Tax Law and Business Planning in 2025: What You Need to Know.

As we move further into 2025, businesses and individuals alike are grappling with significant tax developments that could have lasting implications for financial planning, litigation risk, and even mergers and acquisitions strategies.

The Premium Tax Credit (PTC): A Tighter Window

One of the most immediate changes concerns the premium tax credit (PTC), a crucial component of the Affordable Care Act. Temporary PTC expansions are set to expire after 2025, potentially disqualifying millions of Americans from receiving health insurance subsidies. Starting in 2026, stricter income thresholds will apply—only those with modified AGIs between 100% and 400% of the poverty line will qualify.

This change is particularly relevant to employers and corporate benefit planners, especially in the M&A space. During acquisitions, benefit structures and compliance with IRS mandates are frequently evaluated. The sunsetting of PTC enhancements adds another layer of risk to consider in due diligence processes and post-closing integrations.

Litigation Spotlight: IRS Enforcement and Employer Mandates

On the enforcement front, the IRS is stepping up efforts to hold businesses accountable under the employer mandate. Employers with 50 or more full-time workers must ensure proper filing of Forms 1095-C and 1094-C, or risk significant penalties. In one recent case, a school district faced over $2 million in penalties before eventually reaching a settlement with the IRS. These developments are a cautionary tale: non-compliance can and does lead to litigation. Businesses engaged in restructuring, rapid growth, or acquisitions should conduct a compliance audit to avoid surprises that could jeopardize deals or result in costly disputes.

HSAs: Tax-Advantaged Planning Opportunities

On a more strategic front, Health Savings Accounts (HSAs) continue to present important tax planning opportunities. Contribution limits are rising in 2026, and the tax-free growth of these accounts makes them an attractive vehicle for long-term savings. For high-net-worth individuals considering asset protection or succession strategies, HSAs should not be overlooked. For legal counsel working on executive compensation plans, business succession, or employee benefits structuring in M&A transactions, understanding the nuances of HSAs can deliver real value to clients.

Nonprofits and Exempt Groups: File Now or Face the Consequences

Another key development affects tax-exempt organizations, which must file their 2024 annual returns by May 15. Failure to file for three consecutive years could lead to revocation of tax-exempt status. This is especially important for charitable organizations involved in foundation mergers or restructuring, where oversight of compliance can become fragmented.

Thank you for reading, and as always if you have any questions or concerns feel free to reach out.

MD

Reference: The Kiplibnber Tax Letter- Vol. 100, No. 10, Pages 1&2