Federal and Utah state tax law changes regularly enough that what applied two years ago may not apply today. This summary covers the most significant recent changes affecting Utah small business owners — with a focus on the years 2023–2025. For the complete 2024 tax law changes overview, see our tax changes 2024 article.
This page is updated when significant changes occur. Consult your CPA for how any of these changes affects your specific situation.
Federal Tax Law Changes
Bonus Depreciation Phase-Down
The 100% bonus depreciation allowance enacted by the Tax Cuts and Jobs Act (TCJA) of 2017 has been phasing down since 2023:
| Tax Year | Bonus Depreciation Percentage |
|---|---|
| 2022 and prior | 100% |
| 2023 | 80% |
| 2024 | 60% |
| 2025 | 40% |
| 2026 | 20% |
| 2027 and after | 0% (unless Congress acts) |
What this means: If you place qualifying business property in service in 2024, you can deduct 60% of the cost immediately in year one. The remaining 40% is depreciated under regular MACRS over the asset’s useful life. This contrasts sharply with 100% first-year expensing available just two years ago.
Planning implication: Section 179 expensing (first-year deduction of qualifying property up to the annual limit) remains fully available at the 2024 limit of $1,220,000 and is not subject to the bonus depreciation phase-down. However, Section 179 cannot create a loss — it is limited to business taxable income. Bonus depreciation can create or increase a net operating loss.
For most small businesses, Section 179 provides equivalent benefit to bonus depreciation for equipment purchases within the limit. Discuss with your CPA whether to use Section 179, bonus depreciation, or both for assets placed in service in 2024 and 2025.
SECURE 2.0 Act (Effective 2023–2025)
The SECURE 2.0 Act of 2022 made sweeping changes to retirement plan rules, most of which became effective in 2023 and 2024. Key provisions for small business owners:
- Increased catch-up contributions (2025): Starting in 2025, employees aged 60–63 can make enhanced catch-up contributions to 401(k) plans — the greater of $10,000 or 150% of the standard catch-up amount ($7,500 in 2024). This creates an opportunity for business owners in that age range who have not maximized retirement savings.
- Auto-enrollment required for new plans (2025): New 401(k) and 403(b) plans established after December 29, 2022, must automatically enroll eligible employees beginning January 1, 2025. Auto-enrollment rate: 3%–10% of compensation, escalating by 1% per year up to 10%–15%. Existing plans and plans with fewer than 11 employees are exempt.
- Emergency savings accounts: Starting in 2024, employers can offer emergency savings accounts (ESAs) linked to defined contribution plans, allowing employees to contribute up to $2,500 (after-tax) for emergency access without the usual early withdrawal penalty.
- Student loan “match” provision (2024): Employers may treat employee student loan payments as elective deferrals for purposes of employer matching — allowing employees paying student loans (rather than making plan contributions) to still receive the employer match. Optional; employers must amend their plan document to add this feature.
- Small employer plan start-up credit (enhanced): For businesses with 50 or fewer employees starting a new qualified retirement plan, the existing tax credit for start-up costs has been enhanced. The credit covers up to 100% of administrative costs (up from 50%) for employers with up to 50 employees, up to $5,000 annually for 3 years.
See our self-employed retirement guide for contribution limits and planning strategies.
Research and Experimental Expenditure (R&E) Changes
Under the TCJA, beginning in 2022, Section 174 research and experimental expenditures must be capitalized and amortized over 5 years (domestic) or 15 years (foreign) — rather than immediately deducted as under prior law. This change significantly affected software development businesses, manufacturers, and other research-intensive companies.
Congress has repeatedly debated reinstating immediate R&E expensing but has not enacted a fix as of mid-2024. If your business has significant research, development, or software development costs, discuss the capitalization requirement with your CPA — it affects both your tax liability and your financial statements.
Business Interest Expense Limitation (Section 163(j))
The limitation on deductible business interest expense under Section 163(j) tightened in 2022. Beginning in 2022, the calculation of Adjusted Taxable Income (ATI) no longer adds back depreciation and amortization (EBITDA-based), instead using EBIT (earnings before interest and taxes). This reduces the allowable interest deduction for many capital-intensive businesses with significant depreciation.
Businesses with average gross receipts of $30 million or less are exempt from this limitation.
TCJA Sunset (2025)
Many provisions of the Tax Cuts and Jobs Act of 2017 are scheduled to sunset at the end of 2025 unless Congress extends them. Provisions at risk of expiration include:
- Reduced individual income tax rates (brackets would revert to pre-2017 rates)
- Doubled standard deduction (would revert to pre-2017 amounts, adjusted for inflation)
- $10,000 SALT cap (could change — expiration actually helps high-income taxpayers in high-tax states)
- QBI deduction (Section 199A) — the 20% pass-through deduction would expire
- Doubled estate and gift tax exemption (would drop from ~$13.6 million to ~$7 million per person in 2026)
Planning implication: The potential expiration of the QBI deduction is particularly significant for S-Corp owners, partners, and sole proprietors. If the deduction expires, pass-through income that was effectively taxed at a maximum of ~29.6% (37% rate × 80% after 20% QBI deduction) would revert to 37% ordinary income rates. Monitor legislative developments and discuss planning scenarios with your CPA before year-end 2025.
2024 Indexed Limits (Key Numbers)
| Item | 2024 Limit |
|---|---|
| 401(k) employee deferral | $23,000 |
| 401(k) catch-up (age 50+) | $30,500 total |
| SEP-IRA contribution | Lesser of 25% of compensation or $69,000 |
| SIMPLE IRA deferral | $16,000 |
| HSA — self-only | $4,150 |
| HSA — family | $8,300 |
| Section 179 expensing limit | $1,220,000 |
| Social Security wage base | $168,600 |
| Estate and gift tax exemption | $13,610,000 |
| Annual gift exclusion | $18,000 |
Utah State Tax Law Changes
Utah Income Tax Rate Reduction
Utah has reduced its flat individual and corporate income tax rate several times in recent years:
- 2021: 4.95%
- 2022: 4.85%
- 2023: 4.65%
The current rate of 4.65% applies to all Utah taxable income — individuals, C-Corporations, and pass-through entity owners. There are no graduated brackets; Utah taxes all income at the same rate regardless of amount.
Utah Taxpayer Tax Credit
Utah enacted a nonrefundable taxpayer tax credit available to Utah residents. The credit phases out at higher income levels. Consult your CPA for the current credit amount and phase-out thresholds applicable to your situation.
Utah Pass-Through Entity Tax (PTET) — Ongoing
The Utah PTET election, available since 2021, remains available for 2024 and beyond. The election allows pass-through entities to pay Utah income tax at the entity level (4.65%), deducting it as a business expense on the federal return — bypassing the $10,000 SALT deduction cap on individual returns.
The election is made annually on the TC-20S, TC-65, or applicable Utah return. Estimated PTET payments should be made during the year to avoid underpayment penalties.
See our Utah PTET guide for full election criteria and planning analysis.
Looking Ahead: Legislative Watch Items
- TCJA extension/modification: The political and legislative path for extending TCJA provisions is uncertain. Business owners should model scenarios for both extension and expiration.
- Retirement plan legislation: Additional SECURE 2.0 technical corrections and guidance from the IRS are expected. Stay current with your CPA on implementation details.
- Digital asset reporting: The IRS has expanded reporting requirements for cryptocurrency and digital asset transactions. New broker reporting rules take effect in 2025 — businesses that receive digital asset payments or hold digital assets should discuss reporting obligations with their CPA.
Call (801) 927-1337 or visit cpaone.net/tax-planning to understand how recent changes affect your specific tax position and what planning actions make sense before year-end.
About the Author
Missy Dennis, CPA | Partner | FJ & Associates, PLLC | Kaysville, Utah
Missy holds a Master of Accounting degree from the University of Utah and is a licensed Certified Public Accountant. She is committed to providing clear, accurate, and actionable guidance so clients can navigate complex financial decisions with confidence. With more than twenty years of public accounting experience, Missy Dennis specializes in: tax preparation and tax advisory; bookkeeping strategy alignment; estate and trust taxation; audit and consulting services; low-income housing tax credits; non-profit accounting; and small- and mid-sized business advisory. Contact FJ & Associates at admin@cpaone.net or call (801) 927-1337.
