Question 1

What is the SALT deduction limit for 2025, and how does it affect my tax strategy?

Accepted Answer

For tax year 2025, the state and local tax (SALT) deduction limit has increased to $40,000 ($20,000 if married filing separately), per IRS Publication 530. The limit is reduced if your modified AGI exceeds $500,000 ($250,000 if married filing separately) but will not drop below $10,000 ($5,000 if married filing separately). This higher cap may make itemizing more beneficial for taxpayers in high-tax states.

Question 2

Who qualifies for the 20% Qualified Business Income (QBI) deduction?

Accepted Answer

The QBI deduction is available to taxpayers with income from qualified active trades or businesses operated as sole proprietorships, partnerships, S corporations, or certain trusts and estates. Per IRS Publication 334, the deduction has been made permanent under P.L. 119-21. Limitations on the deduction begin when taxable income before the QBI deduction exceeds $394,600 (married filing jointly) or $197,300 (all other filers) for 2025; these thresholds may be adjusted for 2026.

Question 3

Is it true I can use investment losses to reduce my tax bill indefinitely?

Accepted Answer

You can use capital losses to offset capital gains dollar for dollar. If your net capital losses exceed your capital gains, you may deduct up to $3,000 of the excess against ordinary income per year, and carry the remaining loss forward to future years. However, per IRS Publication 550, the at-risk rules and passive activity loss limits may restrict your ability to deduct certain investment losses. Additionally, passive activity losses generally cannot offset portfolio income.

Question 4

What fringe benefits can an employer offer tax-free in 2026?

Accepted Answer

According to IRS Publication 15-B (2026 edition), employers can offer several tax-exempt fringe benefits, including up to $5,250 per year in educational assistance, up to $7,500 in dependent care assistance ($3,750 if married filing separately), group-term life insurance for the cost of coverage up to $50,000, HSA contributions up to annual limits, and achievement awards up to $1,600 for qualified plan awards. These benefits are generally exempt from income tax withholding, Social Security, Medicare, and FUTA taxes when requirements are met.

Question 5

How do tax shelters and reportable transactions affect my tax return?

Accepted Answer

If you participate in a reportable transaction — including listed transactions, confidential transactions, or transactions with contractual protection — you must file Form 8886 and attach it to your return for each applicable tax year, per IRS Publication 550. Listed transactions must be disclosed within 90 days of identification in some circumstances. Failure to disclose can result in significant penalties. The IRS has a history of successfully challenging abusive shelters in court, so consult a cred

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