Advisory & Planning

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Planning got easier in one way this year: several things stopped having an expiry date. Section 199A is permanent at 20 percent. One hundred percent bonus depreciation is permanent for property acquired after 19 January 2025. Domestic research and experimental costs are expensed again for tax years beginning after 31 December 2024, with an elective 60-month amortization available — though foreign research is still spread over fifteen years.

If you capitalized domestic research costs in 2022 through 2024, there is still an election to recover what remains unamortized — either entirely in the first year beginning after 31 December 2024, or ratably over two. The separate small-business retroactive election closed on 6 July 2026. If you missed it, late-election relief is fact-dependent rather than impossible, and that is worth a look rather than an assumption.

The cap is $40,400 for 2026, grows 101 percent a year through 2029, and then reverts to $10,000. It also phases down by 30 percent of modified adjusted gross income above $505,000, though never below $10,000. That is a four-year window, and the shape of the window drives the decision more than this year's number does.

Pass-through entity taxes survived — the limitation proposed during the 2025 negotiations was dropped from the enacted law, so New Jersey's BAIT and New York's PTET both still operate, and they are worth more, not less, once the cap begins phasing down. New Jersey's election is annual, made by the PTE-100 due date, and it does not carry forward, so a year gets missed simply by not being elected. New York's window is 1 January to 15 March, and only an authorized entity representative can make it. And the federal deductibility of these taxes still rests on a single 2020 notice, with no proposed or final regulations behind it six years on. We treat that as durable, not as settled.

An exchange still requires identification within 45 days and completion within 180 — or by your return due date including extensions, whichever comes first. That second prong is usually left out of the marketing, and it is the one that catches a late-year exchange.

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