2025 Tax & Trade Shifts: What Business Owners Need to Know Now.

Just when we thought the post-COVID business environment was stabilizing, a new round of federal tax policy shifts, tariff deadlines, and economic signals are beginning to ripple across industries — especially for automakers, importers, and investors.

As we continue advising clients on forward-facing legal strategies, three themes stand out this quarter: tariff-triggered price hikes, shifting tax incentives, and rising exposure to regulatory scrutiny. Here's what we’re watching — and how we’re helping clients prepare.

Auto Tariffs + EV Tax Credit Changes = A Legal Minefield

Tariffs on cars and parts are being phased in as early as August 1, and automakers are already signaling 4% to 8% price increases on sticker prices. The tax consequences are twofold:

1. Inventory that was previously tariff-exempt is drying up — automakers are passing future tax costs down the supply chain.

2. The $7,500 federal EV tax credit will expire for most models after September 30, which is expected to cause a short-term drop in EV sales, then a likely rebound next year.

In response, manufacturers are pivoting toward higher-priced models, which changes the economics for both corporate buyers and leasing structures. We’re helping clients evaluate how these shifts affect fleet purchases, Section 179 deductions, and depreciation planning — particularly for closely held companies looking to maximize business-use assets.

Used Cars, New Tax Planning

Used car prices are climbing again — up roughly 3% year-over-year — which brings fresh tax planning opportunities and risks. As affordability becomes an issue, more buyers are shifting to loan-financed purchases. A new federal provision now allows interest on car loans to be tax deductible in certain business contexts.

This opens the door for creative planning — but also possible IRS pushback if the deduction structure isn’t airtight. We’re advising clients to document intent and use, especially in pass-through entities and owner-operator structures.

Deficits Are Growing — So Is the Risk of Tax Scrutiny

The federal government just raised the debt ceiling again, pushing a potential showdown into 2026. With deficits rising past 7% of GDP and interest rate pressure mounting, we expect the IRS to increase enforcement — particularly around aggressive tax positions taken in recent M&A activity.

Now is the time to:

• Review prior-year net operating loss (NOL) carryforwards

• Ensure interest deductions under Section 163(j) are properly substantiated

• Prepare for transfer pricing and related-party scrutiny in cross-border transactions

When the Treasury’s looking for revenue, audits follow. We're already seeing an uptick in IRS exam activity among clients with complex deal structures.

Trade Policy Is Shifting — Contracts Should Be, Too

The White House is moving forward with a new wave of tariffs, hitting 20+ nations with rates as high as 40%. Reciprocal rates from countries like Japan and South Korea are already in play.

If your business involves import/export, manufacturing, or distribution, this matters. We’re working closely with clients to:

• Review international supply contracts for force majeure and tariff-sharing provisions

• Restructure international entities to optimize for tax treaty protection

• Protect against customs penalties and import-related audit exposure

Housing + Banking: Credit Tightening, Risk Rising

Residential construction is down nearly 10%, and bank capital rules are easing. While that sounds like a green light for borrowing, we’re seeing banks pulling back on riskier credits — especially in real estate.

If you're financing a deal or prepping for acquisition, this matters. We’re helping clients:

• Reposition entity structures to qualify for better lending terms

• Use like-kind exchanges and cost segregation to preserve liquidity

• Litigate where necessary when deals get re-traded or lenders move goalposts.

  
  

Private School Tax Credit: A New Legal Battleground?

The latest federal tax package includes a $1,700 credit for donations to private K-12 scholarships — including religious schools. While this is the first federally funded private school credit of its kind, it’s also drawing constitutional scrutiny over church-state separation.

Why does this matter? If you're a high-net-worth donor or your business supports educational nonprofits, you’ll want to ensure:

• Donation structures comply with 501(c)(3) limitations

• You understand how state opt-outs may affect eligibility

• You’re prepared for IRS review, especially if you benefit personally from the donation

We anticipate this becoming an active area for tax litigation in the coming years — especially in blue states opting out of participation.

What It All Means for Your Business

Every quarter brings new tax angles, but this one’s especially loaded: tariffs, tax credits, trade deals, and a federal deficit heading north. We’re helping business owners, family offices, and investors:

• Plan ahead for tax credit sunsets

• Structure acquisitions to hedge against IRS interest deduction audits

• Navigate international exposure with updated compliance strategies

If you’re preparing for growth or just trying to stay ahead of shifting tax policy, Spizzirri Law LLC is here to guide the way.

Thanks for reading.

MD

Reference: The Kiplinger Letter: Forcasts for Executives and Investors- Vol. 102, No. 29