US Tax Returns filed

U.S. Taxes, One, Big, Beautiful Bill, State and Federal Taxes

The One Big Beautiful Bill Act, which was passed on 4th July 2025, made sweeping updates to the U.S. tax code and will extend a number of provisions from the 2017 Tax Cuts and Jobs Act, that were due to expire. This legislation creates new reporting requirements and amends certain eligibility thresholds.  Up to $25,000 in tip income is now deductible.  Many of the provisions will bring change in 2026 and include:

• Taxpayers claiming the standard deduction will now be able to deduct up to $1,000 in charitable contributions in their annual tax return. This figure will rise to $2,000 for couples filing a joint tax return.  Therefore, the new charitable contribution deduction for non-itemizers for cash contributions is up to $1,000 for individuals and $2,000 for married couples who file their tax returns jointly.

• For taxpayers who itemize deductions rather than claiming the standard deduction, their 2026 charitable deduction will be limited to the amount that exceeds 0.5% of their 2026 adjusted gross income (AGI).

• The annual limit of certain K-12 expenses increases to $20,000. The definition has been expanded to include other expenses, for example, books, fees, tutoring, etc. Please be aware, however, that K-12 expenses do not qualify for state income tax purposes in certain U.S. states.

• There will be a new limit on itemized deductions for taxpayers in the 37% tax bracket. Effectively, this means that for every dollar of itemized deduction, the maximum tax benefit available will only be 35 cents. For 2026, the 37% bracket kicks in where the taxable income exceeds $640,600 for single filers and heads of households, $768,700 for married couples filing jointly and at $384,350 for married couples filing separately.

• For 2026, the state and local taxes (SALT) deduction is capped at $40,400. There is a slight increase in the phase-out range, which begins when the modified adjusted gross income (MAGI) is $505,000. Once MAGI surpasses $606,333, the deduction cap will be $10,000. Therefore, regardless of the MAGI, the SALT deduction will not fall under $10,000.

• Commencing 4th July 2026, it will be possible for employers to contribute up to $2,500 to the new Trump Accounts for Children. This amount will be excluded from the employee’s gross income.

• With regard to the Federal Estate & Gift Tax Exemption, the lifetime federal estate and gift tax exclusion amount has risen to $15 million per individual in 2026. For married couples, a combined amount of $30 million applies.

• Catch-up contributions allow those participants aged from 50 years to contribute additional money to their retirement accounts while those individuals, making additional contributions who are aged between 60 and 63 years come within the “super catch-up” definition. Higher-income participants in 401(k), 403(b) and 457(b) retirement plans are required to make any catch-up contributions as after-tax Roth contributions. This requirement applies to participants with 2025 FICA wages exceeding $150,000. In summary, from 1^st January 2026, catch-up and super catch-up contributions for certain high-paid participants must be made on an after-tax Roth basis instead of pre-tax basis.  This rule does not apply to SIMPLE IRAs or SEP IRAs.

Please be aware that 15^th April 2026 is the tax filing deadline for your individual federal income tax return.  It is also the deadline date for most of the state tax returns, however, there are some exceptions so please make sure you check this out.

For further information, please click: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

If you are seeking comprehensive U.S. tax advice or looking to regularise your U.S. tax affairs, and wish to deal with a U.S. Tax Advisor, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

US Taxes, USA Business Tax provisions, One Big Beautiful Bill

On 4^th July 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law.  It introduced several updates to federal informational reporting requirements.

1099-MISC and 1099-NEC

• It significantly raises the reporting threshold for payments made on Forms 1099-NEC and 1099-MISC.

• From 1^st January 2026, businesses will only be required to file a 1099 if their non-employee or miscellaneous income exceeds the threshold amount of $2,000.

• For those individuals working on a freelance or independent contractor/consultancy basis, it’s important to remember that you must report earnings, on your Form 1099-NEC, which have not been reported on form W-2.

• For consultants/contractors/freelancers is also important to keep in mind that while your clients won’t be sending you a 1099-NEC in relation to payments of under $2,000, you’re still responsible for reporting that income in your tax return.  For the client, however, it means that if they pay a contractor/consultant/freelancer less than $2,000 in a calendar year, the general rule is that they won’t be required to issue a Form 1099-NEC.

100% Bonus Depreciation

The One Big Beautiful Bill permanently restores the 100% bonus depreciation for qualifying business property placed in service, on/after 19^th January 2025.  Please be aware, however, if your business had a contract to acquire property prior to 20^th January 2025, the property will not qualify for the 100% bonus, even in situations where the actual acquisition happens after that date.

What is “Bonus Depreciation”?

It’s an additional first-year depreciation to incentivise businesses to invest in qualifying property.  

What does “placed in service” mean?

It means that the asset must be ready and available for its intended business use. For clarity, if you have purchased or financed equipment but it’s not ready and available for the intended business use, then it will not trigger the allowable deduction.

How is “qualifying property” defined?

Qualifying property includes property used in a trade or business or for the production of income and meets the following criteria:

• It must be tangible.

• It must be depreciable under the Modified Accelerated Cost Recovery System (MACRS)

• It must have a recovery period of 20 years or less.

• It must be placed in service after 19^th January 2025

• It can be purchased new or second hand.

• It includes computer systems, equipment, furniture, machinery, certain vehicles, etc.

• The phase-down percentages still apply to some assets, including property that was acquired on/before 19^th January 2025, even if it wasn’t placed in service until after that date.

• The Bonus Depreciation is not limited by taxable income.  Therefore, it can create or increase a net operating loss.

Enhanced Section 179 Deduction Limits

As you’re already aware, under Section 179 businesses can deduct the full purchase price of “qualifying property” during the tax year as opposed to capitalizing the expenses and depreciating them over several years. The new legislation introduced on 4^th July 2025, gives a major boost to the Section 179 deduction.  Under the previous limits for the 2025 tax year, businesses could only expense up to $1.25 million in qualifying property using Section 179.  Beginning in 2025 tax year, the increased deduction limit for certain depreciable business assets has doubled to $2.5 million.

With regard to the Higher Phase-Out Threshold, the deduction starts to phase out for total qualifying property costs over $4 million.  The previous limit was $3.13 million.

In summary, businesses can now deduct up to $2.5 million until their equipment purchases exceed $4 million.  Once purchases reach $6.5 million, the deduction phases out completely.

The OBBBA enhances section 179 expensing for tax years starting after 31^st December 2024.  This means that the changes will apply retroactively to qualifying property placed in service on or after 1^st January 2025.

What’s the difference between Bonus Depreciation and Section 179?

While you may think the 100% bonus depreciation is similar to a Section 179 deduction, you must keep in mind that Section 179 only allows eligible purchases up to $2.5 million to be fully expensed (with a phase-out once purchases exceed $4 million) while there is no dollar limit on the Bonus Depreciation.

For further information, please click: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

If you are seeking a comprehensive and professional U.S. tax advisory of compliance service from U.S. Tax Specialists, including U.S. tax filing, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.