New Trump Tax Law Puts CPAs in Position of Learning as They Go

The new $3.4 trillion tax and spending package has certified public accountants navigating a massive amount of information. As CPAs transition from the language of the law, to analysis and eventual implementation, it’s important to understand what effect its new and continuing provisions will have on their clients.

Some aspects of the law may seem simple but aren’t as straightforward as people think, such as how deductions are calculated. We’re all in the process of learning together, so there are many questions we don’t know we should be asking yet.

The most important thing that accounting professionals can do for their clients is help them prioritize what changes need to happen now versus what needs to happen next month, or even next year.

For instance, there are many questions about the government-seeded investment accounts established as part of the new law, but this new program won’t begin until next year. Instead, CPAs should be thinking of provisions whose effective dates are in 2025 and those that are subject to retroactivity.

The AICPA’s timeline of key tax and financial planning provisions and changes in the new tax law and their respective effective dates can be a valuable tool. Understanding when various provisions become effective is critical to helping clients plan for the coming months and years. CPAs should consider:

• Mining their client list. Determine what provisions and effective dates impact your clients the most in the short term and long term.
• Becoming technically aware of the provisions and knowing how to apply them. Use resources and information from trusted sources to help you navigate any changes.
• Looking out for new guidance and regulations from the Treasury Department and the IRS.
• Understanding how deductions are calculated under the new law.

The most significant aspect of the law for planning purposes is the relative permanency of things. A CPA’s focus should be determined by the needs of their clients. However, there are several issues that are already having a broad impact.

No tax on tips and overtime. This provision affects the entire calendar year of 2025 through 2028. CPAs should ensure their business clients know that:

• The deduction is up to $25,000 per year per taxpayer and phases out for those with modified adjusted gross income above $150,000, or $300,000 for joint filers.
• Tips must be properly reported on IRS-approved forms.
• Married taxpayers must file jointly to claim the deduction. A valid Social Security number is required, and the deduction is available to non-itemizers.

Senior deduction. This is significant due to the amount of confusion surrounding the conflation of senior exemptions with Social Security benefits.

Despite recent reports to the contrary, neither Social Security nor its taxability are mentioned in the new tax law. As we await guidance for senior exemptions, tax advisers should review with their senior clients what is required to qualify for the exemption.

Research and experimentation. The new law allows companies to expense R&E expenditures among other longer-term elections. Small business taxpayers may apply the rules retroactively to tax years beginning 2022.

However, questions remain around the transition rules for the newly introduced Section 174A, including retroactively applying the rules for small businesses. Accounting professionals should continue to keep abreast of any guidance given in this area to take full advantage of this benefit.

One hundred percent bonus depreciation. In the 2017 Tax Cuts and Jobs Act, the applicable rate for bonus depreciation was being phased down to zero over multiple years. Effective immediately under the new tax package, bonus depreciation is set permanently at 100% for property acquired after Jan. 19, 2025. CPAs should help guide their clients with considerations such as whether or not to fully expense and the possible implications.

CPAs are uniquely positioned during this time of transition to help clients comply with the new tax law and achieve their larger financial and life goals with confidence and success.

As we begin the process of navigating the new tax law and understanding how to best help our clients, we must cut through any lingering misinformation and confusion. The IRS will need to provide further guidance, transition rules, and penalty relief as taxpayers and their advisers strive to comply.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Mark Koziel is president and CEO of the American Institute of CPAs, and CEO of the Association of International Certified Professional Accountants.

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