Newsletters
The Appellate Tax Board of Massachusetts denied the appellant’s appeal for a deduction in subcontractor expenses claimed on its second amended corporate excise tax return for the tax year at issue, ...
Beginning in 2026, individuals aged 50 and older who earn more than $150,000 in prior‑year-wages will see a significant change in how they can make catch‑up contributions to their workplace retirement plans. Under the SECURE 2.0 Act, these contributions will no longer be eligible for traditional pre‑tax treatment. Instead, they will be required to be made as after‑tax ROTH contributions (if their plan allows). It should be noted that the new rule applies to just the additional catch-up portion; high earners should still consider maxing out the full $24,500 pre‑tax potion thereby allowing for the greatest income deferral.
Beginning in 2026, individuals aged 50 and older who earn more than $150,000 in prior‑year-wages will see a significant change in how they can make catch‑up contributions to their workplace retirement plans. Under the SECURE 2.0 Act, these contributions will no longer be eligible for traditional pre‑tax treatment. Instead, they will be required to be made as after‑tax ROTH contributions (if their plan allows). It should be noted that the new rule applies to just the additional catch-up portion; high earners should still consider maxing out the full $24,500 pre‑tax potion thereby allowing for the greatest income deferral.
What Employees Need to Know
Catch‑up contributions allow workers over 50 to save beyond the standard 401(k) limit by contributing an additional $8,000, or up to $32,500 in total for 2026. Historically, these contributions reduced taxable income in the year they were made. Under the new rules, high‑earning participants will pay taxes upfront on just the additional $8,000, but this ROTH contribution piece will grow tax‑free and may be withdrawn tax‑free in retirement, provided the account has been open at least five years and the participant is at least 59½.
Key Takeaways for Taxpayers
We encourage clients to review how these rules may affect their savings strategy, while coordinating with plan administrators to ensure ROTH catch‑up contributions are eligible under their plans effective for 2026. Understanding these changes earlier in 2026 can help prevent surprises come year-end. Don’t hesitate reaching out to your EGP & Company contact for additional information.
The One Big Beautiful Bill Act (OBBBA) introduced a major tax change for workers who earn overtime pay. A new tax provision allows eligible individuals to deduct certain overtime compensation directly on their federal income tax return. This provision is designed to provide meaningful tax relief to workers who rely on overtime to supplement their income.
The One Big Beautiful Bill Act (OBBBA) introduced a major tax change for workers who earn overtime pay. A new tax provision allows eligible individuals to deduct certain overtime compensation directly on their federal income tax return. This provision is designed to provide meaningful tax relief to workers who rely on overtime to supplement their income.
Below is an overview of how the new deduction works, who qualifies, and what employers need to know as they prepare as the rule takes effect.
What Is the Qualified Overtime Compensation Deduction?
New IRC Section 225 allows individuals to deduct qualified overtime compensation they receive during the tax year, provided the income is properly reported on an information return such as Form W‑2 or other statements. Key features include:
· Maximum deduction: Up to $12,500 per year (or $25,000 for joint filers).
· Above‑the‑line deduction: Reduces adjusted gross income (AGI) and is available in addition to the standard deduction.
· Income‑based phaseout: The deduction is reduced by $100 for every $1,000 by which the taxpayer’s modified AGI exceeds the statutory threshold.
· Reporting requirement: Only overtime compensation reported on required information returns (Forms W‑2 and 1099) qualifies for the deduction.
Who Can Claim the Deduction?
· Employees: Most employees who receive overtime pay under the Fair Labor Standards Act (FLSA) or similar state laws may qualify.
· Independent Contractors: Do not qualify for the overtime deduction, as overtime rules apply only to employees.
What Employers Need to Know
Employers should prepare for several practical implications:
· Payroll systems may require updates. Because the deduction applies beginning January 1, 2025, employers may need to adjust payroll systems. However, given the retroactive nature of the deduction, employers are not required to separately report overtime compensation on 2025 Forms W‑2 to employees.
· Accurate overtime tracking is essential. Employers should ensure their payroll systems accurately track overtime hours and pay, as employees may rely on these records to substantiate their deduction.
· Withholding rules remain unchanged. Overtime compensation remains fully subject to federal income tax withholding, Social Security, and Medicare taxes.
· Employee communications may be needed. Employers may wish to inform employees about the new deduction and how to access their payroll records for substantiation.
Key Takeaways for Taxpayers
This new Qualified Tips Deduction represents a meaningful shift in how tip income is treated for tax purposes. While the deduction primarily benefits workers, employers will need to ensure compliance with the increased reporting rules. For 2025, the IRS has provided a transition period, allowing for a reasonable method to bifurcate between ‘wage’ and ‘tip’ income. In 2026, new tip coding will be afforded to employees within Box-12 of their W-2 forms.
The Overtime Income Deduction provides a new tax benefit for employees who work overtime, but it also introduces new compliance considerations for employers. While reporting obligations remain largely unchanged for 2025, employers should ensure that overtime is calculated correctly, payroll systems maintain accurate records, and employees can access documentation needed to claim the deduction.
We recommend reviewing your current systems, proactive preparation will help minimize administrative burdens and support employees in taking advantage of this new tax benefit. Don’t hesitate reaching out to your EGP & Company contact for additional information.
As we approach the close of the 2025 tax year, proactive planning remains essential. Recent legislative changes enacted under the One Big Beautiful Bill Act (OBBBA) introduces a significant new tax benefit for workers in traditionally tipped occupations. This provision allows eligible individuals to deduct certain tip income directly on their federal tax return. However, there are numerous limitations, restrictions, and constraints.
As we approach the close of the 2025 tax year, proactive planning remains essential. Recent legislative changes enacted under the One Big Beautiful Bill Act (OBBBA) introduces a significant new tax benefit for workers in traditionally tipped occupations. This provision allows eligible individuals to deduct certain tip income directly on their federal tax return. However, there are numerous limitations, restrictions, and constraints.
Below is an overview of how the new deduction works, who qualifies, and what employers need to know as they prepare for implementation.
What Is the Qualified Tips Deduction?
New IRC Section 224 allows individuals to deduct up to $25,000 of qualified tips received during the tax year. This deduction is taken “above the line,” meaning it is available in addition to the standard deduction. To qualify, tips must be:
· Cash tips received in an occupation that traditionally and customarily received tips on or before December 31, 2024.
· Applies to certain occupations as determined by the Secretary of the Treasury.
· Voluntary payments made by customers, not negotiated or mandatory charges.
· Reported to the IRS on an information return such as Form W‑2, Form 1099, etc.
· Not received in a “specified service trade or business” which includes fields such as health, law, consulting, and investment management.
Further, the deduction is subject to an income‑based phaseout. It begins to phase out at $150,000 modified AGI for single filers ($300,000 for joint filers). The deduction is reduced by $100 for every $1,000 of income above these thresholds.
Who Can Claim the Deduction?
· Employees: Most employees in tipped industries—such as restaurants, hospitality, and personal services—may qualify, provided their tips meet the statutory criteria and are properly reported.
· Independent Contractors: Non‑employee workers (e.g., hair stylists renting a booth, self‑employed massage therapists) may also claim the deduction, but only to the extent their tips exceed their deductible business expenses. This ensures the deduction applies only to net tip income.
What Employers Need to Know
Employers should prepare for several practical implications:
· Tips must still be reported. Employees must continue reporting tips to employers, and employers must continue reporting them on Form W‑2.
· Withholding rules remain unchanged. Tips remain subject to federal income tax withholding, as well as Social Security and Medicare taxes.
· Payroll systems may require updates. Because the deduction applies beginning January 1, 2025, employers may need to adjust payroll systems.
· Service charges are not tips. Automatic gratuities -- such as an 18% charge for large parties -- do not qualify as tips (for purposes of this deduction).
· Unreported tips may still be deductible. Employees who fail to report tips to their employer may still claim the deduction by reporting them on Form 4137.
· Non‑employee tip reporting is evolving. Form 1099‑NEC currently has no dedicated line for tips, but the law requires reporting of tipped amounts and whether the occupation is customarily tipped.
Key Takeaways for Taxpayers
This new Qualified Tips Deduction represents a meaningful shift in how tip income is treated for tax purposes. While the deduction primarily benefits workers, employers will need to ensure compliance with the increased reporting rules. For 2025, the IRS has provided a transition period, allowing for a reasonable method to bifurcate between ‘wage’ and ‘tip’ income. In 2026, new tip coding will be afforded to employees within Box-12 of their W-2 forms.
We recommend reviewing your current tip‑reporting procedures, updating payroll systems as needed, and preparing to communicate these changes to employees. Don’t hesitate reaching out to your EGP & Company contact for additional information.
The One Big Beautiful Bill Act (OBBBA) created a new tax‑advantaged savings vehicle known as the Trump Account. These accounts are designed to encourage long‑term savings and investment for American children and operate similarly to traditional IRAs, with several important distinctions. Further additional IRS and Treasury guidance is forthcoming.
The One Big Beautiful Bill Act (OBBBA) created a new tax‑advantaged savings vehicle known as the Trump Account. These accounts are designed to encourage long‑term savings and investment for American children and operate similarly to traditional IRAs, with several important distinctions. IRS and Treasury guidance is forthcoming.
Below is a practical overview for evaluating how Trump Accounts may fit into your individual tax planning.
What Is a Trump Account?
A savings vehicle treated similarly to a traditional IRA. An account is created for the exclusive benefit of an eligible individual, generally a minor child. Once created, it is subject to specific contribution, reporting, and administrative rules. Distributions from the account could likely be taxable, however, exceptions apply. Current guidance makes it clear these accounts are not Roth IRA’s.
Taxpayer may eventually open a Trump Account in various ways: via an online portal at trumpaccounts.gov, with Form 4547 with the 2025 tax return, or potentially additionally prescribed by future IRS Notice(s).
Who Is Eligible?
An “eligible individual” is generally a child who has not reached age 18 by the end of the calendar year, and meets additional criteria to be clarified in forthcoming regulations.
IRS guidance indicates that no contributions may be made until July 4, 2026. Annual contributions are capped at $5,000, indexed for inflation beginning in 2027. Contributions may be made by parents, guardians, or other permitted contributors.
Families with children born between December 31, 2024, and January 1, 2029, and who are a U.S. citizens, and hold a valid social security number can likely receive additional benefits. These individual may participate in the ‘pilot program’ where an one-time governmental $1,000 contribution is seeded for each qualifying Trump account beneficiary.
Tax Treatment
Trump Accounts are modeled on traditional IRAs where contributions may be deductible, subject to income limits (to be clarified in regulations). Earnings grow tax‑deferred. While withdrawals will be subject to rules similar to IRA distributions unless modified by future guidance. Any future ‘nonqualified distributions’ from the account are taxable and may face further penalties (similar to traditional IRA rules).
Trump Accounts represent a new opportunity for families to build long‑term savings for children, with tax advantages similar to retirement accounts. Financial institutions will begin offering Trump Accounts once regulations are finalized. As noted above, future legislation is anticipated further clarifying the accounts. Don’t hesitate reaching out to your EGP & Company contact for additional information.
About 830,000 taxpayers are having their tax refunds held up due to the move away from paper checks and Democratic leadership on the House Ways and Means Committee is seeking information on what the IRS is doing to expedite the issuance of those refunds.
About 830,000 taxpayers are having their tax refunds held up due to the move away from paper checks and Democratic leadership on the House Ways and Means Committee is seeking information on what the IRS is doing to expedite the issuance of those refunds.
House Ways and Means Subcommittee on Worker and Family Support Ranking Member Danny Davis (D-Ill.) and Subcommittee on Oversight Ranking Member Terri Sewell (D-Ala.), in a March 9, 2026, letter to IRS Acting Commissioner Scott Bessent, noted that to date 530,000 notices have been sent to individual taxpayers who did not include bank account information on their tax returns and are planning to send another 300,000 notices this week.
“As a result of President Trump’s Executive Order 14247 mandating electronic payments of tax refunds, these taxpayers could face more than a 10-week delay (over 2.5 months) in receiving their refunds by paper check,” the letter states, adding a National Taxpayer Advocate citation stating that more than 10 million individual taxpayers received their refunds by check.
They continued: “Having reviewed the IRS notice and called the IRS phone lines, we learned that there is no simple process for these taxpayers to request an immediate release of their refund by paper check without waiting at least 10 weeks. Effectively, the President, unilaterally through his Executive Order, is causing undue hardship on millions of Americans by delaying their paper refunds for months. This delay is not mandated by the Internal Revenue Code.”
The ranking members ask Bessent a series of questions, including how IRS taxpayers without an online account can apply for a paper check and immediate release of funds; how many notices have been sent and are expected to be released; how many tax payers have exceptions have been successfully filed; and how many paper checks have been mailed to date.
The representatives asked for answers by March 23, 2026.
By Gregory Twachtman, Washington News Editor
The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2026 and the lease inclusion amounts for business vehicles first leased in 2026.
The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2026 and the lease inclusion amounts for business vehicles first leased in 2026.
Luxury Passenger Car Depreciation Caps
The luxury car depreciation caps for a passenger car placed in service in 2026 limit annual depreciation deductions to:
- $12,300 for the first year without bonus depreciation
- $20,300 for the first year with bonus depreciation
- $19,800 for the second year
- $11,900 for the third year
- $7,160 for the fourth through sixth year
Depreciation Caps for SUVs, Trucks and Vans
The luxury car depreciation caps for a sport utility vehicle, truck, or van placed in service in 2026 are:
- $12,300 for the first year without bonus depreciation
- $20,300 for the first year with bonus depreciation
- $19,800 for the second year
- $11,900 for the third year
- $7,160 for the fourth through sixth year
Excess Depreciation on Luxury Vehicles
If depreciation exceeds the annual cap, the excess depreciation is deducted beginning in the year after the vehicle’s regular depreciation period ends.
The annual cap for this excess depreciation is:
- $7,160 for passenger cars and
- $7,160 for SUVS, trucks, and vans.
Lease Inclusion Amounts for Cars, SUVs, Trucks and Vans
If a vehicle is first leased in 2026, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of the lease is more than:
- $62,000 for a passenger car, or
- $62,000 for an SUV, truck or van.
The 2026 lease inclusion tables provide the lease inclusion amounts for each year of the lease.
The lease inclusion amount results in a permanent reduction in the taxpayer’s deduction for the lease payments.
Vehicles Exempt from Depreciation Caps and Lease Inclusion Amounts
The depreciation caps and lease inclusion amounts do not apply to:
- cars with an unloaded gross vehicle weight of more than 6,000 pounds; or
- SUVs, trucks and vans with a gross vehicle weight rating (GVWR) of more than 6,000 pounds.
So taxpayers who want to avoid these limits should "think big."
The IRS has released guidance on the withdrawal of an election to be an excepted trade or business for the Code Sec. 163(j) business interest limitation for the 2022, 2023, and 2024 tax year. The election is made by filing an amended income tax return, amended Form 1065, or administrative adjustment request (AAR) on or before October 15, 2026, or applicable statute of limitation. The withdrawal allows a taxpayer to make depreciation adjustments or a late election not to deduct the additional first-year depreciation (bonus depreciation) for certain property in light of recent legislative changes.
The IRS has released guidance on the withdrawal of an election to be an excepted trade or business for the Code Sec. 163(j) business interest limitation for the 2022, 2023, and 2024 tax year. The election is made by filing an amended income tax return, amended Form 1065, or administrative adjustment request (AAR) on or before October 15, 2026, or applicable statute of limitation. The withdrawal allows a taxpayer to make depreciation adjustments or a late election not to deduct the additional first-year depreciation (bonus depreciation) for certain property in light of recent legislative changes. Guidance is also provided on the early election or revocation of a controlled foreign corporation (CFC) CFC group election.
Background
A taxpayer’s deduction of business interest expenses paid or incurred for the tax year is generally limited under section 163(j) to the taxpayer’s business interest income for that year and 30 percent of the taxpayer’s adjusted taxable income (ATI). The deduction limit does not apply to certain excepted businesses, including an electing real property trade or business, electing farming business, or regulated utility trade or business.
The election applies to the current tax year and all subsequent tax years. The election is irrevocable but may automatically terminate in certain circumstances. An electing real property trade or business or electing farming business that elects out of the section 163(j) limit must depreciate certain property using alternative depreciation system (ADS) and as a result cannot claim bonus depreciation for that property.
Election Withdrawal
An election to be an excepted trade or business for the section 163(j) business interest limit may be withdrawn for the 2022, 2023, and 2024 tax year. The withdrawal is made by attaching a statement to the taxpayer’s amended income tax return, amended Form 1065 , or administrative adjustment request (AAR) on or before October 15, 2026, or applicable statute of limitations per the IRS guidance.
A taxpayer that receives an amended Schedule K-1 as a result of an amended return or Form 1065 should similarly file an amended return, amended Form 1065, or AAR with a similar attached statement. If a taxpayer withdraws an election, the taxpayer will be treated as if the election had never been made.
Depreciation Adjustments
A taxpayer that is withdrawing an excepted trade or business interest election under section 163(j) must determine its depreciation deduction and basis for the property that is affected by the withdrawn election in accordance with Code Sec. 168. A taxpayer that makes the withdrawals may make a late election under Code Sec. 168(k)(7) to opt certain property out of bonus depreciation on the same amended Federal income tax return, amended Form 1065, or AAR filed for withdrawing the section 163(j) excepted trade or business election.
CFC Group Election
A taxpayer that is a designated U.S. person may revoke or make a CFC group election without regard to the 60-month limitation of § 1.163(j)-7(e)(5)(ii) for the first specified period of a specified group beginning after December 31, 2024. A taxpayer that chooses to revoke the election or make a new election must follow all procedures specified in the regulation other than the 60-month limit. In addition, the 60-month limitation applies to subsequent specified periods.
Internal Revenue Service CEO Frank Bisignano highlighted the early successes of the tax provisions in the One Big Beautiful Bill Act before the House Ways and Means Committee while defending or deflecting critical commentary from the panel’s Democratic representatives.
Internal Revenue Service CEO Frank Bisignano highlighted the early successes of the tax provisions in the One Big Beautiful Bill Act before the House Ways and Means Committee while defending or deflecting critical commentary from the panel’s Democratic representatives.
In his opening statement during the March 4, 2026, hearing, Bisignano noted that the tax benefit to individuals under these provisions is “estimated to be $220 billion,” noting key aspects like the no tax on tips, no tax on overtime, and the Trump accounts helping to pave the way to the benefits.
He also highlighted the growth of 43 percent in usage of online tools, which he said is coinciding with a decrease in demand for phone service.
“Our goal is for taxpayers is our transformational efforts to create a seamless customer experience where taxpayers can interact with the IRS with the same ease they expect from the private sector,” Bisignano told the committee.
Bisignano during the hearing framed AI simply as a tool in the technology toolbox and stated that he didn’t simply want to “modernize” IRS systems because all that does is lead to future obsolescence, but framed information technology upgrades as “transforming” the systems to be able to evolve with technology, which “will increase compliance and increase simplification.”
He was put on the defensive on the subject of audit rates, with questions suggesting that the agency is not doing its job in terms of auditing high income and other wealthy taxpayers, which will lead to a greater tax gap.
Bisignano tried to interject that there was a $2 billion settlement reached but was not given an opportunity to expand upon the circumstances around the recovery, as Rep. Mike Thompson (D-Ca.) noted that “fewer audits of wealthy tax cheats and more scrutiny of working families” doesn’t build “trust among the American taxpayers.”
In answering a separate question regarding audit rates, he pushed back on the increase or decrease in audit rates, testifying that there has never been a standard audit rate that has been proven to be the right number and it could be more or less than where things are at now.
Bisignano defended the cutting of the National Treasury Employees Union contract, stating that by statute, federal employees already have “greater benefits that any union in the world can provide for their people,” including pay, health, and other benefits that are guaranteed by law. “So they are losing nothing,” he said.
He also defended the elimination of the Direct File program, citing its lack of utilization and its costs to operate the program, while promoting Free File as “well-received” and a well-used and trusted program.
Bisignano avoided any discussion regarding the IRS turning over taxpayer information to the Department of Homeland Security without proper authorization, noting that litigation on this issue was still ongoing. He confirmed that so far, no one has been fired or disciplined for this unauthorized information transmission.
He also would not commit to opening any of the closed Taxpayer Assistance Centers, noting that the current centers were experiencing increased activity, although he did add that there were no plans to close any of the existing centers.
Adoption Credit Update
Bisignano told the committee that the IRS will be implementing a provision that for tax year 2025, carry forward amounts of the adoption credit for prior years are refundable up to $5,000 per qualifying child, “and the IRS is implementing this policy as expeditiously as possible without disrupting the current filing season.”
He said there is will be information on this published “very soon” and that taxpayers “should continue to claim the credit as directed by the current tax forms and instructions during the tax season, since the IRS is pursuing post-filing remedies to solve this issue.”
By Gregory Twachtman, Washington News Editor
The IRS has finalized regulations to include unmarked vehicles used by firefighters, members of rescue squads, or ambulance crews in the list of “qualified nonpersonal use vehicles” exempt from the IRC §274(d) substantiation requirements. The final rule adopts, with only minor, non-substantive changes, the text of the proposed regulations (NPRM REG-106595- 22) issued on December 3, 2024. The amendments ensure that specially equipped unmarked vehicles are subject to the same tax treatment as other emergency vehicles used by first responders.
The IRS has finalized regulations to include unmarked vehicles used by firefighters, members of rescue squads, or ambulance crews in the list of “qualified nonpersonal use vehicles” exempt from the IRC §274(d) substantiation requirements. The final rule adopts, with only minor, non-substantive changes, the text of the proposed regulations (NPRM REG-106595- 22) issued on December 3, 2024. The amendments ensure that specially equipped unmarked vehicles are subject to the same tax treatment as other emergency vehicles used by first responders.
Qualified Nonpersonal Use Vehicles
IRC §274(d) requires that taxpayers satisfy additional substantiation requirements when claiming certain business deductions including the business use of an automobile or other means of transportation. A qualified nonpersonal use vehicle is any vehicle that, by reason of its nature, is not likely to be used more than a de minimis amount for personal purposes. Reg. §1.274-5(k)(2)(ii) provides a list of such vehicles, which includes, in part: ambulances; clearly marked police, fire, public safety officer vehicles; and unmarked police vehicles.
Unmarked Emergency Vehicles
Recently, some municipalities have been providing unmarked vehicles to these first responders as a response to an increase in incidents of vandalism and harassment. These unmarked vehicles are typically equipped with special equipment such as lights and sirens, medical emergency equipment, communication radios, and personal protective equipment. Most fire and emergency response departments retain the title to these unmarked vehicles and have policies that limit the use of the vehicles for personal purposes.
The intent and use of these unmarked vehicles meet the definition of qualified nonpersonal vehicles provided in IRC §274(i). However, prior to the amendments, fire and emergency response departments had to substantiate the time the first responders spent using these unmarked vehicles for work related purposes. Personal use of these vehicles, no matter how minute, was required to be included in that employee’s income.
In addition to adding unmarked rescue to the list of qualified nonpersonal use vehicles provided in Reg. §1.274-5(k)(2)(ii), the amendments add Reg. §1.274-5(k)(7) which provides the definitions for “unmarked firefighter, rescue squad or ambulance crew vehicles”, “firefighter,” and “member of a rescue squad or ambulance crew.”
The amendments apply to tax years beginning on or after the date the final regulations are published in the Federal Register. However, taxpayers may rely on the guidance provided in the proposed regulations until that date.
Proposed regulations under Code Sec. 530A, providing guidance on making an election to open a Trump account, and under Code Sec. 6434, relating to the Trump account contribution pilot program, have been issued. Comments are requested and should be submitted via the Federal eRulemaking Portal (indicate IRS and REG-117270-25 for comments related to Code Sec. 530A or IRS and REG-117002-25 for comments related to Code Sec. 6434). The proposed regulations are proposed to apply on or after January 1, 2026.
Proposed regulations under Code Sec. 530A, providing guidance on making an election to open a Trump account, and under Code Sec. 6434, relating to the Trump account contribution pilot program, have been issued. Comments are requested and should be submitted via the Federal eRulemaking Portal (indicate IRS and REG-117270-25 for comments related to Code Sec. 530A or IRS and REG-117002-25 for comments related to Code Sec. 6434). The proposed regulations are proposed to apply on or after January 1, 2026.
Background
Code Sec. 530A, as added by the One Big Beautiful Bill Act (P.L. 119-21) provides for the creation of a Trump account for an eligible individual. A Trump account is subject to certain special rules that do not apply to other types of individual retirement accounts during the growth period, which is the period that begins when an initial Trump account is established and ends on December 31st of the year in which the account beneficiary of the initial Trump account reaches the age of 17. Proposed regulations on the special rules that apply during and after the growth period are reserved and will be proposed at a later date.
In addition, Code Sec. 6434 was added, which provides for a one-time $1,000 pilot program contribution to the Trump account of an eligible child with respect to whom an election is made. The qualifications to be an eligible child are less restrictive than those to be an eligible individual. Finally, Code Sec. 128 allows for employer contributions to a Trump account of an employee or a dependent of an employee. These contributions must be made in accordance with the rules of a Code Sec. 128(c) Trump account contribution program. Guidance on this section is expected to be released in the future.
General Requirements and Election to Open an Account
A Trump account is either (1) an initial Trump account, created or organized by the Treasury Secretary for an eligible individual or (2) a rollover Trump account, which is an account created during the growth period and funded by a qualified rollover contribution from the account beneficiary's existing Trump account. An individual can only have one Trump account containing funds in existence at a time. The written governing instrument of a Trump account must generally meet the rules of Code Sec. 408(a)(1) through (6) and Code Sec. 530A (b)(1)(C)(i) through (iii). Any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA would have automatic approval to act as a trustee of a Trump account. The written instrument must clearly identify the account as a Trump account at the time of creation.
An election to open an account can be made by either an authorized individual or by the Secretary. If a pilot program contribution election is made at the same as the election to open the initial account, the authorized individual would be the individual authorized to make (and making) the pilot program contribution election. If a pilot contribution program election is not being made, Prop. Reg. §1.530A-1(c)(1)(i)(B) provides an ordering rule to determine who the authorized individual is. In order of priority, the authorized individual would be a legal guardian, parent, adult sibling, or grandparent of the eligible individual. The election to open an initial Trump account is made on or before December 31st of the calendar year in which the eligible individual attains age 18. The election is made on Form 4547 or through an electronic application or webpage made available by the Secretary.
Contribution Pilot Program
A pilot program election with respect to an eligible child must be made by a pilot program-electing individual so that the Secretary can make the $1,000 pilot program contribution into the Trump account of en eligible child. An eligible child is a pilot program-electing individual's anticipated qualifying child, as defined in Code Sec. 152(c), for the tax year of the pilot program-electing individual in which the pilot program election is made; is born in 2025, 2026, 2027, or 2028; is a U.S. citizen; has been issued a social security number; and with respect to which no prior pilot program election has been made by any individual and processed by the Secretary.
A pilot program election is made with respect to the eligible child's "special taxable year" (defined in Prop. Reg. §301.6434-1(c)(1)), instead of with respect to any calendar based tax year for the eligible child's federal income tax liability. Once an election is processed, the eligible child is treated as making a $1,000 payment against a federal income tax liability for the eligible child's special taxable year, resulting in a $1,000 overpayment. The overpayment is then refunded by the Secretary as a pilot program contribution to the eligible child's Trump account. The overpayment is not refunded unless the eligible child has an established Trump account.
An election may be made on the day that a child becomes eligible, and the last day to make the election is December 31st of the calendar year in which the eligible child attains age 17. In addition, only the first pilot program contribution election processed by the IRS will result in a $1,000 contribution to the eligible child's Trump account. The pilot program contribution election is made on Form 4547.
Proposed Regulations, NPRM REG-117270-25
Proposed Regulations, NPRM REG-117002-25
The IRS expects to delay the applicability date of proposed regulations on required minimum distributions (RMDs) until the distribution calendar year that would begin 6 months after the date the regulations are finalized. Specifically, the announcement relates to proposed amendments of Reg. §§1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6, issued pursuant to NPRM REG–103529–23 .
The IRS expects to delay the applicability date of proposed regulations on required minimum distributions (RMDs) until the distribution calendar year that would begin 6 months after the date the regulations are finalized. Specifically, the announcement relates to proposed amendments of Reg. §§1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6, issued pursuant to NPRM REG–103529–23 .
Background
Prior to this announcement, provisions under NPRM REG–103529–23 (2024) were proposed to apply for determining RMDs for calendar years beginning on or after January 1, 2025. This ensured the provisions would begin to apply at the same time as final regulations under T.D. 10001 (2024).
Following a request for comments, concerns included difficulty to implement many provisions of future final regulations in a timely manner if the January 1, 2025, applicability date were to be retained in future final regulations.
Future Final Regulations
The IRS expects future final regulations that would amend Reg. §§1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6, issued pursuant to NPRM REG–103529–23, to apply to determine RMDs for the distribution calendar year that would begin no earlier than six months after the date that any future final regulations would be issued in the Federal Register. For periods before the applicability date of such future final regulations, taxpayers must continue to apply a reasonable, good-faith interpretation.
The IRS has issued a waiver for individuals who failed to meet the foreign earned income or deduction eligibility requirements of Code Sec. 911(d)(1) because adverse conditions in certain foreign countries prevented them from fulfilling the requirements for the 2025 tax year. Qualified individuals may elect to exclude from gross income their foreign earned income and to exclude or deduct the housing cost amount.
The IRS has issued a waiver for individuals who failed to meet the foreign earned income or deduction eligibility requirements of Code Sec. 911(d)(1) because adverse conditions in certain foreign countries prevented them from fulfilling the requirements for the 2025 tax year. Qualified individuals may elect to exclude from gross income their foreign earned income and to exclude or deduct the housing cost amount.
Relief Provided
The IRS, in consultation with the Secretary of State, has determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business in the following countries, effective from the dates specified: (1) Haiti – January 1, 2025; (2) Ukraine – January 1, 2025; (3) Democratic Republic of the Congo – January 28, 2025; (4) South Sudan – March 7, 2025; (5) Iraq – June 11, 2025; (6) Lebanon – June 22, 2025; and (7) Mali – October 30, 2025. An individual who left any of these countries on or after the respective dates will be treated as a qualified individual for the period during which the individual was a bona fide resident of, or was present in, the country. To qualify for relief, an individual must establish that, but for these adverse conditions, they would have met the requirements of Code Sec. 911(d)(1). Additionally, the waiver does not apply to individuals who first established residency or were physically present in any of these countries after the respective dates listed above. Taxpayers seeking guidance on how to claim this exclusion or file an amended return should refer to the Foreign Earned Income Exclusion section at https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion or contact a local IRS office.