Tax

The Tax Cuts and Jobs Act (TCJA) of 2017 introduced significant changes to the U.S. tax code, offering tax savings, reductions, and other benefits to individuals, businesses, and families. The more popular provisions included an immediate reduction in the business tax rate, a new pass-through entity deduction (Section 199a), Net Operating Loss carrybacks, and changes to the annual estate tax exclusion. However, several of these provisions are scheduled to expire at the end of 2025, creating uncertainty for businesses. As the deadline approaches, it is important to be aware of the changes and how to prepare.

The IRS announced yesterday new tax relief measures that extend certain federal tax deadlines until May 1, 2025. This has extended various filing and payment deadlines and applies to all Georgia residents and businesses. The relief applies to income tax returns normally due in March and April. It also covers 2023 individual and corporate returns with valid extensions and estimated quarterly payments.

Millions of U.S. businesses must now comply with Beneficial Ownership Information (BOI) reporting rules, with the deadline set for January 1, 2025. Under the Corporate Transparency Act, businesses are required to submit BOI reports to the Financial Crimes Enforcement Network (FinCEN). The goal is to increase transparency and prevent financial crimes, such as money laundering and terrorism financing. As of August 2024, only 2.7 million of the 32.6 million businesses required to report have done so. These rules mandate businesses to provide detailed ownership information to the federal government.

Recent changes in Tennessee tax law now allow businesses to claim refunds for franchise taxes on previous payments. On May 10, 2024, Public Chapter 950 was signed into law, eliminating the property measure from the franchise tax calculation. Starting January 1, 2024, businesses will calculate franchise taxes based only on net worth, simplifying the process and potentially lowering tax liabilities.

The Georgia Department of Revenue (DOR) has issued new guidance regarding the state’s Job Tax Credit, a valuable incentive for businesses that create new jobs. This guidance is particularly relevant for companies with questions about meeting minimum wage requirements and how to treat jobs transferred between locations. The recent changes' central focus is the minimum wage requirements and the treatment of transferred jobs.

Digital assets, including cryptocurrencies like Bitcoin and Ethereum, have become significant players in the global economy. As their use has grown, so has the need for regulatory oversight to ensure compliance with tax laws. According to data from the Federal Reserve, 7% of U.S. adults used cryptocurrency in 2023, either as an investment tool or for making financial transactions. To address this growing sector, the IRS recently issued final regulations (T.D. 10000) detailing the reporting requirements for digital assets.

The Georgia Manufacturing Investment Tax Credit is a financial incentive aimed at supporting businesses in the manufacturing and telecommunications sectors. By making capital improvements more affordable, this state credit encourages companies to expand and upgrade facilities, promoting economic growth and job creation throughout the state. The credit can offset up to 50% of a company’s Georgia corporate income tax liability, and any unused portion can be carried forward for up to 10 years.

On May 10, 2024, Tennessee Governor Bill Lee signed Public Chapter 950 into law, eliminating the property measure for computing the franchise tax starting January 1, 2024. This change is expected to benefit many businesses across Tennessee, particularly those with substantial real and tangible property, such as in the real estate, retail, transportation, and manufacturing sectors. With the property measure removed, the net worth measure is now the sole method for calculating the franchise tax.

The Inflation Reduction Act, signed into law in 2022, called for new taxes to tackle the rising deficit while investing in clean energy technology. A key component of the legislation was the introduction of clean vehicle tax credits to purchase new and used electric vehicles (EV). This includes the new vehicle tax credit, used vehicle tax credit, and the commercial clean vehicle tax credit. Each provides purchasers with an immediate federal tax credit for purchasing an eligible EV. Since its passage, several updates have been to the temporary guidance addressing specific aspects of the incentives. However, earlier this month, the Department of Treasury issued final regulations, including guidelines for batteries, critical minerals, and the need for Foreign Entity of Concern (FEOC) compliance.

As the 2024 presidential election approaches, tax policy remains a pivotal issue in the platforms of both major candidates: former President Donald Trump and President Joe Biden. Each has outlined distinct visions that promise to reshape the nation’s fiscal outlook, impacting individual taxpayers and the business community. Trump advocates for deeper tax cuts, while Biden proposes increased rates for higher earners and corporations, making understanding these policies crucial for effective financial planning and strategy.