315. The Future of Bonus Depreciation and SALT: 2025 Tax Updates with Nathan Sosa, CPA, MST

Summary

Podcast Episode Summary

Podcast: Tax Smart Real Estate Investors Podcast
Episode: 315 - The Future of Bonus Depreciation and SALT: 2025 Tax Updates with Nathan Sosa, CPA, MST
Date: March 4, 2025
Host: Hall CPA
Guest: Nathan Sosa, CPA, MST (Head of National Tax, Hall CPA)

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Episode Overview

This episode dissects the major tax changes looming in 2025, particularly under a Trump administration. Host Tom and guest Nathan Sosa delve deep into what happens if the Tax Cuts and Jobs Act is not extended, the potential for 100% bonus depreciation to return, possible modifications to the SALT deduction cap, and the legislative and political process governing these changes. The conversation is practical, no-nonsense, and focused on preparing real estate investors for what’s to come.

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Key Discussion Points & Insights

1. What’s at Stake if the Tax Cuts and Jobs Act (TCJA) Expires?

(02:14 – 05:16)

• Potential Tax Hikes: If TCJA provisions sunset at the end of 2025, the average American could see a 22% tax increase.
  • “If the Tax Cuts and Jobs Act does not get extended...that means that an average American will see a 22% tax increase if they don’t.” – Nathan Sosa (02:43)
• Lower Tax Brackets & Standard Deduction: Key TCJA provisions like reduced tax brackets and the doubled standard deduction would be rolled back, impacting everyone, especially married filers.
  • “If these expire, that goes away, as does the standard deduction that got doubled in 2017 as well.” – Nathan Sosa (03:39)
• Estate Exemption Cut in Half: The $28 million exemption (for spouses) would return to $14 million.
• Qualified Business Income Deduction: The 20% pass-through deduction for business owners also set to expire.
  • “It’s like a free 20% tax rate for most business owners... That also goes away at the end of 2025.” – Nathan Sosa (04:38)

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2. Possible Legislative Changes for 2025

(05:23 – 06:33)

• Trump’s Top Promises:
  • Eliminate tax on tips, Social Security, overtime pay.
  • Permanently extend the Trump tax cuts (TCJA).
  • Raise the SALT cap for state and local tax deductions.
  • Reinstate 100% bonus depreciation.
  • Lower the corporate tax rate for manufacturers to 15%.
• Key for Real Estate Investors: High likelihood that 100% bonus depreciation, QBI deductions, and a higher SALT cap will be prioritized if legislation succeeds.

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3. The Battle Over Bonus Depreciation

(07:01 – 11:08)

• Current State:

  • Attempts to extend 100% bonus depreciation have passed the House but failed in the Senate before.
  • There are projections that it might return at a lower percentage (e.g., 50%), but the most recent Congressional scoring (used for evaluating policy costs) has modeled it at 100%.
  • Cost Consideration: 100% bonus depreciation has a projected cost of $378 billion over 10 years—substantially less than fully removing the SALT cap ($1.2 trillion).
  • Bipartisan support makes its passage likely if timing aligns.

• Key Insight on Timing:

  • If tax legislation is passed quickly (by late summer/early fall), 100% bonus depreciation is likely.
  • Nathan’s Priority Ranking:
    1. Individual tax rates/standard deduction
    2. Qualified Business Income deduction
    3. 100% Bonus Depreciation
  • “I really feel like 100% bonus depreciation has a very solid chance of returning due to its overall cost over a 10 year period.” – Nathan Sosa (10:53)

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4. Carried Interest: Perennial Headline, Minimal Impact

(12:01 – 14:21)

• Definition: Carried interest affects syndicators/general partners; essentially, it provides favorable tax treatment for partnership gains.
• Political Discussion:
  • Trump promises to eliminate the carried interest “loophole.”
  • Real impact is minor—just $12 billion in revenue over 10 years.
  • “Every new tax bill they talk about it… just for the impact only be $12 billion. It’s just like, why bother?” – Tom (14:17)
• Real Estate Investors:
  • Historically, carried interest restrictions (like the three-year holding period in 2017) haven’t applied to real estate. Some tightening might occur but is not expected to be major.

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5. Legislative Timing: When Might These Changes Happen?

(15:12 – 21:04)

• Conflicting Timelines:
  • The House wants a single, comprehensive bill—covering tax, border, military, immigration—done by September 30, 2025 (the budget reconciliation deadline).
  • The Senate prefers a two-bill approach, with tax pushed to a later reconciliation (possibly into December/January).
• Political Reality:
  • Both chambers are at an impasse, and because of razor-thin majorities, each side has “veto” power over the other.
  • Deadline pressure is significant, but passage before September 30 is unlikely.
  • “If you want a summer bill, you’re going to be disappointed. And if you want a September bill, there’s also a high chance you’re going to be disappointed, too.” – Nathan Sosa (20:55)
• Impact on Bonus Depreciation:
  • If passed later in the year (December/January) via the Senate, more concern about costs could mean bonus depreciation doesn’t get fully restored.

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6. Practical Questions from Investors

(21:04 – 22:14)

• Should You Delay Filing Taxes Waiting for Depreciation?
  • No; there’s too much uncertainty and major provisions like the elimination of income tax in favor of tariffs are not remotely likely.
  • “If you think that income tax is going away this year, it’s not going to happen.” – Nathan Sosa (21:19)

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7. Administrative Updates: DOGE & IRS

(21:57 – 24:11)

• DOGE’s Role: Elon Musk’s DOGE team rumored to be reviewing government waste, including the IRS, possibly cutting staff and modernizing operations.
  • No confirmed layoffs at the time of recording.
  • Focus on efficiency, digitization (e.g., eliminating paper checks).
• IRS inefficiency discussed:
  • Hosts note government tech/IRS is outdated and ripe for AI and basic upgrades.
  • “I feel like the current tax preparation software… feels like it was built on like Windows 95.” – Tom (24:11)

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8. SALT Deduction—A Moving Target

(24:46 – 26:16)

• Varied Proposals Under Discussion:
  • Raise the cap ($20,000 mentioned), eliminate the cap entirely, or even kill the state and local tax deduction for individuals and businesses (including the PTET workaround).
  • “I think that’s going to be gone… if that’s something you used, I’m sorry, but I don’t think that’s going to be allowed going forward after 2025.” – Nathan Sosa (25:50)

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9. Staying Informed

(26:16 – end)

• For frequent updates, listeners are urged to:
  • Use Hall CPA’s 2025 tax tracker (therealestatecpa.com/2025taxchanges)
  • Follow Nathan Sosa on X (formerly Twitter) and LinkedIn.
  • Subscribe to the new newsletter via the same CPA website.

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Notable Quotes with Timestamps

• "If the Tax Cuts and Jobs Act does not get extended... that means that an average American will see a 22% tax increase if they don't." – Nathan Sosa [02:43]

• "The 20% [QBI] deduction... also goes away at the end of 2025. So there's a lot on the table." – Nathan Sosa [04:38]

• "100% bonus depreciation... that's a big boon for you." – Nathan Sosa [06:33]

• "The cost of bringing back 100% bonus depreciation only costs $378 billion. So it's actually... rather small." – Nathan Sosa [09:06]

• “If you want a summer bill, you’re going to be disappointed. And if you want a September bill, there’s also a high chance you’re going to be disappointed, too.” – Nathan Sosa [20:55]

• "If you think that income tax is going away this year, it’s not going to happen." – Nathan Sosa [21:19]

• "Every new tax bill they talk about [carried interest]... the impact only be $12 billion. It's just like, why bother, right?" – Tom [14:17]

• “I feel like the current tax preparation software… feels like it was built on like Windows 95.” – Tom [24:11]

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Timeline Highlights

• 02:14 – 05:16: What will expire if TCJA lapses
• 05:23 – 06:33: Trump’s tax reform proposals
• 07:01 – 11:08: 100% bonus depreciation debate and prioritization
• 12:01 – 14:21: Carried interest and legislative “headline” issues
• 15:12 – 21:04: Legislative process, timing, and reconciliation
• 21:04 – 22:14: Guidance on tax extensions and tariffs
• 21:57 – 24:11: DOGE, IRS efficiency, government waste
• 24:46 – 26:16: SALT deduction—raise, remove, or eliminate?
• 26:16 – end: Staying updated; how to follow new developments

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Final Takeaways

• Act Proactively: 2025 tax law is still in flux; be ready to pivot when legislation passes.
• 100% Bonus Depreciation: There’s a solid chance it returns, but timeline uncertainty remains. Don’t delay filings based on speculation.
• SALT Deduction: Watch for major changes—cap could be raised, removed, or erased.
• Reliance on Updates: Use trusted resources to keep up with fluid developments.
• Key Point: "Smart investors don't just make money, they know how to keep it."

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For more updates and to follow the changes in real time:

• Visit therealestatecpa.com/2025taxchanges
• Follow Nathan Sosa on X and LinkedIn

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This summary skips advertisements, promotional content, and non-tax-related segments per user request.

Transcript

[A]

You're now listening to the Tax Smart REI Podcast, the number one tax podcast for real estate investors.

[B]

Your source for all things real estate accounting and tax. Here we reveal our secrets that can save you thousands in taxes, streamline your accounting process and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors and current clients on what strategies they use to grow their business and how they steer clear of Uncle Sam.

[A]

Welcome back to Tax on REI Podcast.

[C]

Today we're joined with Nathan Sosa, head of National Tax here at Whole cpa, to break down the potential tax changes under the Trump administration that we might see in 2025. Will 100 bonus depreciation make a comeback? Could the ten thousand dollar salt cat be lifted?

[A]

Will opportunity zones be extended?

[C]

And will income taxes be eliminated by tariffs? We're gonna see how this all plays.

[A]

Out in this episode.

[C]

So stay, stick around. We'll be jumping into all that in just 60 seconds.

[A]

Are you ready for the 2025 tax changes under the new administration? With new leadership in Washington, the tax landscape is shifting fast. These are some of the biggest updates we've seen in years. And if you're not proactive, you could be leaving thousands on the table. But don't stress, we've got exactly what you need. Access our exclusive 2025 tax changes resource, an in depth tracker that breaks down what's new, what's changing, and the strategies that you need to stay ahead. This isn't just some generic checklist. It's a powerful and live resource tailored for real estate investors like you. Head on over to W. Thank you.

[C]

So much for joining us on the show today.

[A]

I know you've been keeping close tabs.

[C]

On these 2025 tax changes and almost going so exciting in your pocket.

[A]

That's ww.the realestatecpa.com2025 tax changes. Because smart investors don't just make money, they know how to keep it. We'll see you over there. But right now we'll jump right into today's episode.

[C]

All right, Nathan, thank you so much for joining us on the show today. I know you've been keeping close tabs on these 2025 tax changes and like almost like a play by play on how everything's going. So really excited to hear the news and latest updates. Before we kind of dive into what's going to change and will towers replace income taxes, can we just kind of talk about what do we stand to lose if no action is taken in 2025?

[D]

Hey Tom, thanks for Having me on today, super excited. Yeah, this, I. I find this, this, this political piece of tax to be really intriguing, fun to talk about, but what do we stand to lose at the end of the day? Jason Smith, head of the Ways and Means Committee. And like, if you want. You don't know who that is. Ways and Means Committee are the people who basically, they do a lot of tax policy of the nation.

[E]

Right.

[D]

They're the first ones. Everything starts with. They run through deeper discussion of that here a little bit. But they came out and said that if the Tax Cuts and Jobs act does not get extended.

[E]

Right.

[D]

Does not get extended through 2025 through 2026, that means that an average American will see a 22% tax increase if they don't.

[E]

Right?

[D]

So that's an average number, right? So, like, that's like, it sounds scary, right? It's like, I'm gonna lose $20 out of my next hundred extra, right? So, like, what does that mean? So that's what we stand to lose. And essentially the reason why we stand to lose all of that is because back in 2017, tax cuts and Jobs act initially brought down tax brackets. It decreased the rates overall. It increased a tiny bit at the top at the upper rates, but for the lower rates, Basically, from a 24% down, it reduced them.

[E]

Right.

[D]

We had quite a few more brackets that were needed to be considered a lot more than 20%. Right now we have 22%, 24% tax brackets at the moment. And then in between there is a 15%. And so right now, we have a much lower tax system than we've had prior. And so if these expire, that goes away, as does the standard deduction that got doubled in 2017 as well. We everyone, if you're married, filing joint, you had a 24 like you get right now, you get a $24,000 deduction. I like, basically the tax code just says, hey, this is the cost of living. We all know that's not the cost of living. But they say, hey, you get this is the cost of living. You get to deduct it. So standard deduction is one, because that means basically it'll get half. So that will get half. Another item to consider is those of you who are thinking about estate planning, other options you really think we thinking about this year, have communications with your estate planners or attorneys or tax advisors. Is the estate exemption that gets halved. Right now it is 14 million per spouse. So you can have up to $28 million that you could have exempted if you pass away, however, that's going to get halved and go back to normal rates. And so basically go back to where you could get a max of 14, $14 million. That's a significant number at the end of the day. So there's a lot on the table here. Qbi, qualified business income deductions. That deduction also expires in. It's like a free 20% tax rate for most business owners and saying, hey, because the corporate rate got lowered, now you get a free 20% deduction too. That also goes away at the end of 2025. So there's a lot on the table we have to consider for like as taxpayers and there's a lot that needs to be taken care of. And that's why this current tax legislation fight is so important for Americans abroad.

[C]

Sounds like if no action is taken and some of these provisions that were in the Tax Collection Jobs act, if they expire, it's going to lead to higher taxes.

[D]

Unfortunately, yes, it will lead to higher taxes. And for politicians that's not good. Especially when you are the party of lowering taxes and all of a sudden everyone, they vote you in and then now your tax rate gets increased. That doesn't, that doesn't end well politically for most folk.

[C]

It kind of sounds like that there's motivation to pass some type of legislation.

[D]

Highly motivated isn't is a good way to put that?

[C]

Okay, okay. So I know there's been a lot of talk about this on the campaign trail in Congress and we've heard a lot. What are the potential changes that listeners of the show should expect to see? What's relevant for them? What do we think is going to happen in 2025?

[D]

Yeah, that's a great question, Tom. So a couple of weeks ago, after like a five hour long meeting with the top tax writers between President Trump and the top tax writers in Congress, they basically like as they came out, they asked them what are the priorities that are going to happen here? And President Trump said I'm going to eliminate tax on tips. I'm going to eliminate tax on Social Security, I'm going to eliminate overtime pay. Additionally, I'm going to extend and make permanent the Trump tax cuts is what they're calling which is this tax cuts and jobs that a bunch of the items that we just discussed. I'm going to increase the SALT cap that the state and local income tax deduction on. For those who itemize, I'm going to increase that cap and 100% bonus depreciation which does get pass through deduction. And lower the corporate tax to 15% as well for American manufacturers. Those are his promises. What's relevant to real estate investors, it's going to be 100% bonus appreciation. It's going to be the qualified business income deduction. It's going to be raising the salt cap actually.

[E]

Right.

[D]

For those of you who live in high income states, New York, New Jersey, California, that's that. It's a big boon for you. Sorry for it in Texas, but for like what property tax is actually for those folks. But anyone who lives in a high state tax state is going to jurisdiction is going to benefit from a raised assault cap. So we'll see what happens. Honestly, those first four I mentioned, the no tax on tips, no tax on ot, no tax on Social Security that applies to Americans abroad. But we'll see if those are legitimate provisions that will actually get passed.

[C]

Yeah, yeah, yeah. I'm a little bit skeptical on, you know, how viable those are and whether or not that will happen. But really, I think what let's just drill down 100% bonus depreciation just a little bit because we know there was a bill passed by the House last year. Right. That included 100% bonus depreciation through the end. I think it was the end of 2026, if I'm not mistaken, was the end of 2025. But they wanted to bring it back. That was ultimately shot down in the Senate. But now I'm hearing some people, some tax professionals believe that it might only go back to 50%. What do you think is the most likely outcome? Is it going to go back to 100 or will it be something else?

[D]

No, it's a great question, Tom. And so it's a tricky situation right now. Every projection that's being done from, incidentally I say projection from economists, the Congress Budget Office, the Congressional Budget Office, they are the ones who do the scoring and estimate saying, hey, this is how much deficit of revenue the government's not going to earn.

[E]

Right.

[D]

Because whenever you do implement a provision like bonus depreciation, that means you're not getting as much in tax now because you've allowed taxpayers, real estate investors to write off more of their income, so they're going to pay less in tax. And so they've scored that the cost of 100%. But like they have not scored it as a 50% bonus depreciation, 60% bonus depreciation, they've scored it as 100% bonus depreciation. I know. I listened to a Ways and Means Committee open hearing that they had a Couple of weeks ago, and they had mentioned immediate expensing, which is 100% bonus depreciation. Very much want to bring that back. And that's what they mentioned when they said they want to bring back the tax cuts and jobs. That's what they're talking about referring to. They want to bring back 100% bonus depreciation. Now, the caveat is the later we go in this year for tax legislation, the more difficult it might wind up being to get 100% for a long period of time. So that's what's going to be key, delineation. Look, if they can get this done fast and get it done maybe this summer, early fall, I definitely think 100% bonus appreciation can come back. If it continues to carry and drag, and all of a sudden we see ourselves sitting in November, December, I feel like 100% bonus appreciation might not be as realistic.

[C]

Realistic for 2025 or realistic going forward?

[D]

I think going forward. I think going forward it could be difficult because they just got so much in this package. They have to. They have to think about. We can talk a little bit about, like, how everything scored and looked at. I mean, as of right now, so the overall cost of bringing back 100% bonus depreciation only costs 378 billion. So it's actually, I say 378 billion. Like, that's just a small number.

[E]

Right.

[D]

You can just throw around, like it's just pennies on the dollar.

[E]

Right.

[D]

But actually, in terms of all the other provisions, it's actually rather small. So, like, if you completely eliminate salt cap or remove the cap out, is what I'm trying to say. Completely remove the cap, that would cost $1.2 trillion. So that's definitely not going to happen because that provision is just far too expensive. Now, 378 billion for 100% bonus appreciation and what is actually viewed as bipartisan across the board.

[E]

Right.

[D]

Like you mentioned last year's bill, the Tax Relief act or whatever that was, like the Republicans called it, had bipartisan support on both sides. And so it is definitely a favorable bill. And I definitely think 100% bonus appreciation is one of the top goals. Here's how I order the priorities for Congress.

[E]

Right.

[D]

I'm sorry, I will toss President Trump's priorities out of here, but Congress's priorities are to return anything individual, any individual tax rate, standard deduction. That's essentially a lock that is going to happen in 2025. You can mark me on it. You can come to me in six and eight months and If I'm wrong, let me know. But that is going to for sure get passed this year. But what's next? Actually I feel like qualified business income is second on their priority list actually, which is another individual provision, but it feels separate in my opinion. I think that 20% deduction, that's also a lock for 2025 as well to come back. The next one on the list is 100% bonus depreciation. And again it is a significant less cost. So it kind of just feels like a freebie that you can give. Almost like because it's only $378 billion. Stupid number. But I really feel like 100% bonus appreciation has a very solid chance of returning due to its overall cost over a 10 year period because that's how they're all being scored currently.

[A]

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[C]

Okay, perfect. Perfect. I know a lot of people are tuning in right now. 100% bonus appreciation is major and it has been very powerful. So I think we're all hoping it comes back. It looks, looks like there's a good chance before we move on a little bit, drill down a little bit more into timing and when we expect some, you know, how we expect this stuff to get passed. Can we just talk about carried interest? Right. That impacts some of the syndicators who might be tuning in. Maybe you're in the general sponsorship side or your, excuse me, general partner or, or maybe you're on the sponsorship side or maybe even as a limited partner. They need to understand how that might impact their investments perhaps in the future. So what is carried interest exactly? And I guess it's on the chopping block. It's considered to be a loophole that's going to be closed. What do you see going on there?

[D]

Yeah, so that's a good, that's a good, great point. Tom. Is like carried interest somehow always winds up in the mouths of every congressman saying we're going to get rid of it. This loophole will be done away with. It's going to be gone. And President Trump listed it. I listed the taxes he wants to erase or lower. And I did not mention the fact that he specifically called out removing carried interest and then oddly removing sports franchise owners business deductions. I don't know what that means. No one's, everyone's trying to figure that one out still. But we'll see what happens there. But carried interest specifically, that actually only raises about $12 billion of revenue. Oddly enough. It's not a significant, it's really, it's a tiny, tiny raise. So it's like, okay, can they do it? Sure, they could. In 2017 they suggested doing it, but then they ended up having a three longer three year holding period. But that three year holding period didn't even apply to real estate.

[E]

Right.

[D]

It didn't even apply to real estate. And the day just applied to other hedge fund owners. And so I think there might be some modifications to carries. Maybe real estate has to hold for three years now too. Maybe it's a five year old period, I don't know. I imagine that they'll tweak it just so they can somewhat keep the political promise, but I don't truly expect a large adjustment.

[C]

Yeah. You know, it's really interesting how some of these things catch a lot of headlines and yet the impact like it's almost like it catches headlines, gets people going. But the overall impact is just very minor. Like 12 billion. I would expect the amount of tension that carrier interest gets that every single time you turn around. Right. Every new tax bill they talk about a little bit just for the impact only be 12 billion. It's just like why bother, Right?

[D]

Yeah, I know, right?

[E]

Yeah.

[D]

$12 million is nothing, Tom. I'm gonna give that in your bank account.

[C]

In the grand scheme of things, this is not like it's, it's not moving the needle tremendously. Meanwhile, 100 bonus depreciation has a 308 billion dollar impact. Perhaps you mentioned that's significant. That seems to have more support, believe it or not, or at least in the headlines. So Switching gears a little bit into timing. Right. We've heard mixed signals over the last few months. I remember at first the White House, they wanted to do it, they want to do it asap, Right. And that stated they want to do it as soon as possible. And then initially after the election, I heard that the stuff was going to get done in one reconciliation bill within the first hundred days. Now later on I heard chatter about two budget reconciliation bills because so much stuff needs to get packed in there and it's going to be taking part over 2, 2 bills with taxes being in the latter part of the year. And that second bill. What's going on today? Where do we stand?

[D]

Yeah, initially we, like many Representatives, wrote letters saying we're going to have tax, border, immigration, armed forces. We're going to have all these bills done in 100 days in Congress. It's going to be done and over with and we're going to be taken care of. And now we've approached a, I call it the dueling Houses, because right now the House has a lot of budget deficit hocks. And essentially what they're saying is that like, our current government's debt is so insanely massive that we can't allow these, that we can't just continue to not do things that same economy and continue to add onto that debt. We have to be more careful and be more judicious in what we spend, what we don't. And then on the flip. So there's a lot that needs to be kind of like neatly navigated over in the House because the margins are also significantly smaller. All it takes is one vote in the House and then now nothing gets passed. All it takes is one Republican House representative to flip and they're done. They cannot pass this bill. But on the flip side, the Senate has a much healthier majority and much stronger majority. Normally, how this process works is the House will start the budget resolution and then the Senate will start a simultaneous one because everything has to technically start in the House. And so they have to go and do their process and then the Senate will follow. Will follow their lead. The House was taking a while and trying to get all of its party members in one agreement or in line together. The Senate basically got impatient and so they said, we're just going to do our own and we're going to take care of it. It actually did motivate the House. And they said, hey, okay, fine, we're doing our budget resolution now. And so they were like a few days after the Senate passed their budget resolution, the House then passed theirs. However, the House is on recess this week, the Senate is not. So they'll be voting on their budget resolution. And I don't think I explained budget resolution either. So I'll try to make this 30 seconds or less. But essentially to pass tax bills now, you have to do what? Go through a process that's called budget reconciliation. And the reason this is is it avoids the filibuster and bird rule in the Senate. Basically instead of having 60 majority of senators who vote on a bill because we're so closely narrowed in this country. Now when it comes to Republicans versus Democrats where you need 60 members, you're never going to get 60 members. However, you have 53 majority. If you go through budget reconciliation process, you can actually avoid this and just have the majority in the Senate. However, the key point here is that limits you because you can only work in a 10 year span. So like the costs have to be considered for over a 10 year budget. You can't do things, quote unquote, permanently. Now there's a little bit of a workaround, actually a loophole that the Senate is trying to go through. But most things need to start in the House. They start in the Ways and Means Committee, we mentioned them a little bit earlier. They're the ones who do tax stuff. And so essentially what's happening now is the Senate's impatient and not doesn't want to wait on the House. And so they have a two bill approach, right. The House has the one big beautiful bill that President Trump touted approach. They want to get tax, immigration, border and security all done in one bill. While on the flip side, Senate wants to do a skinny resolution, give the presidency a big win right now and just do border, immigration and military. That's what they want to do. Funding, they'll leave tax for later, right? Because right now they have two budget reconciliation bills. They can do 2025 and 2026. The deadline for the 2025 budget reconciliation bill is September 30th. So there's a little bit of movement and a little bit of pressure on Congress. Right. Congress will take as much time as it wants, but this creates a lot of pressure and that's what the House is trying to do. They are trying to say we want this done by September 30th, which is a feature, not a bug.

[E]

Right?

[D]

Like the fact that Congress deadlines is actually a good thing. Now right after the House passed their budget resolution, basically 10 senators came out and said we're not going to support that when it comes to our way, we're not going to vote on it. And then simultaneously, the House has also said when the Senate's bill comes to our. Comes to our side, we're not going to support it won't even hit the floor. So we're kind of at an impasse on both sides. We'll see who wins ultimately.

[E]

Right.

[D]

Because neither wants to give and neither wants to budge. So we'll see what happens there. I fully expect this to come at best September 30th. Right, guys? That's the deadline. So that'd be the earliest case scenario, in my opinion. Worst case scenario, January 1, 2026, could potentially be an option for SEO, which that would not be ideal, but I think that could be when this winds up happening.

[C]

Long story short, you don't foresee it happening any earlier than September 30th.

[D]

I don't know. I really don't. I don't see that happening. There's too much going on and I truly don't expect that. The House is already on recess this week. I don't expect them to move faster. Maybe summer would be a shock to me if that happened. I expect August. September is when this actually get through.

[C]

Okay. And if it went all the way up to 2026, it was January. In that scenario, you foresee there being lesser of a chance of 100% bonus depreciation making it into that bill.

[D]

I think so. I think so. But however, if we get. So if we go to September, that's because we're doing it the Houses way. If we go to December, January, that means we've gone the Senate route. And so when you go the Senate route, they actually have said that they want to do a baseline policy. And basically what that means, all these provisions that already exist are like, we don't actually have to pay for those. They just exist. They are. And so we don't have to worry about paying for any of that. So 100% bonus appreciation, all these numbers that I've been throwing out, like in the billions, trillions that I've thrown out thus far, they say, yeah, that's actually not a cost. That doesn't hurt our GDP or anything like that. There's no deficit or revenue there. So actually there's a chance that we can still get 100% bonus appreciation. I do think that with the House has a similar majority, so they have to be able to pass it. So the budget deficit hawks are always going to nip at certain provisions and it might just nip bonus appreciation down just enough.

[C]

Got it. Okay. Anything else we need to know about timing here? Anything else you think is important to highlight or you think we.

[D]

I don't think there's that much to know. I think. I think if you want a summer bill, you're going to be disappointed. And if you want a September bill, there's also a high chance you're going to be disappointed, too.

[C]

All right. All right, so one last question along this line. I know people are thinking about it. Should people be extending their tax returns right now, hoping depreciation comes back for 20, 24, or should they just file their tax?

[D]

Tom and I are laughing at this because we know how ridiculous that provision is. Like, I'm sorry, if you think that income tax is going away this year, it's not going to happen. The government gets over 50% of its revenue from income tax. Tariffs would only replace maybe 25% of that's like, as it's been promised, like, hey, we're just going to replace income tax, get rid of it, and we're going to have tariffs. For the economists and the very smart people who do this stuff, they say that tariffs are great from a leverage perspective. They don't produce a lot of income and they actually pass a lot of costs down to other taxpayers at the end of the day. So I would not extend your tax return and hoping that you won't have to pay tax this year.

[C]

Okay, so, long story short, tariffs are not going to place income tax anytime soon.

[D]

Don't see that happening, Tom, personally.

[C]

Okay, so let's hope that's going on with Doge Right. Because we know that some of these tax reform vision is that if they're extended, like we talked about throughout this episode, that it's going to increase the deficit. So some of the ways of trying to offset the deficit, if I'm not mistaken, is through Doge. What's going on with Doge right now? What do we need?

[D]

Yeah, Doge is a lot going on. There's a lot going on politically. If you're on X, you're going to be well aware of all the changes that are happening at Doge. One in terms for real estate investors, specifically, is they went into the IRS building last week and they have potentially. I've not seen this confirmed yet. Last week it was mentioned that maybe 15,000 IRS agents were gonna be fired. Well, I still haven't seen any news on that as of yet, so we'll see. I forgot it was President's Day yesterday. So that might happen today, later today or tomorrow. That news might get released. And so DOGE is looking to cut costs and make efficiencies. So that could be good for the IRS potentially. I don't know if getting rid of the organizations that's already low staffed, I don't know if that'll help, but maybe we could get some great efficiencies from Doge and Elon Musk and his team, they could help us there. They're supposed to be looking for quote unquote government waste in general to help pay for the tax bill that will be coming.

[E]

Right.

[D]

It's supposed to cost about $4.5 trillion. And so they have to look for a trillion of cuts on Doge side and government waste to help pay for it. We'll see what's happening there. I don't. Was it like Doge tweeted, like, what kind of adjustments would you want to see happening to the irs? Paper checks was a big one. It's like getting rid of paper checks completely, which if we can find an efficient way to do that, great. I don't know if there's an efficient way to do that, Tom.

[C]

Yeah, I feel like there's so much waste though in terms of like with the irs. I remember this year they mailed me a check and I'm like, why are they mailing me this check? Can't they just deposit the check? I mean, there's other things too. I feel like a lot of things within the government can be made more efficient with modern day technology. Whether it's AI or just even. Not even AI, Honestly, it's just like basic stuff that we've all been using in the business world for the last like 10, 15 years. They just apply it to the government. Things will be a lot more efficient.

[D]

I hope so. I hope that's what DOGE does. I hope they just like basically like, hey, here's a computer from like just 2005 versus like the 1950s computer they're working on.

[E]

Right.

[D]

If we do that, like everything's going to work running a lot faster.

[C]

Yeah, I mean even the tax preparation software, I know this obviously is in doge, but just kind of goes to show you like how far things are. I feel like the current tax preparation software, a lot of it feels like it was built on like Windows 95. Right. 98, like you. Yeah, it would belong on those platforms. But anyway, yeah, I mean there's a lot going on within the government right now. DOGE is cutting out a government waste. Hopefully that will help cover some of the spending bill. 100% bonus appreciation sounds like it's going to be making comeback. We got our fingers crossed September 30th. Hopefully we see that. What else have we not covered right now? You think people need to know about 2025 tax changes?

[D]

Yeah, Tom, I definitely think that, like, we've talked a lot about raising the salt cap.

[E]

Right.

[D]

Raising it or eliminating it? It has been discussed completely eliminating salt deductions in general and not just for individuals, also business taxpayers as well. So basically no one gets to deduct state income tax any longer. Is that that no longer. That that could potentially be on the chopping block. It provides a ton of space and revenue to allow for all these things to happen. So I can't confirm if that's for sure going to happen, but I definitely think it's an option that they're considering. We'll see what happens. I really think by the end of February, we'll have a little bit better picture of what direction everything is going to be going. But we'll see, like, it requires the House to be in session and we'll see what the Senate ultimately tries to do if they try to push their, their brethren into line.

[C]

That's interesting. So on one side they want to raise perhaps 20,000, I heard, or perhaps even like eliminate the cap itself. Right. But then on the other side, it's like they're trying to eliminate it like the deduction completely, like, meaning completely, you know.

[D]

Yeah, yeah, yeah. I mean that like all businesses. So I. So one thing that a lot of real estate investors who might have used is the, the PTET deductions pass the entity tax deduct, like tax deductions where you did make the, like you basically like you elect into your state to pay forward taxes essentially, and you make the deduction. I def. I think that's going to be gone. That's going to be used as a pay for. For this year. So if that's something you used, I'm sorry, but I don't think that's going to be allowed going forward after 2025.

[C]

All right, so we talked a lot about 2025 changes. What could be coming, what might be coming. There's still some unknowns. We don't know exactly the timing, you know, when all the pins are going to drop, so to speak. Where's the best way? You know, I know we have a lot of resources on this. What's the best resource that our listeners can get that helps them keep up to date with what's going on? These tax changes.

[D]

Yeah. So I would highly recommend logging onto our 2025 tracker at Haas CPA. It's an awesome way to do that. We'll be posting updates constantly and consistently. Also give me a follow on X, formerly Twitter or LinkedIn, and I'm posting pretty much daily, at minimum weekly on what's going on and what's going on in the government. If there's an announcement that's made, you'll hear it from me first before you hear it from anywhere else.

[C]

Yeah, absolutely. We do have that tax tracker that Nathan just mentioned. You can get [e-mail] realestatecpa.com 2025 tax changes. You can also join our new newsletter that we'll be putting out. We'll be keeping everybody up to date with the Latest information on 2025 tax changes on that newsletter. You can also get that at the same page, which again therealstatecpa.com 2025 tax changes and we'll add you to that newsletter as well so that you don't miss a beat.

[A]

With all that being said, if you.

[C]

Are looking for proactive tax advice on how you can use these changes to your advantage and that's currently in place within the tax code, we'd love to learn more about your situation and how we can help you come up with a tax plan that'll help you reduce your tax bills. So you can learn more and request a free discovery. [e-mail] podcasts and we will see you on the next episode of Tax on RA Podcast.

[B]

Thanks for listening to today's show. If you enjoyed the show, please find us on itunes and leave us a review. You can also email us at. Contact therealestatecpa.com with any feedback or topic suggestions. We are always taking on new clients and with the new tax laws in play, you really don't want to navigate this alone. Let us help you save money on taxes with your accounting and CFO needs to become a client. Navigate to our client [e-mail] and fill out a web form with as much detail about your situation as possible. Thanks so much for listening. Have a great rest of your week.