priest & Co. can help you navigate the credit and incentive opportunities created by The Inflation Reduction Act of 2022. Call us at (401) 921-2000 or submit our contact form to get started.
What’s meant by a “clean” set of books and records? It simply means that a company’s financial records are up-to-date, accurate, and organized. While the nature and scope of a firm’s books and records may differ amongst companies and across an industry, the importance of adequately maintaining books and records are of equal importance.
All too often, business owners become complacent in maintaining their company’s financial records. Owners turn their energies to other aspects of the business, such as sales and operations, and struggle with finding the time for this imperative function.
Why is this so important? While there are many reasons to dedicate the time and resources to maintaining a “clean” set of books and records, there are two main benefits.
First, up-to-date and accurate financial records contain a lot of information about a company’s operations, such as profitability, cash flow, and receivables from customers, to name a few. Such information is necessary to successfully manage operations and make informed, knowledgeable business decisions. Second, a “clean” set of books and records can make a company more valuable and more attractive to prospective buyers. The condition of a company’s books and records are a direct reflection of the ongoing condition of a business. This is very similar to the curbside appeal of a piece of property or home.
Some other reasons to maintain a “clean” set of books and records include meeting tax filing requirements, assisting with business plans, and providing the ability to perform year-end tax planning to help plan for and potentially reduce income taxes. While maintaining a “clean” set of books and records may not be the most exciting aspect of running a business, the benefits far exceed the detriment of not doing so.
DiSanto, Priest & Co.’s experienced team of professionals can assist you in realizing the value of having a “clean” set of books and records and can help you achieve this goal. Call us at (401) 921-2000 or submit our contact form to get started.
If you’re a commercial real estate investor, you may be aware of the complex rules in a Section 1031 Exchange, also known as a like-kind exchange. Our previously published blog post outlines the guidelines on this federal tax regulation. Many states follow the federal tax code and allow for the deferral of state income tax for like-kind exchanges; however, like-kind exchanges occurring between properties located in different states may have additional state tax implications to consider.
Some states require non-resident withholdings on real estate transactions that occur when an investor lives outside of the state. A handful of states – California, Massachusetts, Montana, and Oregon – have a “claw back” provision, allowing them to tax the gain on the property sale when the deferred gain originated from a property exchange located in their state. For example, if an investor sold a property in Massachusetts and purchased a replacement property in Florida, when the Florida property sells, Massachusetts may “claw back” and impose their state income tax on the gain.
Some of the states with the “claw back” provision have passed bills that require certain tax forms be filed along with a yearly tax return when doing a like-kind exchange. In California, for example, the bill “California AB 92” requires annual information reporting for taxpayers that claim non-recognition of gain or loss for like-kind exchanges with property outside of California. Form 3840 needs to be filed for 1031 exchange recognition, even if no tax return is required in California until the property is ultimately sold.
If you own investment properties in multiple states and have taken advantage of the 1031 Exchange, call us at (401) 921-2000 or submit our contact form to get started. We’re more than happy to assist you in determining state filing requirements.