Six Ways Accountants Can Guide Business Owners Through 2025 Tax Law Changes
Part of a series | The One Big Beautiful Bill Act Series
The 2025 tax year is challenging business owners and their accountants with one of the most sweeping sets of federal tax-law updates in recent memory. The One Big Beautiful Bill Act (the Act) was signed into law on July 4, 2025, and includes several significant changes relevant to employers for payroll, employment tax and employee benefits purposes, with some key provisions effective retroactively as of January 1, 2025. The Act and related IRS guidance introduced new deductions, shifted compliance expectations, and created reporting complexities—especially around overtime, tips, and small business incentives. These changes can present uncertainty, but they also create a powerful opportunity for accountants to elevate their role as year-round advisors.
Drawing from insights shared at the 2026 ADP Accountant Summit, panelists Jody Padar, known as the "Radical CPA," co-founder of ExcelLabs, Amy Miller, senior director of government affairs at ADP, and Kelly Phillips Erb, a prominent tax attorney and writer known as "Taxgirl(R)," described six ways accountants can guide business owners through this complex transition.
1. Clarify how new deductions actually work—before clients misunderstand them
The new deductions for overtime and tips have generated enormous buzz, but as Miller, senior director of government affairs at ADP, explained, "it's not as straightforward as employers and employees may think."
For overtime, only the premium portion qualifies. As background, overtime can be divided into two parts – the "straight time" portion of the overtime, which is paid at an employee's standard hourly rate, and the "premium" portion of overtime, which is the additional pay received for overtime work. And even then, deductions are capped at $12,500 for single filers and $25,000 for joint filers.
Tips face similar limitations, including strict definitions of who qualifies as a tipped worker and caps at $25,000 per taxpayer (or married filing jointly).
Erb added that many taxpayers "think they know it, but maybe they don't." Your role is to decode these nuances before clients make decisions based on headlines or social media posts.
2. Guide employers on compliance for 2025 reporting—a "loose ‑but‑mandatory" year
For 2025 only, the IRS will not update W2 forms or withholding tables, meaning reporting requirements will rely on supplementary documentation. As Erb noted, 2025 will be "a little loosey goosey," but employers must still provide workers with accurate overtime and premium tip information.
Helping businesses understand what must be tracked—even if not directly reported on a form—is essential to preventing future penalties or employee confusion.
3. Prepare clients for IRS data ‑matching and audit triggers
Both Miller and Erb emphasized that, despite staffing challenges at the IRS, enforcement in these new areas will rely heavily on algorithms. Dramatic year-over-year shifts in reported tips or overtime could trigger automated notices.
As Erb warned, "this is low hanging fruit." If a restaurant suddenly reports triple the tip volume—or none at all—after deductions change, expect scrutiny.
Advisors can help clients stay ahead by reconciling point of sale (POS) data, payroll reports, and W‑2/1099 information early and often.
4. Help businesses evaluate operational changes before they backfire
Some employers may wonder whether to restructure compensation to maximize deductions (e.g., pushing more pay into tips or overtime). Erb cautioned that temporary tax incentives should not drive permanent business model changes.
Accountants should help owners assess:
• Whether changes are legitimate and sustainable
• How shifts may impact retirement contributions, payroll taxes, or employee satisfaction
• Whether new classifications align with IRS occupation codes
This advisory role ensures employers avoid unintended consequences that could surface years later.
5. Proactively educate employees and employers about withholding changes
Employees will likely ask their employers how to complete their Form W4, one of the more common annual questions. With new deductions affecting refund expectations, accountants can help their small business clients set realistic withholding strategies.
As Padar emphasized, if accountants "don't know about these things," their clients will turn elsewhere—often to inaccurate online sources.
Advisors can provide:
• Updated withholding worksheets
• Employee-facing explanations
• Alerts about how choices now affect refunds later
This is an opportunity to deepen trust while preventing filing season surprises.
6. Use compliance conversations to launch advisory services
The panel repeatedly emphasized that the Act is a catalyst for accountants to position themselves as strategic partners, not just tax preparers.
Padar urged firms to "turn compliance into advisory" by identifying which clients may benefit from tip credits, research and development (R&D) expensing, or small business elections. With changes spanning payroll, credits, and income classification, clients need year-round planning more than ever.
Advisory opportunities include:
• Recognizing tip credit opportunities and reconciling POS and payroll data for accurate reporting
• Communicating year-round about evolving IRS guidance
• Modeling tax impacts of different compensation approaches
• Helping small businesses amend returns to claim retroactive R&D expenses before the July 2026 deadline
As Padar put it, accountants "have context"—context of clients' business operations, risk tolerance, financial goals, and human considerations that no algorithm or search engine can replicate.
Conclusion: A defining moment for the profession
The 2025 tax year will be confusing, fluid, and filled with questions from business owners and their employees. But it's also a defining moment for accountants to showcase their expertise, translate complexity into clarity, and guide clients toward strategic, complaint, tax efficient decisions.
By embracing proactive communication, analytical rigor, and advisory-driven services, accountants can turn tax law uncertainty into long-term value—for their clients and their firms alike.
