IRS UPDATES

The IRS released Fact Sheet 2025-5, providing FAQs to help taxpayers and tax pros alike clarify the termination of energy credits due to the OBBBA. The guidance helps identify what actions must be completed to be eligible for the credits. The following actions must be completed to be eligible for the credit:

Previously-owned vehicle credit – disallowed for any vehicle acquired after Sept. 30, 2025
Clean vehicle credit – disallowed for any vehicle acquired after Sept. 30, 2025
Qualified commercial clean vehicle credit – disallowed for any vehicle acquired after Sept. 30, 2025
Energy efficient home improvement credit – disallowed for any property placed in service after Dec. 31, 2025
Residential clean energy credit – disallowed for any expenditures after Dec. 31, 2025
Alternative fuel vehicle refueling property credit – disallowed for any property placed in service after June 30, 2026
New energy-efficient home credit – disallowed for any qualified home acquired after June 30, 2026
Energy efficient commercial buildings deduction – disallowed for any property where construction begins after June 30, 2026

Acquired in the context of these FAQs is based on the date a written binding contract is entered into and payment has been made.

For more information, please refer to Fact Sheet 2025-5. Watch for updates as the IRS can make changes and edits after posting them.

Could OBBBA Gambling Deduction Cap Be Reversed?

House Ways and Means Chair Jason Smith (R-Mo.) signaled bipartisan support for reversing the 90% cap on deductions for gambling losses (effective after Dec. 31, 2025) included in the OBBBA. Smith emphasized at a Ways and Means Committee hearing in Las Vegas (July 25) that both sides of the aisle are interested in revisiting and possibly reversing the cap before it takes effect. Legislative proposals have emerged in both chambers, reflecting bipartisan concern over potential tax compliance issues and the economic implications for gaming jurisdictions. NATP will continue to monitor this issue as it develops and will keep you informed.

Signed into law on July 4, this sweeping legislation permanently extends many tax benefits and introduces new taxpayer-focused deductions.

On July 4, 2025, a major reconciliation bill was enacted that reshapes the tax landscape for individuals, businesses, nonprofits, and higher education institutions. While additional IRS and Treasury guidance is expected, here are the key highlights you need to know:

For Individuals

Permanent Tax Brackets & Standard Deduction: Current TCJA rates remain, with small inflation-adjusted increases.

New Deductions: Up to $25,000 for tip income and $12,500 for overtime wages (2025–2028).

Expanded SALT Deduction: Increased to $40,000 in 2025 and indexed for inflation annually. Reverts to $10,000 in 2030.

Extension and enhancement of increased estate and gift tax exemption amounts made permanent.

Charitable Deduction Reinstated: Available to non-itemizers again, encouraging broader giving. $600.00 per taxpayer.

Child Tax Credit: Raised to $2,200 and indexed for inflation, made permanent.

529 Plan Flexibility: Includes expenses for K–12 and homeschooling.

Other Additions:

$6,000 senior deduction

Auto loan interest deduction – Car loan interest is now deductible, up to a cap, for certain years and purchased after a specific date.

“Trump Accounts” for newborns' Expanded 529 plan.

For Businesses 100% Bonus Depreciation:

Made permanent for eligible assets. QBI Deduction (199A): Now a permanent fixture for qualified income and increased to 23%.

Research Expensing: Renewed deduction for domestic R&D, with retroactive relief for small businesses.Expanded Section 179 and low-income housing provisions. For Nonprofits, Charitable Deduction Reinstated: Available to non-itemizers again, encouraging broader giving.SALT changes and the IRS filing program sunset may impact donor behavior and nonprofit operations.

For Higher Education QBI Deduction: Extended for faculty and researchers with consulting income.

529 Plan Flexibility: Includes expenses for K–12 and homeschooling.

Research Deduction: Applicable for qualified research partnerships or initiatives.

What’s Going Away? Many green energy incentives from the Inflation Reduction Act will sunset after 2025—including clean vehicle credits, residential energy upgrades, and EV charging credits.

The IRS Direct File program will end within 30 days of passage, in lieu of a “public-private partnership” to replace it.

Next Steps: To better serve and inform our clients, we are closely monitoring updates from the IRS and Treasury to understand how the newly enacted provisions will be implemented. We will issue follow-up guidance as Treasury updates regulations related to the new law.