Sellers CPA Newsletter - April Edition

As the vibrant blooms of spring awaken across the landscape, painting fields in hues of green and gold, we find ourselves at the threshold of a fresh tax year. The air carries a sense of renewal—much like the annual cycle of filing taxes, where careful planning and attention to detail can blossom into meaningful savings and peace of mind. Just as gardeners tend to their soil in anticipation of growth, savvy taxpayers and business owners prepare now to navigate the evolving tax terrain ahead. At Sellers CPA LLC, founded by Carol Sellers in 1991, we’ve witnessed countless stories of clients who, through proactive guidance, turned potential tax burdens into opportunities for financial flourishing. Whether it’s a family celebrating the arrival of a new child or a small business expanding its horizons, spring reminds us that thoughtful preparation yields rewarding results.

This April 2026 edition provides a comprehensive overview of the key tax developments shaping the current filing season and the year ahead. We cover major legislative updates from the One Big Beautiful Bill Act (OBBBA), including detailed information on the Child Tax Credit, inflation adjustments, executive actions with tax implications, Alabama-specific state tax law changes, detailed filing deadlines for individuals and businesses, and procedures for requesting extensions. Our goal is to equip you with clear, in-depth insights so you can approach tax matters with confidence.

While we cover these topics thoroughly, every individual and business situation is unique. We strongly encourage you to reach out to Carol Sellers directly to schedule a personalized tax consultation.To contact Carol Sellers and set up your consultation, please visit https://sellerscpa.net and use the contact form, or reach out via the phone or email options listed on the site’s contact page.

Major New Tax Laws: The One Big Beautiful Bill Act (OBBBA) and Its Far-Reaching Impact

The cornerstone of recent tax changes is the One Big Beautiful Bill Act (OBBBA), also known as the Working Families Tax Cut, signed into law by President Donald Trump on July 4, 2025. This sweeping legislation addressed the scheduled expiration of many provisions from the 2017 Tax Cuts and Jobs Act (TCJA) by making numerous individual and business tax cuts permanent while introducing new deductions, credits, and modifications. Without OBBBA, tax rates would have increased for many, the standard deduction would have shrunk, and other favorable rules would have reverted—potentially raising taxes for millions of Americans.

For tax year 2026 (returns filed in 2027), the IRS has issued inflation adjustments incorporating OBBBA amendments. The standard deduction rises to $32,200 for married filing jointly, $16,100 for single filers or married filing separately, and $24,150 for heads of household. Additional amounts apply for taxpayers age 65 or older or blind (typically an extra $1,650–$2,050 per qualifying person, depending on filing status).

Key Permanent Extensions and New Provisions Under OBBBA

• Individual Income Tax Rates and Brackets: The seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, and 37%) is now permanent. For 2026, the top 37% bracket begins at approximately $640,600 for singles and $768,700 for joint filers (subject to final inflation adjustments).

• No Tax on Tips: Qualified tip income for eligible service industry workers is excluded from taxable income, subject to forthcoming IRS guidance on documentation and qualification.

• No Tax on Overtime: Premium overtime pay receives favorable treatment for qualifying workers (details apply through at least 2028 in many cases).

• Senior Deduction: Taxpayers age 65 or older at year-end may claim an additional $6,000 above-the-line deduction (available for tax years 2025–2028, with phaseouts for higher incomes—generally over $75,000 single/$150,000 joint).

• Car Loan Interest Deduction: Up to $10,000 of interest paid on loans for new U.S.-manufactured vehicles, with transition relief for certain 2025 purchases.

• Increased SALT Cap: The state and local tax (SALT) itemized deduction limit rises from $10,000 to $40,000 (inflation-adjusted in future years through 2029), offering substantial relief for itemizers in high-tax states.

• Charitable Contributions: Starting in 2026, standard deduction filers can claim a limited above-the-line deduction for cash gifts to qualified 501(c)(3) organizations (up to $1,000 single / $2,000 joint). Itemizers face new floors or caps in high-income scenarios.

Family-focused updates also include expansions to the adoption credit, dependent care credit limits, and new savings vehicles such as Trump Accounts for children in designated cohorts.Enhanced Child Tax Credit Under OBBBA

One of the notable family provisions in OBBBA is the enhancement and permanent extension of the Child Tax Credit (CTC). For tax year 2025 (returns filed in 2026), the maximum CTC increases from $2,000 to $2,200 per qualifying child under age 17. This higher amount is permanent and will be indexed for inflation starting in 2026 and subsequent years.The refundable portion of the credit remains capped at $1,700 per qualifying child for 2025 (also subject to inflation adjustments in future years). This means that if the credit exceeds your tax liability, you can receive up to $1,700 as a refund, but the full $2,200 benefit is not fully refundable for all families—particularly those with lower earnings where the credit phases in based on income.The credit begins to phase out at modified adjusted gross income (MAGI) levels of $200,000 for single filers and $400,000 for married filing jointly. The $500 non-refundable credit for other dependents (such as elderly parents or adult children) is also made permanent.Additional eligibility rules under OBBBA require a valid Social Security Number (SSN) for both the claiming taxpayer (or at least one spouse on a joint return) and the qualifying child.

These changes provide meaningful additional support for middle- and upper-middle-income families with children, though the partial refundability limits the benefit for the lowest-income households. Families should carefully review qualifying child rules, including age, relationship, residency, and support tests, when claiming the credit.Business and Retirement Provisions

• 100% Bonus Depreciation is made permanent, enabling immediate expensing of qualified property investments and supporting capital expenditures.

• Pass-through entities and C corporations benefit from stabilized deduction rules and prevented phase-outs, including the permanent 20% Qualified Business Income (QBI) deduction.

• Retirement plan enhancements (building on SECURE legislation) feature higher catch-up contribution limits for 401(k), 403(b), and similar plans. Individuals ages 60–63 qualify for a “super catch-up” of up to $11,250 in 2026 (in addition to standard catch-up amounts). High earners (generally $150,000+ AGI and age 50+) face requirements to direct certain catch-up contributions to Roth accounts.

• Health Savings Account (HSA) limits and eligibility have seen favorable adjustments.

More than 60 tax provisions receive annual inflation adjustments, including modest widening of tax brackets, Earned Income Tax Credit (EITC) maximums (projected around $8,000+ for qualifying families), and capital gains thresholds. Some OBBBA provisions apply retroactively to tax year 2025 (filed in 2026), potentially increasing refunds, while others take full effect in 2026.Executive Orders Affecting Taxes in 2025–2026President Trump issued numerous executive orders in 2025 and early 2026 that shape the tax and regulatory landscape, although the primary structural reforms came through OBBBA legislation.

Key EOs with tax implications include:

• Global Tax Policy: Orders rejecting or unwinding U.S. commitments to the OECD’s Pillar 1 and Pillar 2 global minimum tax framework, protecting American businesses from extraterritorial taxation and directing reviews of discriminatory foreign taxes under Internal Revenue Code provisions (such as potential retaliatory measures).

• Energy Policy: Directives that curtailed certain subsidies and credits from prior laws (e.g., portions of the Inflation Reduction Act related to wind, solar, or other specified sources), while prioritizing reliable domestic energy production. This affects the availability of specific energy-related tax credits.

• Regulatory and IRS Oversight: Early freezes on pending regulations slowed some tax guidance, alongside reviews of IRS enforcement priorities, hiring, and focus on fraud prevention in programs intersecting with tax compliance.

• Trade and Tariffs: Multiple orders on reciprocal trade and tariffs prompted examinations of foreign digital services taxes and other measures, which could trigger U.S. responses affecting multinational businesses, import costs, and related deductions. Tariffs themselves are not direct income taxes but influence business expenses and supply chains.

• Accountability and Economic Development: Orders emphasizing responsible use of taxpayer funds and supporting targeted incentives, such as those aligned with Opportunity Zones or similar programs.

These actions emphasize deregulation, American sovereignty in taxation, and reduced bureaucratic burdens. They do not replace statutory compliance requirements but influence how certain credits, international provisions, and enforcement are implemented. Ongoing Treasury and IRS guidance continues to clarify details, particularly around energy credits and cross-border rules.Alabama State Tax Law Changes for 2025–2026Alabama taxpayers must navigate both federal changes under OBBBA and state-specific updates. Alabama’s individual income tax remains progressive with rates of 2%, 4%, and 5% (2% on the first $500 of taxable income for singles/$1,000 for joint filers; 4% on the next amounts up to $3,000/$6,000; and 5% above that). The state allows a deduction for federal income taxes paid, which helps moderate the effective rate.

Key recent Alabama changes include:

• Mobile Workforce Relief (Act 2025-334): Effective January 1, 2026, nonresident employees who work in Alabama for 30 days or fewer in a calendar year are generally exempt from Alabama income tax and employer withholding on that compensation. This safe harbor simplifies compliance for businesses with traveling or remote workers but does not apply to professional athletes, entertainers, or certain public figures.

• R&D Expense Decoupling (Act 2025-400): Effective retroactively for tax years beginning on or after January 1, 2024, Alabama decouples from federal TCJA rules requiring amortization of research and experimental (R&D) expenses. Businesses can generally deduct these costs in the year incurred, supporting innovation regardless of federal treatment.

• Overtime Pay Exemption: Alabama’s temporary state-level exemption for overtime compensation (enacted in 2023) expired on June 30, 2025. Overtime pay earned after that date is subject to Alabama income tax, though federal “no tax on overtime” provisions under OBBBA may provide relief at the federal level.

• Retirement Income Exemptions: Legislation effective for the 2026 tax year doubles the exemption on certain retirement income (such as from 401(k)s or IRAs) to $12,000 for individuals and $24,000 for married filing jointly in some cases, providing additional relief for retirees.

• Other Incentives and Deductions: Alabama offers various business credits, including the Alabama Jobs Act investment credit, port credit, Growing Alabama Credit, and Innovating Alabama Credit for contributions to economic development. Personal deductions remain available for items such as catastrophe savings account deposits, Health Savings Account contributions, and certain home retrofit costs for wind or flood protection. A new tax credit for donations to qualifying rural hospitals is also available starting in 2026.

Alabama does not conform to all federal changes automatically, so careful coordination between federal and state returns is essential—particularly for new OBBBA deductions (tips, overtime, senior deduction, car loan interest) and the enhanced Child Tax Credit, which may not directly translate to state benefits. State filing generally follows the federal April 15 deadline, with automatic extensions available.State lawmakers continue to consider additional relief measures, such as potential reinstatement of capped overtime deductions. Always verify the latest guidance from the Alabama Department of Revenue for your specific situation.

Tax Filing Deadlines for 2026: Individuals and BusinessesTax year 2025 returns (covering income earned January 1–December 31, 2025) are due in 2026. Below is a detailed overview for calendar-year taxpayers. Fiscal-year entities should adjust dates based on their year-end. Always verify with the latest IRS Publication 509 and Alabama Department of Revenue guidance for any shifts due to holidays or disasters.Individuals (Form 1040 or 1040-SR)

• Primary Due Date: April 15, 2026 — File your return and pay any tax owed. Also due: first-quarter 2026 estimated tax payment (Form 1040-ES). Alabama individual income tax returns are also generally due April 15, 2026.

• Automatic Extension: File Form 4868 by April 15, 2026, for a 6-month extension to file until October 15, 2026.

  
  

  Critical Note: This extends only the time to file the return—not to pay taxes owed. Any balance due must be paid by April 15, 2026, to minimize penalties and interest. Alabama generally grants a corresponding automatic extension for state returns.

• Special extensions (often automatic 4–6 months) may apply for taxpayers abroad or in the military.

• Other key dates: Final 2025 estimated tax payment was January 15, 2026; quarterly estimated taxes for 2026 due April 15, June 15, September 15, and January 15, 2027. Employers furnish W-2s and certain 1099s by February 2, 2026.

Businesses

• S Corporations and Partnerships (including multi-member LLCs): Form 1120-S or 1065 due March 16, 2026. Schedule K-1s to owners/partners by the same date.

  
  

  Extension: File Form 7004 by March 16 for an automatic 6-month extension to September 15, 2026.

• C Corporations: Form 1120 due April 15, 2026.

  
  

  Extension: File Form 7004 by April 15 for an automatic 6-month extension to October 15, 2026. Alabama corporate returns generally align with these dates, with extensions available to November 15 in some cases.

• Sole Proprietorships and Single-Member LLCs: Report on the owner’s individual Form 1040 (subject to April 15 deadline and extension rules above).

• Employment Taxes (e.g., Form 941) and excise taxes follow separate quarterly deposit and filing schedules.

• Trusts and Estates (Form 1041): Generally due April 15, with extension to October 15 available.

Penalties for late filing or payment can be significant. Accurate estimated payments throughout the year and timely extensions help manage compliance. Information returns (W-2s, 1099s) have their own earlier deadlines for furnishing to recipients and filing with the IRS.Why Professional Guidance Matters More Than Ever

The interplay of permanent TCJA extensions, OBBBA’s new and expanded deductions/credits (including the enhanced $2,200 Child Tax Credit, tips, overtime, seniors, car loans, enhanced SALT, charitable options), retirement shifts, inflation adjustments, executive orders, and Alabama-specific changes (such as the 30-day mobile workforce safe harbor, R&D decoupling, and expanded retirement exemptions) creates both opportunities and complexities this season. Retroactive elements may boost 2025 refunds, while 2026 rules call for strategic planning around bonus depreciation, Roth catch-up mandates, deduction limitations, and state conformity issues.Tax provisions interact uniquely with your business structure, investments, family dynamics (including qualifying children for the CTC), retirement strategy, and state residency. Professional review helps identify optimizations while ensuring full compliance at both federal and Alabama levels.

Sellers CPA LLC specializes in tailored tax preparation, planning, bookkeeping, payroll, and advisory services for individuals and businesses. Carol Sellers and her team bring decades of experience to help clients navigate these changes effectively—whether coordinating federal OBBBA benefits with Alabama rules or optimizing family credits.

To schedule your personalized tax consultation with Carol Sellers, please visit https://sellerscpa.net and use the contact form, or reach out via the phone or email options listed on the site’s contact page. Engaging early in this season of renewal positions you for a smoother filing experience and stronger financial outcomes throughout the year.We look forward to partnering with you.

This newsletter is for informational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and subject to change or interpretation. Always consult a qualified CPA for advice specific to your individual or business circumstances.