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New Law Eases the Limitation on Business Interest Expense Deductions for 2025 and Beyond

Interest paid or accrued by a business is generally deductible for federal tax purposes. But limitations apply. Now some changes under the One Big Beautiful Bill Act (OBBBA) will result in larger deductions for affected taxpayers.

Limitation basics

The deduction for business interest expense for a particular tax year is generally limited to 30% of the taxpayer’s adjusted taxable income (ATI). That taxpayer could be you or your business entity, such as a partnership, limited liability company (LLC), or C or S corporation. Any business interest expense that’s disallowed by this limitation is carried forward to future tax years.

Business interest expense means interest on debt that’s allocable to a business. For partnerships, LLCs that are treated as partnerships for tax purposes, and S corporations, the limitation on the business interest expense deduction is applied first at the entity level and then at the owner level under complex rules.

The limitation on the business interest expense deduction is applied before applying the passive activity loss (PAL) limitation rules, the at-risk limitation rules and the excess business loss disallowance rules. For pass-through entities, those rules are applied at the owner level. But the limitation on the business interest expense […]

By Linkenheimer LLP|2025-12-10T17:26:18+00:00December 10th, 2025|business, deduction, deductions, New Tax Laws|0 Comments

California Employers: CalSavers Deadline is December 31, 2025

If you’re a California employer with at least one W-2 employee and you don’t already offer a qualified retirement plan, you’re required to either register for CalSavers or claim an exemption by December 31, 2025. CalSavers is the state-sponsored IRA program that allows employees to save for retirement through payroll deductions. Alternatively, you can satisfy the requirement by offering your own qualified retirement plan such as a 401(k), SEP, or SIMPLE IRA.

Not sure if this applies to you? You’re exempt if you’re a sole proprietor or business with no W-2 employees other than the owners, if you already sponsor a qualified retirement plan, or if you’re a government entity, religious organization, or tribal organization. If you’re exempt, you should still submit an exemption request to avoid receiving compliance notices.

If you’re not exempt, take action now. Businesses that don’t comply risk fines of $250 per employee if noncompliance extends 90 days or more after receiving a notice, and an additional $500 per employee if noncompliance continues past 180 days. Register or claim your exemption at employer.calsavers.com. Have questions about whether CalSavers or a […]

By Linkenheimer LLP|2025-12-03T20:54:18+00:00December 3rd, 2025|business, ca, california, employer|0 Comments

Review Your Business Expenses Before Year End

Now is a good time to review your business’s expenses for deductibility. Accelerating deductible expenses into this year generally will reduce 2025 taxes and might even provide permanent tax savings. Also consider the impact of the One Big Beautiful Bill Act (OBBBA). It makes permanent or revises some Tax Cuts and Jobs Act (TCJA) provisions that reduced or eliminated certain deductions.

“Ordinary and necessary” business expenses

There’s no master list of deductible business expenses in the Internal Revenue Code (IRC). Although some deductions are expressly authorized or excluded, most are governed by the general rule of IRC Section 162, which permits businesses to deduct their “ordinary and necessary” expenses.

An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your business. (It doesn’t have to be indispensable.) Even if an expense is ordinary and necessary, it may not be deductible if the IRS considers it lavish or extravagant.

OBBBA and TCJA changes

Here are some types of business expenses whose deductibility is affected by OBBBA or TCJA provisions:

Entertainment. The TCJA eliminated most deductions for entertainment expenses beginning in 2018. However, entertainment expenses […]

By Linkenheimer LLP|2025-10-27T19:31:54+00:00October 27th, 2025|business, expensing, New Tax Laws, tax planning, year-end|0 Comments

There’s Still Time for Businesses to Benefit from Clean Energy Tax Breaks

The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, extends or enhances many tax breaks for businesses. But the legislation terminates several business-related clean energy tax incentives earlier than scheduled. For example, the Qualified Commercial Clean Vehicle Credit (Section 45W) had been scheduled to expire after 2032. Under the OBBBA, it’s available only for vehicles that were acquired on or before September 30, 2025. For other clean energy breaks, businesses can still take advantage of them if they act soon.

Deduction for energy-efficient building improvements

The Section 179D deduction allows owners of new or existing commercial buildings to immediately deduct the cost of certain energy-efficient improvements rather than depreciate them over the 39-year period that typically applies. The OBBBA terminates the Sec. 179D deduction for property beginning construction after June 30, 2026.

Besides commercial building owners, eligible taxpayers include:

Tenants and real estate investment trusts (REITs) that make qualifying improvements, and
Certain designers — such as architects and engineers — of government-owned buildings and buildings owned by nonprofit organizations, religious organizations, tribal organizations, and nonprofit schools or universities.

The Sec. 179D deduction is available for new construction as well as additions to or […]

By Linkenheimer LLP|2025-10-13T19:50:40+00:00October 13th, 2025|business, energy, New Tax Laws, tax credit|0 Comments

The 2025–2026 “High-Low” Per Diem Business Travel Rates are Here

If you have employees who travel for business, you know how frustrating it can be to manage reimbursements and the accompanying receipts for meals, hotels and incidentals. To make this process easier, consider using the “high-low” per diem method. Instead of tracking every receipt, your business can reimburse employees using daily rates that are predetermined by the IRS based on whether the destination is a high-cost or low-cost location. This saves time and reduces paperwork while still ensuring compliance. In Notice 2025-54, the IRS announced the high-low per diem rates that became effective October 1, 2025, and apply through September 30, 2026.

How the per diem method works

The per diem method provides fixed travel per diems rather than requiring employees to save every meal receipt or hotel bill. Employees simply need to document the time, place and business purpose of their trip. As long as reimbursements don’t exceed the applicable IRS per diem amounts, they aren’t treated as taxable income to the employee and don’t require income or payroll tax withholding.

Under the high-low method, the IRS establishes an annual flat rate for certain areas with higher costs. All locations within the continental United […]

By Linkenheimer LLP|2025-10-13T17:48:36+00:00October 13th, 2025|business, travel|0 Comments