2025 Tax Changes You Need to Know: No Tax on Tips & Overtime (Plus What It Means for Self-Employed Filers)
2025 Tax Changes You Need to Know: No Tax on Tips & Overtime (Plus What It Means for Self-Employed Filers)
Tax year 2025 brings some of the most significant changes in recent memory for individual taxpayers. The federal tax code was updated through the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, and many provisions take effect for the taxes you’ll file in early 2026. Filing your 2025 return could look a lot different than prior years, especially if you earn tips, overtime pay, or are self-employed.
Seller’s Discretionary Earnings (SDE)
What Is SDE — And Why It’s the Most Important Number in Your Business Valuation
If you’re thinking about buying or selling a business, you’ve probably heard the term SDE (Seller’s Discretionary Earnings) thrown around — but very few business owners truly understand what it means or how dramatically it impacts the price of a company.
At Baker Business & Tax Services, SDE is one of the first numbers we calculate when helping clients evaluate a potential acquisition or prepare their business for sale.
Let’s break it down in plain English.
Trump Accounts: The New Government-Seeded Investment Account Every Parent Needs to Understand
Beginning in 2026, a brand-new federal savings program called the Trump Account will launch, aimed at helping families build long-term wealth for their children. While it functions similarly to a traditional IRA, it has its own rules, contribution limits, and planning opportunities that make it one of the most impactful family tax changes in years.
If you have children, grandchildren, or employees with young families, this program could significantly change how you approach education and retirement planning.
Let’s break it down.
No Tax on Tips & Overtime: A Deep Dive into the 2025–2028 IRS Deductions
Service workers: You can now deduct up to $25,000 in qualified tips and $12,500 in overtime pay starting in 2025 — even if you take the standard deduction.
This is a below-the-line deduction that could dramatically lower your taxable income.
Let us show you how to qualify and track it correctly.
How to Defer Taxes on Inherited Land Using a 1031 Exchange
Thinking About Selling Inherited Land? We Can Help.
At Baker Business & Tax Services PLLC, we help clients structure 1031 exchanges, analyze inherited property basis, coordinate with qualified intermediaries, and build long-term tax-efficient real estate strategies.
Should Your LLC Be Taxed as an S-Corporation?
Should Your LLC Be Taxed as an S-Corporation?
Many small business owners form LLCs for their flexibility and legal protection—but when it comes to taxes, an S-Corporation election can provide big benefits if done correctly. Here’s what you need to know before making the switch.
What Is the American Opportunity Tax Credit (AOTC)?
What Is the American Opportunity Tax Credit (AOTC)?
The AOTC allows eligible taxpayers to claim up to $2,500 per eligible student per year for qualified education expenses during the first four years of postsecondary education.
The credit is partially refundable—up to $1,000 of the credit can be refunded even if the taxpayer owes no tax.
It covers 100% of the first $2,000 of qualified expenses and 25% of the next $2,000.
What Is the Saver’s Credit?
Maximize Your Retirement Savings with the Saver’s Credit
Saving for retirement is always a smart move—but did you know the IRS might reward you for doing it? If you're a low-to-moderate income earner, you could be eligible for the Saver’s Credit, also known as the Retirement Savings Contributions Credit. This valuable tax credit can reduce your tax bill just for contributing to your retirement accounts.
Let’s break down how it works, who qualifies, and how much you could benefit.
Understanding the Special $25,000 Deduction for Non-Real Estate Professionals
For many taxpayers, real estate investments offer significant tax benefits. One such benefit is the special $25,000 passive loss deduction for rental real estate activities. This deduction is particularly valuable for individuals who are not real estate professionals but actively participate in rental property management. However, strict criteria must be met to claim this deduction.
Understanding the Additional Medicare Tax and Form 8959 Withholding Reconciliation
Understanding the Additional Medicare Tax and Form 8959 Withholding Reconciliation
The U.S. tax code includes a variety of provisions designed to fund government programs, including Medicare. One such provision is the Additional Medicare Tax, which applies to high-income earners. If you or your clients earn above a certain threshold, understanding how this tax works—and how it’s reconciled on Form 8959—is crucial for accurate tax reporting and compliance.
Breaking Down Schedule A: Understanding Itemized Deductions
Breaking Down Schedule A: Understanding Itemized Deductions
As tax professionals, we know that maximizing deductions is key to helping clients reduce their taxable income. One of the most powerful tools available to taxpayers is Schedule A (Form 1040), Itemized Deductions. This form allows taxpayers to claim eligible expenses that exceed the standard deduction, potentially lowering their overall tax burden.
Private Foundation Tax - Understanding Excise Tax in a 990-PF Return: How It Applies to Investment Income
Private foundations operate under unique tax rules, particularly when it comes to excise tax on investment income. If you’re a tax professional assisting foundations with their Form 990-PF, understanding how excise tax applies to capital gains, interest income, and dividend income is crucial. In this post, we’ll break down the key points you need to know.
Understanding the Qualified Dividends and Capital Gains Tax Worksheet
Understanding the Qualified Dividends and Capital Gains Tax Worksheet on a 1040 Tax Return
When preparing a tax return, many taxpayers are often unaware that different types of income are taxed at different rates. Among these are qualified dividends and capital gains, which benefit from preferential tax treatment under the U.S. tax code. The Qualified Dividends and Capital Gains Tax Worksheet, used with Form 1040, is a critical tool that ensures these types of income are taxed correctly—often at rates lower than ordinary income.
How much of my Social Security will be Taxable?
Social Security benefits can be taxable depending on your total income and filing status. The IRS uses a formula to determine whether you owe taxes on your benefits. Here's how it works:
Maximizing Tax Savings: Cost Segregation Study on Residential Rental Property
Maximizing Tax Savings: Cost Segregation Study on Residential Rental Property
Investing in residential rental properties can be a lucrative endeavor, but maximizing profitability requires strategic tax planning. One powerful tax strategy is conducting a Cost Segregation Study. This technique allows property owners to accelerate depreciation deductions, thereby reducing taxable income and increasing cash flow. In this post, we will explore how cost segregation works, provide an example of its application on a residential rental property, and explain how the resulting loss can be utilized on a personal tax return for all three types of rental participation: passive, active participation, and real estate professional.
How to Set Up Your W-4 as a Married Couple with Comparable Incomes Filing Jointly
How to Set Up Your W-4 as a Married Couple with Comparable Incomes Filing Jointly
When you're married, both earning similar incomes, and filing jointly, figuring out the right W-4 setup can feel like walking a tightrope. Too little withholding, and you could face a tax bill come April. Too much, and you’re essentially giving the IRS an interest-free loan. So, how do you strike the perfect balance? Here’s how to set up your W-4 to avoid surprises and maximize your financial well-being.
Navigating Ohio Business Taxes: What Every Business Owner Needs to Know
Navigating Ohio Business Taxes: What Every Business Owner Needs to Know
If you're a business owner in Ohio, understanding your tax obligations is crucial for staying compliant and maximizing your savings. Ohio’s tax landscape can be complex, especially when it comes to how business income impacts your personal taxable income. In this article, we’ll break down the essentials of paying business taxes in Ohio, with a special focus on how Schedule C and Schedule E income can be deducted from your personal taxable income
Understanding Required Minimum Distributions (RMDs): What You Need to Know
Understanding Required Minimum Distributions (RMDs): What You Need to Know
If you have a retirement account like a Traditional IRA, 401(k), or other tax-deferred account, you might have heard the term Required Minimum Distribution (RMD) thrown around. But what exactly is an RMD? How are they calculated, and what happens if you don’t take them? Let's break down everything you need to know.
