SCAM ALERT: The City of Philadelphia Department of Revenue is warning the public about a text messaging/SMS scam. The text messages are regarding 'refund requests'. Please note the City of Philadelphia Department of Revenue will NEVER ask for bank or refund payment information over text. For official refund information, visit tax-services.phila.gov

On July 4, 2025, a major reconciliation bill was enacted that reshapes the tax landscape for individuals and businesses.

Due to the significant number of changes the legislation will bring, this is part three from Bee, Bergvall & Co., highlighting key elements of the new legislation.

As each person's tax situation is unique, please contact your tax advisor to discuss how these changes may impact your tax planning.

Provisions for Individuals

• Personal exemptions and senior deduction: The act permanently sets the deduction for personal exemptions at zero. However, it provides a temporary $6,000 deduction under Sec. 151 for individual taxpayers who are age 65 or older. This senior deduction begins to phase out when a taxpayer’s MAGI exceeds $75,000 ($150,000 in the case of a joint return). It will be in effect for the years 2025 through 2028.

• Child tax credit: The act increases the amount of the nonrefundable child tax credit to $2,200 per child beginning in 2025 and indexes the credit amount for inflation. The act also makes permanent the $1,400 refundable child tax credit, adjusted for inflation. It in addition makes permanent the increased income phaseout threshold amounts of $200,000 ($400,000 in the case of a joint return), as well as the $500 nonrefundable credit for each dependent of the taxpayer other than a qualifying child.

• Estate and gift tax exemption amounts: The act amends Sec. 2010 to permanently increase the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers ($30 million for married filing jointly) in 2026 and index the exemption amount for inflation after that.

• Moving expense deduction: The act permanently eliminates the Sec. 217 deduction for moving expenses, except for members of the armed forces and certain members of the intelligence community.

• No tax on overtime: The act provides a temporary deduction of up to $12,500 ($25,000 in the case of a joint return) for qualified overtime compensation received by an individual during a given tax year. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 in the case of a joint return). The act defines qualified overtime compensation as overtime compensation paid to an individual required under Section 7 of the Fair Labor Standards Act of 1938 that is in excess of the regular rate (as used in that section) at which the individual is employed. Overtime deductions would only be allowed for qualified overtime compensation if the total amount of qualified overtime compensation is reported separately on Form W-2 (or Form 1099, if the worker is not an employee). This temporary deduction will be available for tax years 2025 through 2028 and would be available to non-itemizers.

• Car loan interest: For the years 2025 through 2028, the act excludes qualified passenger vehicle loan interest from the definition of personal interest in Sec. 163(h). Qualified passenger vehicle loan interest is defined as interest paid or accrued during tax year on indebtedness incurred by the taxpayer after Dec. 31, 2024, for the purchase of, and that is secured by a first lien on, an applicable passenger vehicle for personal use. Among other restrictions, applicable passenger vehicles must have had their final assembly in the United States.

The exclusion is capped at $10,000 per year and will phase out for taxpayers with MAGI in excess of $100,000 ($200,000 for married taxpayers filing jointly).

Provisions for Businesses

• Opportunity zones: The act makes opportunity zones permanent but with several changes, including narrowing the definition of “low-income community.” The changes would generally take effect Jan. 1, 2027.

• New Markets Tax Credit: The act makes the Sec. 45D new markets tax credit permanent.



• Excess business losses: The act makes Sec. 461(l)(1) limitation on excess business losses of noncorporate taxpayers permanent. It was scheduled to expire after 2028. Language in the Senate Finance Committee version of the bill would have treated carried over excess business losses as excess business losses, and therefore subject to the Sec. 461(l) limitation, rather than as net operating losses (NOLs), which are not subject to Sec. 461(l). That language was dropped from the final act.

For more information, contact your Bee, Bergvall & Co. tax advisor directly at 215-343-2727 or Liz Vibber.

This article is part 3 in a series reviewing the new tax legislation.

Under this order, the Federal government will be required to disburse payments electronically effective September 30, 2025. Electronic payments to the Federal government will also be required, although a firm required date has not been announced, it is recommended that taxpayers adhere to the September 30, 2025 date.

What this means:

1.   The IRS will not issue paper checks for all Federal payments, including tax refunds and Social Security payments.

2.   The IRS will not accept paper checks for tax payments.

What to do:

1.   Please provide banking information, if you have not done so already, including Bank routing and Account number if you are getting a refund

2.   Consider registering for an IRS Online account to make secure payments online.

3.   Visit the IRS website https://www.irs.gov/payments to register or make payments

4.   If you currently receive any paper check from the government you will need to move to direct deposit or another approved method.

If payments from these groups are not submitted electronically after the implementation date, penalties may apply.

If you are still receiving a paper check for Social Security, Veterans benefits, or any other Federal benefit, enroll in direct deposit using one of the following options:

• Call the Federal agency that pays your benefits and follow their instructions for enrolling in direct deposit. A list of the paying agencies’ contact information can be found at Go Direct® - Paying Agencies
• Call the Electronic Payment Solution Center at 800-967-6857

Estimated tax payments and tax return payments.

If you are currently mailing in your quarterly estimated tax payment vouchers or tax return payments with a check, you will need to start making those payments electronically after September 30, 2025. The IRS provides several options for making payments:

No account set-up needed:

• Direct Pay from your bank account
• Debit card, credit card or digital wallet (fees will apply)

Account set-up required:

• Individual Online Account (uses ID.me verification)
• EFTPS – Electronic Federal Tax Payment System (new accounts can take up to five business dates to process)

Also, to note there are some exceptions. If someone doesn’t have access to a bank or electronic payments, or if there’s an emergency or special situation (like national security), the government can still use paper checks or other methods. People who qualify for these exceptions will be given other ways to receive or send money.

Bee, Bergvall & Co. | www.bbcocpa.com