Background

The 2025 tax season is proving to be a pivotal one, as political change is bringing ramifications for the IRS and the future of tax planning and filing for SME owners. While the Trump administration’s arrival was not expected to immediately trigger sweeping changes this tax season, events such as the resignation of IRS Commissioner Daniel Werfel on Inauguration Day and the unusual delays in IRS website updates signaled early shifts ahead (“What To Know About The Not-So-Usual 2025 Tax Season”). As the Department of Government Efficiency aggressively pursues mass layoffs within the IRS, debates ensue over the extension of the Tax Cuts and Jobs Act (TCJA), and BOI reporting under FinCEN has been terminated, SME owners may struggle to navigate this flurry of changes on top of regular tax planning. This whitepaper explores these developments further and their impact on tax filing and planning for SME owners, as well as the comprehensive tax solutions and bookkeeping services that Occams Advisory offers to help businesses stay compliant in these uncertain times while maximizing available benefits.

Extension or Expiration of TCJA?

One consequential fiscal policy initiative Donald Trump undertook during his first term was signing the Tax Cuts and Jobs Act (TCJA) into law in 2017, a comprehensive tax reform package that delivered cuts to pass-through businesses, corporations, and individuals. However, the TCJA is set to expire at the end of 2025 unless Congress takes action. Key provisions of the TCJA that concern SMEs include: (“What New Tax Policies Mean for Small Businesses”).

Bonus depreciation that gradually reduced from 100% in 2017 to 40% this year will return to 100% if the TCJA is extended. Bonus depreciation incentivizes SMEs to invest in their businesses and significantly or entirely remove the cost of qualifying assets.

Qualified Business Income Deduction (QBI) of 20% for sole proprietorships or pass-through entities like S-corps.

Tax credit (Section 45S) for employers offering up to 12 weeks of paid family and sick leave to employees.

Capital gains tax cuts for SMEs investing in underserved communities federally designated as Opportunity Zones.

Individual tax cuts for SME owners reporting business income on personal taxes.

Even though the cuts to businesses are substantial, Democratic lawmakers and other critics argue that the top 1 percent of income earners in the United States disproportionately benefited from them. According to the Wall Street Journal, there is more than a $60,000 difference in cuts between the top 1 percent and bottom quintile of income earners. Additionally, fully renewing the TCJA is projected to cost the government $5.5 trillion in deficit spending and increase net interest outlays by $467 billion (“How Trump’s 2017 Tax Cuts Actually Played Out”).

Republican lawmakers’ plan is to use the reconciliation process to extend the TCJA which would bypass filibusters and require just a simple majority of 51 votes in the Senate (“Will Trump and Congress Extend TCJA Tax Cuts?”).

The expiration of certain TCJA provisions may bring significant tax changes, but SME owners do not have to navigate them alone. With Occams Advisory’s expertise in tax filing and planning, you can stay compliant with confidence— allowing you to focus on running core business operations.

Termination of BOI

President Trump and the U.S. Treasury have recently announced that the Beneficial Ownership Information (BOI) filing requirement to FinCEN under the Corporate Transparency Act has been terminated. This news will likely come to the relief of SME owners who found the requirement burdensome and stress-inducing because of complex regulations, having to give out sensitive information, and the threat of heavy fines. The termination comes after a federal district court in Texas blocked the enforcement of BOI and FinCEN granted a 30-day extension until March 21st. However, there is a slim possibility that the CTA will come back to life if the Supreme Court upholds the law in the fall and the Treasury Department is forced to enforce it. SME owners should be on the lookout for such updates (“BOI Filing Requirement is Officially Dead!”).

IRS Mass Layoffs

As part of cost-cutting measures by the newly created Department of Government Efficiency (DOGE), Elon Musk’s agency has recently called for the axing of 6,000 IRS employees, with reports suggesting that number can go up to half its workforce. Here is how the tax returns of SME owners and individuals could be impacted: (“IRS Layoffs 2025: How Businesses Will Feel the Impact”).

Processing Delays: Former IRS Commissioner Charles Rettig stated, “There should not be a significant impact on current filing season operations.” However, with the broad nature of the layoffs, taxpayers could face processing delays on their returns.

Reduced Customer Support: Taxpayers could have to wait longer for assistance with fewer staff available to pick up calls.

Audit Delays: Auditing officers at the IRS have declined over the past decade. Additional layoffs would further inhibit their ability to detect tax fraud.

Challenging verification process: Businesses seeking verification letters such as the S-corp election could face delays in obtaining them.

Upcoming Deadlines

A flurry of tax changes makes it all the more important for SME owners to be secure on the upcoming regular deadlines first:

March 17th, 2025: Taxes due for businesses set up as partnerships such as S-corps and multi-member LLCs.

April 15th, 2025: Taxes due for C-corps.

September 15th, 2025: Final deadline for S-corps and partnerships that applied for an extension.

October 15th, 2025: Final deadline for C-corps that applied for an extension.

Note: The following list is a general overview of deadlines for businesses. For a complete list of deadlines for each taxpayer, visit IRS Publication 509.

Sources/Citations

Forbes. “What to Know about the Not-So-Usual 2025 Tax Season.” YouTube, 28 Jan. 2025, www.youtube.com/watch?v=mYglwfzQYws. Accessed 7 Mar. 2025.

Mark J Kohler. “BREAKING NEWS | What New Tax Policies Mean for Small Businesses.” YouTube, 13 Feb. 2025, www.youtube.com/watch?v=LoPhfXX8Pgw. Accessed 7 Mar. 2025.

The Wall Street Journal. “Economists on How Trump’s 2017 Tax Cuts Actually Unfolded | WSJ.” YouTube, 28 Feb. 2025, www.youtube.com/watch?v=AdwFchjz2e8. Accessed 3 Mar. 2025.

Bloomberg. “2025 Tax Policy Crossroads: What Will Happen When the TCJA Expires? – Bloomberg Government.” Bloomberg Government, 28 Oct. 2024, about.bgov.com/insights/elections/2025-tax-policy-crossroads-what-will-happen-when-the-tcja-expires/#what-is-the-tax-cuts-and-jobs-act.

Smith, Liz. “IRS Layoffs 2025: How Businesses Will Feel the Impact.” TechRepublic, 5 Mar. 2025, www.techrepublic.com/article/irs-layoffs-business-impact/. Accessed 8 Mar. 2025.

Conclusion

Written by Veer Agarwal

Veer Agarwal studies at Livingston High School in the United States.

Check out our website: www.occamsadvisory.com or Schedule a free consultation: https://bit.ly/3X6era9 

This blog is intended for informational purposes only and should not be considered as any professional advice. Please consult with the respective professional for any specific advice related to your situation. 

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