Source: IR-2025-94: Text taken from Spidell article January 2026.

Paper refund checks for individual taxpayers began phasing out on September 30, 2025. (IR-2025-94) The phaseout of refund checks for individual taxpayers is the first step in implementing President Trump’s Executive Order 14274, issued on March 25, 2025, which directed the U.S. Treasury to stop issuing paper checks by September 30, 2025, as well as mandating that all payments to the federal government be made electronically “as soon as practicable.”

CLIENTS SHOULD BRING TO THE TAX APPOINTMENT: BANK NAME, ROUTING NUMBER AND ACCOUNT NUMBER. (Be sure of these numbers as errors delay refunds for many months).

For taxpayers who are unable to receive direct deposits to a bank account, other options such as prepaid debit cards, digital wallets, or limited exceptions to the paper check prohibition are available. However, no additional guidance has been provided yet as to how these alternatives may be requested.

To date, there are no changes being made to how payments to the U.S. Treasury should be made. Taxpayers should continue to use existing payment options until further notice. According to the IRS, additional guidance and information for filing 2025 taxes will be issued prior to the 2026 filing season.

Ref: One Big Beautiful Bill IRS Notice 2025-57.

When: Tax years 2025 through 2028

What: Interest deduction on individual return for up to $10,000 on vehicle interest for vehicles manufactured/assembled in the United States.

Phase out: This is phased out for taxpayers with adjusted gross income over $100,000 ($200,000 on joint return).

Specifics:

1. Must be passenger vehicles with original use commencing with the taxpayer. Does not apply to used and leased vehicles.
2. Must be a car, minivan, van, SUV, pickup truck or motorcycle.
3. Must have a gross vehicle weight under 14,000 pounds.

Forms:

1. 2025: The lender can provide any proof of the interest including a monthly or annual statement.
2. 2026 – 2028: The lender must provide a Form 1098-VLI to the owner for use on the tax return.

Other: This is a “below the line” deduction available to any individual, subject to the above adjusted gross income limitations.

VIN Number: Vehicles starting with a 1, 4 or 5 were assembled in the USA.

Source: IRS Fact Sheet 2025-08; One Big Beautiful Bill (OBBB)

Form 1099-K is issued by banks, credit card clearing houses and others such as PayPal and Zelle to recipients of funds clearing through their organization which are deemed to be business-related.

Under OBBB, the threshold for issuance by a third party settlement organization is now transactions to a payee exceeding $20,000 or 200 transactions in a year.

Senate Bill 711

IRS: For divorces executed after 12/31/2018, alimony (aka spousal support) is not income to the recipient and non-deductible to the payor.

California: Now conforms to this treatment for any divorce or separation agreement executed after 12/31/2025. For agreements executed prior to 12/31/2025, spousal support is a deduction on the CA return of the payor and income on the return of the recipient.

Source: Spidell Publishing 8/29/25

Spidell Publishing approached the IRS about Los Angeles County taxpayers (within the Presidential Declared Disaster area) receiving penalty/interest notices after filing their 2024 taxes prior to the extended due date of October 15, 2025.

The IRS responded that some ZIP codes overlap into multiple counties. If a taxpayer receives such a notice, he/she should request an abatement of the interest/penalties and provide proof that they are within LA County (e.g., a copy of a Los Angeles County property tax bill for the address).

Senate Bill 132; Signed 6/27/25.

Pass through entity payments (PTE) under AB150 available to partnerships, LLCs and S Corporations were due to expire 12/31/2025. They have been extended through 12/31/2030.

[Note that in the original wording of the One Big Beautiful Bill signed 7/4/25, use of the PTE was to be limited. However, the final version of the OBBB removed that limiting language].

See the article in this section dated 7/28/21 entitled “SALT Limitation Partial Work Around.” Please call if you have additional questions.

Ref: OBBBA signed by President Trump 7/4/2025

States: California does NOT conform to any of these changes. Some states such as Utah and New Mexico have “rolling conformity” and will likely adopt many of these changes. Non-California clients should check their individual state adoption.

Business selected highlights (not all sections of the OBBBA):

1. QBI 20% deduction: Enjoyed by most small businesses since 2017 has been made permanent.
2. Bonus Depreciation: Restores to 100% for property placed in service on or after 1/19/25. This is now permanent.
3. Research & Development: Allows businesses to IMMEDIATELY EXPENSE R&D again. You no longer have to capitalize and amortize these costs. ALSO businesses that have been capitalizing the costs from 2022 through 2024 can elect to accelerate the remaining balance in the capitalized accounts over a one or two year period. (We’ll await regulations on how to accomplish this).
4. 1099-MISC and 1099-NEC: Starting for payments made in 2026, reporting threshold moves from $600 to $2,000.
5. Form 1099-K: Threshold for reporting by third-party services (e.g. Paypal) moves to $20,000 on more than 200 separate transactions.
6. Termination of clean energy credits: Terminates for vehicles purchased after September 30, 2025.

Ref: OBBA signed by President Trump 7/4/25

STATE TAX: California does NOT conform to any of these changes. Some states such as Utah and New Mexico have “rolling conformity” and will likely adopt many of these changes. Non-California clients should check their individual state adoption.

Individual selected highlights:

1. SALT limitation: From 2025 through 2029: New limit of $40,000 reduced for modified adjusted gross income over $500,000.
2. Standard deduction: Starting in 2025: $15,750 single; $23,625 head-of-household and $31,500 married joint.
3. Estate/gift tax exemption: $15 million starting in 2026.
4. 529 plans: Starting 2026: Annual limit on distributions of $20,000 and can be used for elementary or secondary schools in addition to post-secondary.
5. Charitable for those who don’t itemize: Starting in 2026, up to $1,000 ($2k for married) for cash gifts.
6. Tip income deduction: Above the line deduction up to $25k for tips in industry which customarily and regularly receives tips INCLUDING INDEPENDENT CONTRACTORS. Phases out when modified AGI exceeds $150k ($300k married joint). For years 2025 – 2028. UPDATE: The IRS has promised to publish a list of “occupations where tips are traditionally received” by October 2, 2025.
7. Overtime deduction: Up to $12,500 ($25k married) for qualified overtime compensation. Phase out when modified AGI is over $150k ($300k married).
8. Senior deduction: Additional deduction of $6,000 per individual age 65 or over from 2025 – 2028. Phase out when modified AGI is over $75k ($150k joint)
9. US assembled car interest: Deduction up to $10k of interest on us assembled vehicle for years 2025 – 2028. Phased out when modified AGI exceeds $100k ($200k on joint return).
10. Mortgage insurance premiums: Starting in 2026… deductible if itemizing. Phased out for modified AGI over $100k ($50k married filing separate).
11. Termination of Clean Energy Credits: For vehicles purchased after September 30, 2025.

Ref: IRS Tax Tip 2025-04 / Secure 2.0 Act

This IRS is reminding those in the Los Angeles County disaster are that they can:

1. Take up to $22,000 from their retirement without penalty (it will still be taxed)
2. Include that amount in their tax return over three years (up to $7,333 per year) OR
3. Repay the amount to the retirement account over three years.

Who qualifies:

1. Those displaced from their principal residence OR
2. Those who had damage to their principal residence OR
3. Those who lost income due to temporary or permanent layoff

Ref: Federal disaster declared Jan 8, 2025

On January 8, 2025, President Biden signed a major disaster declaration for the Los Angeles County wildfires.

If you experience a loss (after insurance settlement) you can claim a casualty loss on BOTH your federal and California returns. This is a complex calculation. Clients effected should contact us for more information. [Note that casualty losses NOT in a federal disaster area can be claimed only on the California return under current tax law].