BREAKING: Massive Tax Changes for Business Owners (Bill Just Passed)

In the tax world. I want to give you a quick update for business owners and there's going to be more updates coming. I've been doing this for weeks, since the new Year. We're waiting for this big tax legislation and we're in the middle of seeing sausage get made. Now, some of you want to wait till that hot dog or brat with the sauerkraut's done and perfect. Others of us like to see what's coming. Well, that's what's happening now. The House just passed unan. Well, the bill as it will stand for now. The Senate is already complaining. They want to rewrite it. They want to put their own twist on it. We, we, we're going to see that coming soon. And I'll keep you updated. But for now, business owners, I think there's a lot we can depend on here. And I look forward to seeing there's some cool stuff in here. So I have eight updates. Now. This is just for business owners. I'm not going to talk about salt. I'm not going to talk about auto deduction, interest tips and Social Security and overtime. I want to talk about you, the business owner, and what you should be planning on. So, number one for business owners, big deal. This is the qualified business income deduction. It is now 23% under the House bill, permanent. Now, what that means if you're a business owner, you make 100 grand. And you, before you do your standard deduction, your itemizing your adjusted gross income above the line, before you do any of that, you get to deduct $23,000 or 23% off of that 100 grand. Then you end up at your AGI and doing your standard deduction and tax and credits and the child tax credit, that's up, all those little things come into play. So the QBI deduction for you, the business owner, this is amazing. Absolutely amazing. You get a 23% haircut off the top of your profit and don't have to pay tax on it. Wow. You know why Congress and the Trump administration is doing this? They want to incentivize us, you and me, Main Street, America, to go out and build our business, to stimulate the economy, to make Main street great again. And I've been fricking working for Main street my whole career. We have our Main street tax professionals all over the country helping small business owners. And my Main street business owner training, I mean, we just love Main Street. So it's, this is good. Okay, number two, number two, opportunity zones. Now, for all of you that are real estate investors. 60% of my business owner clients own a rental property. We know that wealth will be built in real estate over and over and over again. So if you're buying short term rentals, long term rentals, you know the benefit of real estate opportunity zones were passed back with the Tax Cuts and Jobs act that said if you go invest any capital gain from crypto from your business, the sale of your business from real estate, and invest in a zone that's kind of crappy, and the governors all get to choose these opportunity zones and give investors an opportunity to go revitalize. This area will give you tax incentives. Well, this new one is the Opportunity Zone was on life support, now it's back. And the new provisions, so say that if you invest that money in an opportunity Zone and hold that for at least five years, your basis gets stepped up by 10%. And if it was in a rural area, like an area that really needed some development, you get a stepped up basis of 30%. This is big. And then, so when you sell, so you reinvest, you get that, you hold it at least five years and then three years, seven years, and when you sell, that's when you'll pay your tax. With that stepped up basis, if you, if you hold it at least 10 years, the gain that you made while you held it never gets taxed. So think about this. You've got crypto or stock and you've got 100 grand. You got $100,000 capital gain, you did some XRP, you bought some Tesla, whatever, you got $100,000 of gain, don't want to pay tax on it. So you go, well, I'm going to go invest in this opportunity Zone. I invest in the Opportunity Zone and I hold it and I bought that stock or that crypto for let's say 25 grand. So it goes up by 10%, that 25 grand goes up to 2750. And then I pay my tax on the difference. If I hold it seven years, it goes up by 30%. And then I pay my tax on the difference when I sell. But whatever I go buy in that opportunity zone and I hold that property 10 years, never pays tax again. So I'm going to explain this more with whiteboards in the future as this gets finalized. But for real estate investors and small business owners, this is a big deal. All right, number three, loving this one. The bonus depreciation bonus depreciation is now back to 100%. And that means if you go buy equipment, you buy rental real estate and do a Cost seg and tear out the chattels or the, the property that's being depreciated over less than 20 years, you can 100% depreciate it and it's retroactive to the beginning of 2025. This is great for the auto deduction because now I can bonus depreciate my auto and then do actual expenses for fuel, repairs and maintenance. It's a better deduction than mileage nine times out of 10. So I'm going to be comparing the auto deduction as we go into 2025 with this. You don't have to go buy a big truck or big SUV to take this. This is huge. All right, number four on this bonus depreciation. There's a new one. Trump's trying to stimulate the economy, getting people to manufacture, bring their business from Mexico or Canada or around the world and manufacture in the US if you go buy a building or build a building, you normally have to depreciate it over 39 years. New legislation. If you buy or build a building and do any sort of manufacturing. And what were you saying, Jack? Could be actually a woodworking shop. You're like making furniture, you're producing something. It could be in the farming business even. But you buy a building to manufacture something, you don't have to be like Ford or Chevrolet. I mean just manufacture. You could write off the entire building. I know. Buckle up all in the first year. Instead of depreciating it over 39 years, you can take a write off in the first year. And if there's a loss because you wrote off this big frickin building all in the first year, you get to carry forward that loss and chew it up over time. Unbelievable. All right, number five now, guys. This one I almost didn't want to share online today on video because I'm just hoping a staffer does not notice this. When the Tax Cuts and Jobs act was passed, it eliminated the entertainment deduction. You couldn't write off golf show tickets, go into a baseball game and take in a client or an employee, anybody or business partner. You could not write off entertainment anymore. When that was passed back in 2007, it was to expire. It was going to expire at the end of that Tax Cuts and Jobs act period that was expected to expire at the end of this year. All right. The new bill does not reference the entertainment deduction at all. It's silent. What that means is the entertainment deduction expires, the limitation expires and we got entertainment write offs back full throttle. So 50% of golfing is now going to be back on the table as a write off. Now, I've got the bill right here. 11, 17 pages. There is no word in the bill referencing entertainment. Now, heaven forbid the Senate picks up on this and shoots it down and makes that permanent or extends it. That limitation again, but I'm praying. Nope, Big deal. You want to know the other one? This is me gaming the system, guys. I'm in this every day as a tax lawyer for you, the small business owner, the one I'm loving, too. Number six, business meals. Now, we know meals are a 50% write off, but you know what was before Tax Cuts and Jobs Act? If you're a business owner and you told all your employees, hey, we got a lunch meeting, you all got to be here. Or, hey, we're working late, or, hey, I'm going to stock the fridge with some food for you guys. That was 100% write off because you were making the employees come in for lunch for a meeting. Had to be a meeting. Had to work late. 100% write off. I put food in the lunchroom to keep them at the office rather than going down the street to Taco Bell and I lose them for an hour. I'd rather have them here at the office eating at their desk. I'll freaking buy your lunch. 100% write off. Well, that was restricted or limited to 50% after the tax Cuts and Jobs act temporarily. It expires at the end of this year. There is no reference to that in the new bill, which means we get that back 100% pending any change from the Senate. Big deal. All right. Now, I just want to make a couple final points. That's number six. I told you there was seven and eight. They're kind of. FYI. You'll see stuff about writing off auto loan interest, whatever that's on your personal auto business owners. You can still get to write off your auto interest even if you do mileage, even if you do bonus depreciation and actual. So don't get caught up in it. Don't care. You the business owner. We get a better fricking write off when we write off the interest on our business vehicles. We get to do that anyway. All right, and the last one. Okay. No tax on tips, no tax on overtime. Guess what? You cannot pay yourself overtime as a business owner and not pay tax on it. I wish, but there's a limitation for owners of businesses where you cannot pay yourself overtime, so you're not taxed. Not going to happen but another little FYI, I pay an employee for overtime, okay? I get a write off, I paid them for overtime and they don't pay tax on the overtime. That's great. Good. Knock yourself out. But guess what? I still have to match their FICA. So I'm still paying frickin FICA 7.65% on overtime wages I pay even if they don't pay tax on it. So Congress, why don't you throw me a bone? Can I just quit paying FICA on that, please? They don't pay tax on it, but I still got to match their fica, for crying out loud. Whatever. Okay. Well guys, those are the top eight highlights at this juncture for small business owners. And there's more. This thing's a behemoth. So I will be studying this, working on it all weekend. I was going to go enjoy Memorial Day. I was going to go have a barbecue, go out on the lake. But no, I'm taking one for the team for you because I love small business America. Okay, maybe I'll have a barbecue a little bit, but I'll have my tax code right next to me. All right, everybody, thank you. I will keep you posted. Thanks for watching. Please share this with every other business owner you know. And I've got an event in two weeks at in Anaheim, California. Tax and legal 360. I have the number one small business owner entrepreneur in the country ever. That's my opinion speaking at my conference. And I'm not going to tell you who this person is. It is going to blow your mind. And I'm going to save you so much in taxes at this event. So three full days in Anaheim, Southern California. And in that first day, if I don't save you $1,000 in taxes and if I don't blow your mind with our entrepreneur keynote that is going to teach you the strategies to make millions that'll give you $1,000 back. You got to look me in the eye and tell me you didn't save 1,000. And I'll be able to hopefully show you that I saved you 10,000. So come check it out. Come have fun. I'll see it. Tax and legal360 in Anaheim in just two weeks, first week of June. And I'll keep posting and shooting videos on this incredible tax legislation that's going to save you thousands and thousands of dollars. Thanks everyone. Keep living the dream.