← The WealthAbility Show with Tom Wheelwright, CPA
The WealthAbility Show with Tom Wheelwright, CPA
One Big Beautiful Bill: What the 2025 & 2026 Tax Changes Mean for You
00:38:15
Loading summary
Transcript63 lines
- [00:00]
Asana AI Narrator
Working across teams is tough, but Asana helps you handle it. Asana AI can spot roadblocks and assign work to keep everything on track. That's how work gets handled. Visit us@asana.com.
- [00:18]
Capital Ideas Podcast Narrator
If you're early in your career and looking for insight, inspiration and honest advice, listen to the Capital Ideas podcast. Hear from Capital Group professionals about leaning into the differences that make you unique, making decisions that last, and what it means to lead with purpose. The Capital Ideas podcast from Capital Group, Available wherever you listen. Published by Capital Client Group Inc.
- [00:45]
Tom (Host of Wealthability Show)
So tax season is underway and we have some tax law changes that we better be paying attention to because a lot of these tax law changes from the one big beautiful bill apply to 2025, not just some of them applied 2026. We'll talk about those too. But what do we have to look out for during tax season? And while you're preparing your tax returns, why, you know, what can you do in preparing your tax returns or your tax preparer? What can they do? What are we looking out for right now during this tax season? And how will the changes at the irs, they've lost a lot of their people. How will that change impact tax taxpayers? Is it, is it the end of the world or can, will they actually get through tax season? That's going to be a really interesting question. And we have with us today Andrew Lautz from, from the Bipartisan Policy Center. And Andrew, it's great to have you here on the Wealthability Show.
- [01:47]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Thanks so much for having me, Tom.
- [01:49]
Tom (Host of Wealthability Show)
So, Andrew, if you would just give us a little of your background and what's got you interested in tax policy.
- [01:58]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
So, Tom, I'm the Director of Tax Policy at the Bipartisan Policy center at BPC. We are a D.C. based think tank. We're actually the nation's leading bipartisan think tank. So we work with both parties in Washington to tackle some of the nation's biggest policy challenges, including the ongoing frustration that I think many Americans have with the, with the US Tax system. It's, it's obviously very complex and a lot of people like filing their taxes come this time of year. But we, we are working with both parties in Congress to try to make that easier. So I should note as well at the top that I work in federal tax policy for a living, but I am not an accountant or lawyer, so none of my thoughts here are legal or financial advice. But I do spend a lot of time thinking about the federal tax code and, and federal tax policy and so happy to walk through some of the major changes that Congress made back in July with the One Big Beautiful Bill Act.
- [02:50]
Tom (Host of Wealthability Show)
I am actually a CPA and tax advisor, so. But none of my, I'll leave it to you. Nothing I say is tax advice here. This is all education. So that's all good. So when you look at the changes for 2025, what do you think entrepreneurs, investors ought to really be paying close attention to for filing their 2025 tax returns?
- [03:16]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Or let me highlight a few. I think several of which will, will apply to your audience and then some of the other major changes that, that your audience will be hearing about in the news, even if they're not, you know, eligible for particular benefits. So first, take a step back. The One Big Beautiful bill Act or obbb or ob3. I use ob3. I think you do as well. Tomorrow we that that passed into law on July 4, 2025. The President signed it. What Republicans in Congress and the President did in crafting this law is they made several changes retroactive to January 1, 2025. And that was an intentional decision by policymakers. They wanted it so that when people are filing their taxes in the coming weeks and months in 2026, they're seeing the benefit of those larger refunds rather than having to wait until 2027 when they're filing their 2026 return. So a couple changes to look out for tax deduction or SALT, as, as your listeners may know, from 2018 through 2025, that was capped at $10,000. That was a pretty strict cap, especially for some of your upper middle income or high income taxpayers. That cap has been lifted to $40,000 for 2025. And that cap is in place for the next couple of that higher cap is in place for the next couple of years.
- [04:35]
Tom (Host of Wealthability Show)
Now let's be clear. It's, it's lifted for some people, but not for all people. And it's actually lifted for most people who actually would have $40,000 in, in, in state taxes because it's limited if your income is too high. Can you kind of walk through those limitations? Because I think they're serious.
- [04:53]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yes, very important caveat. So that $40,000 cap starts to phase down once you surpass 500,000 in adjusted gross income. And it's a pretty aggressive phase down. It phases down at a 30% rate. So you go from 40,000 cap back to down to $10,000 cap as you go up from 500,000 in income to 600,000 income. So it's a pretty fast phase out.
- [05:16]
Tom (Host of Wealthability Show)
And, and it's 40,000 not per person but for return. So this is another marriage penalty that we have because we keep adding on marriage penalties in the tax law. I don't know what the government has against people getting married, but it's very it's actually been quite aggressive over the years that there are some pretty severe marriage penalties, and this would be one of them because if you're married, you get 40,000, but if you're two single people living together, you get 80,000.
- [05:48]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yeah. And there was discussion by Congress during this debate last year of addressing that marriage penalty in the SALT deduction, doubling the cap for married couples. I think where the political negotiation ultimately settled was let's take the cap up, but we're not going to adjust it based on filing status. So that's where they landed another couple. For your listeners who are entrepreneurs, who are business owners, there were a lot of changes on the business side of the code, some of which are retroactive to January 1, 2025. So tax treatment of R and D, R and D deductions, as you've probably covered starting in 2022 for a couple years, businesses had to amortize or spread out their deductions over five years. We've gone back to the full and immediate expensing standard for R and D. That was that was the standard for decades before this tax law change. Congress has finally addressed that issue. So now there's full expensing for R and D. Again, the full expensing for machinery and equipment, sometimes called bonus depreciation, that was phasing down from 100% full expensing to 80%, then 60%, then 40%. That has been snapped back up to 100% on a permanent basis.
- [06:57]
Tom (Host of Wealthability Show)
But let's be clear, that's not retroactive to January 1st. That's retroactive to January 20th.
- [07:03]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
January 9th. Yes, January 20th.
- [07:05]
Tom (Host of Wealthability Show)
Inauguration Day.
- [07:07]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yep, exactly. So if you. Yeah. So unlike some of the other business changes that were January 1st, that's a good flag. Bonus is for machinery and equipment. That's January 20th. So if you add investments in those first three weeks of January, you're going to want to, you know, closely look at the rules there and then for small business owners.
- [07:26]
Tom (Host of Wealthability Show)
Can I ask you a question? So on the effective date, so but 179 deductions, was that retroactive? Because that was increased also, was that retroactive to January 1st?
- [07:40]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yes, it should be. So. And that's increasing the allowance. So the allowance on 179 is increased from 1.25 million to 2.5 million. And then the phase out where that allowance starts to phase out. If you have property above a certain threshold, that threshold was raised from 3.1 million to 4 million.
- [08:01]
Tom (Host of Wealthability Show)
So I think from a practical standpoint, the thing to pay attention here is if you have, if you bought equipment between January 1st and January 20th, you want to be looking at 179 deductions, not bonus depreciation because you'll get it in 179, but you won't, you, you, you will get only a, a limited portion in if you took bonus depreciation. So that's one case where you might definitely want to use 179. Where normally bonus is better than 179. In this case, 179 would be better.
- [08:34]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yep. And it's worth just, you know, going through real quickly some of the individual side changes. Some of your listeners may benefit from this. I'm sure many of your listeners itemize. But if they do take the standard deduction, that's larger this year. So 15,000 it was going to be 15,000 for single taxpayers, 30,000 for married filing jointly. Instead it's 15,750 for single taxpayers, 31,500 for married filing jointly. So that's a tax cut of a couple hundred dollars by the time you apply that standard deduction, depending on what your tax bracket is. And then if you have children, the child, the maximum child tax credit is 2,200 per child instead of 2,000 per child, although that continues that, that also phases out if you surpass 200,000 income as a single taxpayer or 400,000 merit filing jointly. So high higher income taxpayers receive less
- [09:27]
Tom (Host of Wealthability Show)
or interesting that the, that the Trump administration maintained the Biden administration's $400,000 threshold. I find that very interesting.
- [09:36]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Well, tax pledges make it hard to, for either party to do tax policy. And that 400,000 threshold actually dates back to the Tax Cuts and jobs act of 2017. And essentially what happened is Congress got rid of personal exemptions when you file your taxes, including dependent exemptions, and they basically traded those that repeal of dependent exemptions for a larger child tax credit. But yes, they phase it out for
- [10:03]
Tom (Host of Wealthability Show)
4 higher income earners now over time deductions. Excuse me, where I think actually our listeners are particularly going to be interested is in the employer's side of this. And how do employers, you know, what, what's their responsibility both on the overtime and on the, the tips. So can you, can you, can you address that?
- [10:33]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yeah. So we are in a transition period right now. Right where, where the IRS and the Treasury Department are in the process of writing rules and regulations that, that'll help govern how employers report on qualified overtime, qualified tips, if they run a business receiving tips. But we're in this weird transition period where people are claiming the tips and overtime. The workers are claiming the tips and overtime deduction this filing season because it was retroactive to January 1, 2025. But the reporting systems for employers aren't in place. And so I'd encourage folks to go on the IRS's website. They've provided some early initial guidance to employers, some FAQs and some other resources. The IRS, as I understand it, is encouraging employers to provide this information, but not requiring it. And that's something that an employer will have to discuss with their accountant, with their legal team to, to kind of, or their lawyer to determine, you know, because there is, you know, there are concerns, I think, on the employer side about liability. If you get it wrong, you know, I'll just say on overtime, not everyone, you know, outside of, you know, the Washington crowd really knows this yet, but there are, there are so many asterisks and restrictions and terms and conditions.
- [11:46]
Tom (Host of Wealthability Show)
In fact, we're going to do a separate show just on these, these types of things with another tax professional who deals in all the little, little intricacies. But she was actually telling me the other day that pretty much nobody's going to get this. I mean, the overtime, it's so restricted that, and, and, and most of the union people who this was directed to not going to get it because they don't, they don't follow, they don't follow the Department of Labor guidelines.
- [12:19]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Right. So it's just FLSA or Fair Labor Standards act over time. It's. So if you're exempt from the Fair Labor Standards act for any reason, you're not covered by this. If you're covered, there are like flight attendants and railway workers, even FedEx workers. I saw this Reddit thread the other day there. If you're covered by the Railway labor act or the rla, you're, you're probably not eligible for this if it's state mandated, mandated over time, kind of above and beyond flsa, that's not eligible for the deduction. And then what I think a lot of employers understand, but maybe not a lot of workers understand yet, is the deduction itself is just for the half time, any time and a half you get. It's not the full time and a half you're earning in overtime. It's just that halftime bonus. So there's a huge information gap on overtime that's going to play out and
- [13:07]
Tom (Host of Wealthability Show)
we'll actually address that, that all those specifics in, in a separate podcast. But yeah, because you know that one and then the tips, the tips are you know also have all so much, so much hair on it and, but, but something that employers are going to have to deal with because their employees are going to be confused. They're going to be asking and you know, I even wonder if some employers might want to offer a little bit of time of their tax professionals time to their employees. This would be my recommendation is look, just buy, buy a couple of hours from your CPA and offer like a seminar, brief seminar question, answer period to your employees so they can ask questions. So you know, don't take on the liability yourself. Pass it on to your tax advisor. Always good, always good. Pass on that liability. But give employees at least some more information than they would otherwise get.
- [14:08]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
I think that's a reasonable suggestion. And I want to add one quick point on tips too. And this is not an immediate concern, but something that employers will want to watch in the months ahead. There's this restriction in the statute that basically says if you and it as an employer are a specified service trader business or sstb and this folks may know this stems from the qualified business income or QBI or 199, a deduction for primarily small business income. If you're that specified service trader business, there may be restrictions on the TIPS deductions that your workers can claim. And long story short, the IRS and Treasury Department are still working out how a business, especially if you're a business, if you're a C Corp or a business that hasn't had to figure out before if you are SSTB specified service trader business, IRS and Treasury Department are going to have to provide some guidance on how employers figure that out. That's something to look for from them in the coming months because it's going to confuse a lot of people until guidance is issued.
- [15:09]
Tom (Host of Wealthability Show)
Any other major changes that you think people ought to be looking out for?
- [15:14]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
If you're 65 plus there's, there's a deduction for seniors. It phases out. You know, once you, you pass it actually phases out at a pretty low level. 75,000 for single taxpayers, 150,000 for married filing jointly. So it phases out quickly. But if you're under those income thresholds, you'll receive a, you're eligible to receive a full up to $6,000 deduction. And then auto loan interest is the other kind of big headline New tax cut on the individual side, I should flag that. That. That is for it has to be primarily personal use vehicle. The IRS and Treasury Department are writing regulations on how, you know, someone using, using a new vehicle for mixed purposes. Some personal, some business use could be eligible for the deduction. But the standard they're basically, basically applying, at least in the proposed regulations, are it has to be, you know, 50% plus one for personal use.
- [16:07]
Tom (Host of Wealthability Show)
But that's the good news is if it's business use, the interest deductible anyway.
- [16:12]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
That's right. That's right.
- [16:16]
Tom (Host of Wealthability Show)
So let's, let's talk about what becomes law in 2026. So if we're looking forward, because we're starting to do our planning now, which is when everybody should start doing their planning, what are some of those changes in 2020 that, that were not retroactive that we ought to be looking for?
- [16:33]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Sure. This is a good question. So, you know, one, one I actually like to bring up because I think there's a lot of discussion in Washington is, and it could affect particularly C corporations is there's a new floor on charitable deductions. If you, if you claim charitable deductions, and that actually applies to itemizers on the individual side as well. So you basically have to, the first, if you're an itemizer on the individual side, if you're passed through the first half percent of your charitable contributions aren't going to be eligible for a charitable deduction. If you're a C corporation, it's the first 1% of taxable income. So these are new floors. You kind of have to clear those hurdles in order to be able to claim a deduction. And so that's one that I like to point out because it's going to, and it's one that as you imagine the nonprofit and the charitable community is talking about a lot.
- [17:31]
Tom (Host of Wealthability Show)
So, so that actually brings me to a question. Do you think that we'll see a tax bill to fix some of this stuff? Because that's a terrible provision. I'm sorry, but that's just from a policy standpoint, it makes no sense to me why you would restrict charitable contributions like that. Why, why would you, why would you discourage people from making charitable contributions? And, and there are some other things like the gambling issue, you know, the, the gambling losses, which is terrible. You're picking up the income and not getting the loss. I mean, that's a terrible, that's a terrible idea. So there are, there are some things that need to be fixed. You think there's any chance, more than a remote chance that we'll get another bill and some of these things will be cleaned up.
- [18:18]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
It's definitely more than a remote chance. And while I haven't heard as much legislative momentum around addressing the charitable floors, there is a lot of legislative moment to address the gambling loss issue.
- [18:31]
Tom (Host of Wealthability Show)
Can you walk through that gambling loss? Because this is fascinating.
- [18:35]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yeah. So, you know, up until this year, generally how taxes on gambling winnings work is you are taxed on your gambling winnings, but you can also deduct your gambling losses up to, you know, the amount of your gambling winnings. And what changed in the one big beautiful bill over July is that your loss losses are actually capped at 90% of your gambling winnings. And so you can be in a position where you're breaking even or even having a net loss in your gambling activity, but you're still paying taxes on your gambling winnings. And that's generally not good DAX policy. Right. You want to be able to allow people to even out their gains and losses in a particular bucket of income. Yeah.
- [19:28]
Tom (Host of Wealthability Show)
Not. Not the only place where we get this. We actually get this in mutual funds because you can have. You can actually have a loss for the year in mutual funds and be taxed because of when you came in and out of that mutual fund. But this one, it seems particularly egregious just because you didn't make any money, but you're paying. Paying tax. So you're. It's basically what I'd call a syntax. So it is just a tax on gambling. That's what it is. It's a tax on gambling.
- [19:59]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
And normally I agree with you that it's a syntax. And normally, the way that, normally what we see from syntaxes at the federal and at the state level is you get an excise tax. Right. So you think of like alcohol taxes, cigarette taxes, but this is a new kind of syntax that's actually just, you know, kind of changing the rules for deductible losses. And it's a new kind of approach.
- [20:19]
Tom (Host of Wealthability Show)
Yeah, it's interesting. So let's. Let's shift gears for a minute, if we can, to the irs, because I know you pay a lot of attention to what's going on at the irs, and we all know there was big force reductions at the irs, big shakeups at the irs. A lot of people left voluntarily. There's been a lot of movement of the irs. We still don't have an IRS commissioner. We have the Treasury Secretary acting as commissioner, and we have a CEO of the irs, which is A entirely new position. And he seems to be acting quite a bit like a commissioner, frankly, but he's, he's basically hired as the CEO of the irs. How do you think this is going to affect filing season? That's really the big question on everybody's mind.
- [21:07]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yeah, you know, the unsatisfying answer is that it's too early to tell. But, but, you know, this is the way I've been framing it is this is going to be a significant stress test for the irs, Perhaps their biggest stress test since the pandemic. Right. When, when everything was shut down and when Congress was delivering a lot of stimulus and a lot of pandemic benefits through the tax code, that really tested the irs. And in some ways, the IRS rose to the occasion during the pandemic. Right. They, they, they got, you know, direct stimulus payments out and expanded child tax credit amounts out with relative ease to, to most people that were eligible for it. In some ways, it really tested the IRS because, you know, there were pandemic issues with in person service.
- [21:50]
Tom (Host of Wealthability Show)
Answer the phone.
- [21:52]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yeah, exactly right. And you have more people calling the IRS because of all these.
- [21:58]
Tom (Host of Wealthability Show)
And what I love most was the, when you got after you'd waited for an hour and says, for your convenience, we're disconnecting. Literally, that is what they said. For your convenience, we're disconnecting. Callback another time going, how is this for your convenience that you're disconnecting? And that, that, that did improve substantially, actually, particularly under Commissioner Werfel, that he did a tremendous job, I thought, getting that under control. How do you think that's going to go this filing season?
- [22:33]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
So it's going to be a challenge because as you mentioned, the IRS has had a significant drop in staff. We don't have like up to the date, like this month, last month type numbers, but we know that as of May of last year, 2025, the IRS have lost 25% of its staff. And so that's a, that's a big drop, right? You, you ask any, any business, large or small, like, hey, how would things function if you lost 25% of your staff virtually overnight? There'd be challenges. So, so you know that, that's one challenge. Another is this, you know, you alluded to it, this rotating crop of leadership. We, we had seven IRS commissioners in 2025. That was a record in the history of the IRS. Five of obviously, you have Frank Bisignano serving as CEO of the IRS right now. That's a brand new position created by the administration. It's Not Senate confirmed. And then you have Secretary, Treasury Secretary Bessen serving as acting commissioner. Obviously, he's pulled in a lot of different directions in terms of how this flows through the filing season. Because, by the way, you also have this clash of all these new tax provisions we're talking about from the one big beautiful bill. IRS has to create rules around them, create notices, FAQ pages, all sorts of assistance for taxpayers. You know, your average American who has a relatively straightforward time filing their taxes, does it digitally. You know, is, is only claiming, you know, the larger standard deduction, larger child tax credit. You know, I'm, I'm expecting and hoping that things are fairly straightforward for them. Maybe it takes a couple days longer to get their refunds than it normally does. So three and a half weeks instead of three weeks or whatever the average is. But I'm hoping it's mostly a smooth process for people who are filing electronically. If you're filing by paper, either because you have or because that's your preference, if you're claiming some of these new benefits like the TIPS deduction, the overtime deduction, if you have questions for the irs, if you need to get someone on the line or, or if you have an error in your tax return. And so you get in that, that loop with the IRS where you're, you're trying to correspond with them and correct errors. Those are all situations where, where, you know, the backlogs could be greater than prior years, it could take longer just because of all the constraints that the IRS is funding. And by the way, one, we haven't talked about funding cuts. Cuts as well. Both the base budget for the IRS is slated to be cut in an appropriations bill that Congress is debating right now. And that mandatory, that big $80 billion pot of funding they got from Democrats a couple of years ago, Congress continues to chip away at that and take away that funding. So that's another challenge.
- [25:06]
Tom (Host of Wealthability Show)
Yeah. So one of the recommendations I would make is if you've been asking for a physical check from the irs, don't ask for it digitally into your, your bank account, you are much more likely to get it. We have seen clients that are waiting on refunds from three years ago. So that it is, it is, it is absolutely mess. If you can avoid paper filing, avoid paper filing, avoid anything paper, because that requires people, whereas the digital doesn't require people. That is automated. Speaking of which, so Werfel, Commissioner Wurfel, who we've had on this podcast before, he did a lot towards, he was really working hard on the technology of the irs, have you seen that? They are. Because they did. A lot of those people left, but did they, have they replaced them? And are they, are they really working hard? To me, it seems like you could reduce 25% if you could, because you've got 25%. You could easily do digitally. Do you, do you think that, that digital has happened quickly or do you think this is a long term issue?
- [26:29]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
It's still a long term play. And you know, Commissioner Wurfel and the irs, they had this strategic operating plan they released, I believe it was in 20. That was basically their plan on how they were going to spend this $80 billion that Democrats gave them in 2022. And you know, one of the main goals, one of the goals for the IRS with this $80 billion pot of funding is, hey, improve customer service at the irs. Modernize, like update some of these aging systems. Another big goal was increase enforcement activity. Right. Democrats wanted to bring in some additional revenue from enhanced tax enforcement. And obviously that's where one of the partisan divides happened in Washington. Republicans didn't like this big pot of funding for the irs, didn't like the enforcement funding. That's why you've seen it chipped away at. But that operating plan, you know, some of these initiatives have been able to move forward at the irs, but some of them are inevitably going to be stalled or canceled because what was originally an $80 billion pot of funding is down to under 10 billion now. And some of that the IRS has spent, you know, somewhere in the 15 billion range, but most of it has just been taken away by Congress. And so that's going to challenge IRS efforts, efforts to modernize if they don't have the funding to do it. There's certainly, you know, with better technology you can do more with, with less staff. Right. So that is one area where I think the irs, especially under this administration, is looking in the years ahead. But it is, there's only so much you can do without additional funding resources in place.
- [27:52]
Tom (Host of Wealthability Show)
Okay. So, so you would not expect that to be an overnight solution. That's going to take some time. So there could be delays, there could be fighting season.
- [28:04]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
There could be. But you know, and another thing I'll highlight is, and this is more of a, a, you know, middle term, long term play. We're talking like the next two to five years. Congress is working on a bipartisan basis to try and improve the IRS and improve tax administration. They're the leaders of the Senate Finance Committee, Ron Wyden and, and Mike Crapo released a discussion draft it was called last year with a whole bunch of proposed reforms to the irs, and we're hoping there's some momentum on that legislation. One simple example is digitization of paper forms, right? Including something like a QR form on every paper form so that even if you're filing by paper, it's easier for the IRS to scan that information in electronically and get to those paper forms faster. So, like little reforms like that, there are dozens of those in this proposal from, from the Senate, from the senators there. And I'm hopeful that if Congress gets those reforms in place, kind of kicks the IRS into gear and provides the funding needed for the IRS to make those reforms, that maybe not a year from now, but two, three, four years from now, things are a lot better for people interacting with the irs.
- [29:17]
Tom (Host of Wealthability Show)
In the meantime, be patient. In the meantime, be patient with your tax preparer. Because now the good news is it is there are still ways for a tax, tax professional to get a hold of the IRS much quicker than a taxpayer can get a hold of them and get things resolved much quicker. Still frustrating, even for the tax professionals, because it can still. We can still be on hold for an hour, an hour and a half, and just know if your tax professional is on hold for an hour and a half, they are billing you for that hour and a half because they. It is the time that they are selling. So be a little patient. You're gonna have to be a little patient this year, both with the IRS and with taxpayers, just because there's been major changes. I'm curious, on a bipartisan perspective. There's been nothing bipartisan, I mean, to speak of, from a tax. From a tax perspective, in years and years and years. I mean, beginning with Obamacare, which was basically the Democrats thumbing their nose at the Republicans, said, we're not going to involve you. Now they're called complaining that they didn't get involved in the one big, beautiful bill. I don't know. You know, what goes around comes around is kind of in my mind. Do you see any possibility that we're going to see any kind of bipartisan work? We had, for example, before the election, the last election, we had a bipartisan bill. We had a couple of bipartisan bills. We had one on immigration that looked like a really good bill. We had one on bonus depreciation, R and D expense, and childcares, which looks like a really good bill. And the partisan people killed them. So do you see? You know, I mean, you're the bipartisan tax tax organization. Do you see? Do you have hope that this can be remedied in any way.
- [31:10]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
So I am at the Bipartisan Policy center, so I have to be optimistic about, about bipartisan policymaking. And I am, and I'll give you a few reasons why. One, Tom, you're absolute right that on, on the, on the major bills, the major laws, the major issues, the two parties have often been at each other's throats over tax policy. So there is a lot of daylight between the two parties on tax policy. However, there's some interesting stuff happening under the surface. For the one part, you know, it's obviously impossible to prove a negative, but if we had had divided government in 2025, there would have had to have been a negotiation over the expiring tax cuts. Right. Because we've talked a lot about what was new in the one big beautiful bill, the 2025 tax law. What we haven' is, is what was actually just a continuation in that tax law, which is most of it more significant than the new stuff. Right. You know, had Congress not acted, lower tax rates across the board would have expired. Larger child tax credit, you know, larger standard deduction, whole bunch of provisions would have expired. So, and you know, again, hard to prove a negative, but even Democrats were saying, hey, the majority of these tax cuts we're going to need to extend, even if they, you know, aided the tax law as a political matter. So there would have had to been a negotiation. Two is you look at individual bills that members of Congress are introducing, more often than not, they're bipartisan. So there are a lot of interesting one on one pairings or two on two pairings of lawmakers working together on small bills, maybe not the big packages, but that gives me hope for when there is divided government in the future, that they'll work together. And then three, I just point to two, two things where we might see some congressional momentum this year in the tax base on a bipartisan basis. One, I've already mentioned it's this tax Administration IRS reform work that's been strongly bipartisan so far. We hope it stays that way. Another area is in digital assets, cryptocurrency, stablecoins. Congress is working on a bipartisan basis right now to create a regulatory framework for these assets. But there's also an acknowledgment that Ways and Means and Finance, the tax writing committees in Congress, need to provide a tax framework as well for some of the tax questions around cs, around these assets. And so far, that work has been pretty strongly bipartisan.
- [33:23]
Tom (Host of Wealthability Show)
So speaking of partisanship, I've got to address what to me was a travesty and that is eliminating the IRS's tax filing program where you could, you could file for free by the irs. That, that digital tax filing program that the Republicans decided, no, we're going to kill that. I think the lobbyists got to them because I think, I thought it was terrific. I think, I don't think you should have to pay to file your taxes. I really don't. And any hope that that gets resurrected or is that just dead for the foreseeable future?
- [34:03]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
You know, I don't, as long as Republicans have a foothold in government, even if that's, you know, enough of a foothold to, you know, even if they're in the minority in the Senate in the future, but they have enough of a foothold to, you know, filibust and to, you know, the Democrats are short of a 60 vote threshold in the Senate. As long as Republicans have a foothold in government, it's going to be, it's going to be really hard to move something like, you know, filing for free through the IRS forward. It's just become a very partisan issue. And, but you know, that said, you look at the polling and it's very popular. People do want to be able to, you know, file their taxes with the irs. And, and, or you know, just people don't want to have to pay to file their taxes. So it'll remain a politically popular issue. It'll probably have to be Democratic policymakers that bring it forward if it's brought forward again. Interesting.
- [34:53]
Tom (Host of Wealthability Show)
Okay, as we wrap up here, if you were to, to give recommendation two or three things that taxpayers, particularly entrepreneurs, investors ought to be doing at the beginning of tax filing season, what would you have them look for?
- [35:12]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
You know, obviously, I mean, first advice is the simplest advice. Talk to your, talk to your accountant or tax preparer. Right? They're, they're going to know, you know, hopefully this, this podcast has been helpful for folks understanding some of the broad changes that are happening. But, but your accountant, your, your tax preparer is going to know your specific situation and be able to help navigate you through some of the rules. Second, you know, pay attention to IRS.gov you know, the IRS is going to continue to offer notices q and a FAQs and you know, they've already done this with some of the new stuff like tips over time. They'll probably do it with some of the, the entrepreneur and business focused new tax breaks that are coming online, either came online last year or coming online in 2026. They'll continue to do that. And then last but not least, you know, you have a voice in the regulatory process as well. You know, Treasury Department and IRS in the process of writing rules and regulations for these new, these new tax provisions, they asked public for, for input. And so if you have, you know, a particular perspective on, you know, the employer reporting side of overtime, you know, how it can be made easier for employers, or, you know, the particular rules for the new expensing allowance for manufacturing structures, if you're, if you're in manufacturing and you have thoughts on that, you can share those thoughts with the Treasury Department, irs, and they may be incorporated into, you know, when, when treasury goes from proposed regulations to final regulations. So you have a voice in this process.
- [36:46]
Tom (Host of Wealthability Show)
I would actually second that. I, I've actually done that and I do that. They do actually pay attention. So, you know, unlike, you know, you, you may not be able to influence legislation unless you've got big dollars behind you, but can you influence the application of the legislation? And the answer is absolutely yes. I think that's a great idea. And so Andrew Lautz has been our guest today on the Wealthability Show. Andrew, where could they find more about what you and your Bipartisan Policy center are doing?
- [37:19]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
Yeah, thanks, Tom. Our website's pretty easy to remember. It's just bipartisanpolicy.org you can find all of our content there. We also work on energy policy, housing policy. So, you know, check it out, see our research and reports and there's ways to get in touch with us if you have recommendations for how we should be working with both parties in Washington.
- [37:38]
Tom (Host of Wealthability Show)
I love that. And thank you so much, everybody for listening, watching. Because as we learn about this, as we understand it better and better, then we start changing the way we think about it. Yes, we might be able to influence the, the regulatory, but more important, we can influence what we do as we plan both for this fighting season and for 2026. And as we do, we're going to make way more money and pay way less tax. We'll see you next time on the Wealthability Show.
- [38:07]
Wealthability Show Host/Promoter
Thanks for listening to the Wealthability Show. If today's episode gave you a new perspective, remember this, the tax law is not your enemy. It's a roadmap. And when you know how to follow it, you can build real, lasting wealth. If you're a business owner or investor who's tired of overpaying taxes, the Wealthability accelerator is your next step. You'll have the opportunity to work directly with me for 80% less than my standard rate, and I'll personally guide you through how to change your facts so that you can change your tax. Go to wealthability.com bonus and apply today. Remember, it's not just what you make, it's what you keep.
- [38:54]
Andrew Lautz (Director of Tax Policy, Bipartisan Policy Center)
This podcast is a presentation of Rich
- [38:57]
Tom (Host of Wealthability Show)
Dad Media Network
- [39:01]
Safeway/Albertsons Advertiser
this week with digital coupons at Safeway and Albertsons. Get beef rib roast for $7.97 per pound member price with minimum purchase of $50 or more in a single transaction. Exclusions apply. See Store for details and Broccoli, cauliflower or russet potatoes are $0.97 per pound member price limit £6 plus selected sizes and varieties of Lucerne Butter Cheese or Philadelphia cream cheese are $1.97 each member price. Visit safeway or albertsons.com for more deals and ways to save.