How to Start Your 2025 Tax Preparation + Major OBBBA Tax Planning Opportunities for California Taxpayers

Tax season is moving quickly in Los Angeles and San Diego — and 2025 brings significant tax law updates under the One Big Beautiful Bill Act (OBBBA).

If you’re wondering:

• How do I start my tax preparation process?
• Do I qualify for the new SALT cap increase?
• What does “No Tax on Overtime” really mean?
• Can I deduct car loan interest?
• Should I form an S-Corp to reduce taxes?

This guide walks you through best practices and planning strategies for 2025 filings.

Best Practice: How to Start Your 2025 Tax Preparation Process

Whether you are a returning client or new to TaxPlus, the smartest first step is simple:

1️⃣ Call Your Local Office

Los Angeles: 310-398-3231
San Diego: 858-279-1640

Our front desk will connect you with a tax associate who will:

• Review your unique tax situation
• Provide a customized document checklist
• Send you a secure upload link
• Prepare your 2025 Tax Draft
• Coordinate a Final Review Conference with a senior reviewer

If you’re a returning client, request your customized 2025 tax organizer, pre-filled with prior year data to streamline the process.

Early preparation = better planning opportunities.

Important 2026 Filing Deadlines (For 2025 Returns)

📌 February 28, 2026

City of Los Angeles Annual Business Registration

📌 March 16, 2026

S-Corporations (Form 1120S) & Partnerships (Form 1065)

📌 April 15, 2026

Individuals (Form 1040)
Single Member LLCs (Form 568)
C-Corporations (Form 1120)

Extensions are available — but remember:

An extension gives you more time to file, NOT more time to pay.

OBBBA: Major Tax Planning Changes for 2025

The One Big Beautiful Bill Act (OBBBA) introduced several temporary but powerful planning opportunities.

Most important for California taxpayers: the SALT cap increase.

SALT Cap Increased to $40,000 (Temporary)

The State and Local Tax (SALT) deduction cap increases from:

• $10,000 → $40,000 (2025–2029)

This is particularly impactful for high-income states like California.

Income Limits Apply:

• Full $40,000 deduction available if:
  • MAGI ≤ $500,000 (Single / MFJ)
  • MAGI ≤ $250,000 (MFS)
• Phases out completely at:
  • $600,000 (Single / MFJ)
  • $300,000 (MFS)

If your income is near these thresholds, strategic planning can help preserve eligibility.

New 2025 Above-the-Line Deductions

Unlike itemized deductions, these reduce gross income directly and can be taken even if you use the standard deduction.

No Tax on Overtime (2025–2028)

• Deduct up to:
  • $12,500 (Single)
  • $25,000 (MFJ)
• MAGI limit:
  • $150,000 (Single)
  • $300,000 (MFJ)

Only the additional overtime portion qualifies.

No Tax on Tips (2025–2028)

• Deduct up to $25,000
• Applies to occupations that customarily receive tips
• Same MAGI limits as overtime deduction
• California may still tax tips

No Tax on Car Loan Interest (2025–2028)

• Deduct up to $10,000 per year
• Vehicle must:
  • Be new
  • Be under 14,000 lbs
  • Final assembly in U.S.
• MAGI limits:
  • $100,000 (Single)
  • $200,000 (MFJ)

Higher 2025 Standard Deductions

For taxpayers who do not itemize:

• Married Filing Joint: $31,500
• Single / MFS: $15,750
• Head of Household: $23,625
• Additional $2,000 for age 65+ or blind

A temporary senior deduction of up to $6,000 per person is also available (subject to income phase-outs).

Business Owner Planning Opportunities

If you operate a business in Los Angeles or San Diego, 2025 is a powerful planning year.

100% Bonus Depreciation Restored

Under OBBBA, qualified property placed in service after January 19, 2025 may qualify for 100% bonus depreciation.

This may include:

• Equipment
• Heavy vehicles
• Certain business assets

S-Corp Strategy to Improve SALT Eligibility

If your MAGI is limiting your SALT benefit:

• Creating or optimizing an S-Corp
• Increasing deductible business expenses
• Adjusting compensation structure

May reduce MAGI and preserve SALT deductions.

An S-Corp can also:

• Reduce self-employment taxes
• Provide asset protection
• Improve retirement plan flexibility

Children on Payroll Strategy

Hiring your children can:

• Shift income to a lower tax bracket
• Avoid Social Security, Medicare, and FUTA taxes (under 21, depending on entity type)
• Create earned income for Roth IRA contributions

If in entertainment, California law requires a Coogan account.

This strategy must follow strict compliance rules — proper documentation is essential.

Cost Segregation for Rental & Real Estate Owners

Cost segregation allows you to:

• Accelerate depreciation
• Increase short-term deductions
• Improve cash flow

For high-income taxpayers, converting a second home into a qualifying short-term rental with substantial services may create deductible business losses.

This requires careful compliance planning.

Why Bookkeeping Is More Important Than Ever

Accurate books drive tax strategy.

At TaxPlus, Antonia “Toni” Davey leads our bookkeeping team, helping business owners:

• Identify deductible expenses
• Improve profit analysis
• Plan for tax-efficient growth
• Prepare cleaner, audit-ready filings

“Bookkeeping provides the gauges on your business.” – Toni Davey

If you are operating on estimates instead of clean numbers, now is the time to fix that.

California Tax Planning Is No Longer Optional

With:

• SALT cap changes
• New above-the-line deductions
• 100% bonus depreciation
• Increased standard deductions
• Expanded child tax credits

2025 is not a “file and forget” year.

It’s a plan and optimize year.

Work With TaxPlus — Los Angeles & San Diego Tax Experts

We work extended hours during tax season and offer both in-person and virtual appointments.

Los Angeles Office
📞 310-398-3231
✉️ May@taxplus.com

San Diego Office
📞 858-279-1640
✉️ Henna@taxplus.com

Start your 2025 tax preparation process today.