Navigating the Tax Landscape: Aprio’s 2024 End-of-Year Tax Update
As the year winds down and individuals and businesses alike prepare for the upcoming tax season, understanding the evolving tax landscape becomes crucial. Aprio, a leading business advisory and accounting firm ranked among the top 25 firms in the nation, has unveiled its 2024 End of Year Tax Update. This comprehensive guide not only outlines the key tax updates for 2024 but also emphasizes important developments that will influence tax planning for 2025 and beyond.
The Looming Sunset of the TCJA Provisions
A significant highlight of Aprio’s update is the impending expiration—commonly referred to as the "sunset"—of various provisions from the 2017 Tax Cuts and Jobs Act (TCJA). Effective December 31, 2025, unless Congress intervenes, these provisions are poised to reshape the tax landscape dramatically. Areas affected include business taxation, individual income tax, estate planning, international regulations, employee retention credit programs, employment taxes, and state and local taxes.
John Rose, Director of National Tax Services at Aprio, notes, “While the upcoming tax year brings uncertainty for businesses and individuals alike, Aprio’s tax advisors are prepared to navigate any substantial changes. Our End-of-Year Tax Update provides a thorough examination of essential tax updates, potential pain points, and strategic opportunities across all tax domains.”
Key Insights from the 2024 Tax Update
Business Tax Changes
One of the most critical shifts anticipated in the business tax arena is the potential sunset of the Qualified Business Income Deduction (QBID) under Section 199A. As this 20% deduction faces expiration at the end of 2025, business owners should strategize how to optimize their tax positions before these changes take effect.
Individual Tax Implications
For individuals, the expiration of TCJA provisions could lead to an increase in tax marginal rates, reverting many taxpayers to pre-2017 tax levels. This shift is likely to entail a higher overall tax burden for a majority of individuals, necessitating proactive planning to mitigate the impact.
Estate Planning Considerations
The planned sunset also carries significant repercussions for estate planning. Key changes may take effect on January 1, 2026, including a 50% reduction in the federal estate tax exemption and potential increases in capital gains taxes for heirs upon asset disposition. With these impending changes, individuals and families are encouraged to reassess their estate planning strategies.
International Tax Developments
Under IRS Section 961, adjustments aimed at ensuring appropriate basis transfers to U.S. corporations will see heightened importance, as businesses strive to avoid double taxation. This aligns with increased earnings and profits from Controlled Foreign Corporations (CFCs), making it vital for international entities to navigate these complex rules efficiently.
Employee Retention Credit (ERC)
Instituted via the CARES Act in 2020, the ERC program’s relevance remains, particularly with the latest updates announced in August. While the deadline for filing new ERC claims for 2021 expires on April 15, 2025, businesses should stay informed about the limited reopening of the Voluntary Disclosure Program (VDP) that could benefit eligible employers.
Employment Tax Changes
Anticipated shifts in both federal and state employment taxes warrant attention, with modifications to state and local reporting requirements rolling out in 2024 and 2025. Businesses must ensure compliance to avoid penalties as these changes take effect.
Impact on State and Local Taxes
The TCJA prompted states to develop pass-through entity tax (PTET) regimes, which allowed partnerships and S corporations to circumvent federal limitations on state and local tax deductions. With the impending sunset of these benefits, state-level responses will determine the fate of PTET and its implications for local taxpayers.
Preparing for 2025 and Beyond
As we anticipate the potential expiration of these significant tax provisions, early preparation is paramount. Aprio’s comprehensive guide serves as an essential resource for businesses and individuals seeking to navigate the evolving tax framework and develop effective strategies to minimize tax liabilities.
For a deep dive into these end-of-year updates and to prepare your tax strategy for the upcoming year, explore Aprio’s 2024 End of Year Tax Update by visiting Aprio.com. Alternatively, you can contact an Aprio advisor directly for personalized insights and guidance.
In this unpredictable legislative environment, staying informed and planning ahead will be crucial for effectively managing tax obligations in 2025 and beyond.
This structured article highlights the 2024 tax updates from Aprio, ensuring readers gain a clear understanding of the upcoming changes and how they can prepare effectively.
