Tax Expert Explains the Biggest Tax Changes of the Last Year

Quick Overview

The biggest tax changes discussed include the restoration of 100% bonus depreciation for qualified business property until 2026, the increase of the SALT deduction cap to $40,000 for taxpayers under $500,000 AGI, tax breaks for overtime workers (up to $12,500 deduction), tax-free tips under certain conditions, the expiration/reduction of many green energy credits, and an increased senior deduction for 2024.

Key Points: 100% Bonus Depreciation for qualified business property (equipment, machinery, vehicles over $6,000 lbs) is restored but phases down, remaining 100% until January 19, 2025, then gradually decreasing. The State and Local Tax (SALT) deduction cap increased to $40,000 for taxpayers with AGI under $500,000; those over $500,000 are phased down to a $10,000 cap. Overtime workers can deduct up to $12,500 of their overtime earnings, provided the overtime was worked between 2024 and 2028. Tips received by workers in heavy industries (like hospitality and service) are no longer subject to federal income tax under certain conditions, simplifying income reporting. Many Green Energy Credits, including the Residential Clean Energy Credit and Energy Efficient Home Improvement Credit, have been eliminated or are scheduled to phase out soon. The Senior Deduction increased for 2024, offering $6,000 for singles and $12,000 for married couples filing jointly, which stacks on top of the standard deduction. The speaker, Carlton Dennis, emphasizes that tax accountants focus on compliance while tax strategists focus on maximizing savings by leveraging the full tax code.

Context: Carlton Dennis, identifying himself as a Tax Alchemist, outlines seven significant tax code changes affecting individuals and businesses, emphasizing the shift in focus from mere compliance (tax accountants) to proactive tax reduction (tax strategists). These changes primarily relate to deductions, credits, and income reporting rules, many of which were affected by the Tax Cuts and Jobs Act (TCJA) and are being renewed or phased out.