Tax laws are constantly evolving, and staying updated can make the difference between saving thousands and facing unexpected liabilities. In this March 2025 update, we’re diving into some of the most important developments that could directly impact individuals and business owners.

Deducting Disaster Losses for Individuals

When disasters strike, such as wildfires, floods, or hurricanes, the federal tax law provides some relief. Thanks to the Federal Disaster Relief Act of 2023, victims of federally declared “major” disasters from January 1, 2020, through January 11, 2025, can now:

• Deduct losses with only a $500 floor and no 10% AGI threshold.

• Claim the deduction even if they don’t itemize.

• File amended returns to include prior disaster losses.

If you were affected by events like the East Palestine train derailment or recent wildfires, this change could mean significant tax relief.

IRS Challenges Tesla Model X Write-Offs

Did you purchase a Tesla Model X or a similar crossover vehicle in 2022 and claim 100% bonus depreciation? The IRS has incorrectly disallowed some of these deductions, reducing write-offs drastically.

Here’s why they’re wrong:

• The Model X has a GVWR of 6,250 pounds, classifying it as a truck under tax law.

• SUVs and trucks above 6,000 pounds qualify for full bonus depreciation.

• The Department of Transportation classifies the Model X as a non-passenger automobile.

If the IRS challenges your deduction, don’t give in. Options include supervisor review, mediation, appeal, or even Tax Court. Standing your ground could save you thousands.

Retirement Plans for Sole Proprietors

Looking to reduce your 2024 tax bill? A self-employed retirement plan could be the answer. Options include:

• SEP-IRA – Contributions up to $69,000 (2024).

• Keogh Plan – Similar to a SEP, with borrowing options.

• SIMPLE IRA – Great for modest income levels, with contributions up to $19,500 if 50+.

• Solo 401(k) – The highest contribution limits, but more paperwork.

Choosing the right plan depends on your income, goals, and filing deadlines—but there’s still time to act for 2024.

The Right Way to Handle Corporate Travel Reimbursements

If you run your business through a corporation, remember: the corporation is a separate legal entity. Paying for corporate travel, meals, and lodging personally—without reimbursement—means lost deductions.

The fix? Set up an accountable plan so:

• You get tax-free reimbursements for business expenses.

• Your corporation gets full tax deductions.

• You stay compliant and protected in case of an audit.

IRS Disaster Relief: More Than Just Deductions

Beyond deductions, the IRS provides multiple forms of disaster relief:

• Extended tax deadlines – Up to one year in federally declared areas.

• Penalty-free withdrawals – Up to $22,000 from retirement accounts.

• Tax-free relief payments – From government or charitable organizations.

• Qualified wildfire relief payments – Retroactively tax-free back to January 2020.

• Casualty gains relief – Options to defer or exclude income when insurance payouts exceed property basis.

These provisions can provide vital financial breathing room when it’s needed most.

Best Retirement Plans for Solo-Owned Corporations

If you operate a solo-owned C or S corporation, you also have excellent retirement savings options:

• SEP-IRA – Employer contributions up to $70,000 (2025).

• Solo 401(k) – Contributions up to $81,250 (2025) with catch-up options.

• SIMPLE IRA – Lower admin, great for modest salaries.

• Profit-Sharing Plan – Flexible contributions with borrowing options.

Selecting the right plan ensures maximum deductions while building long-term wealth.

Final Thoughts

From disaster relief rules to IRS audit challenges, the tax landscape in 2025 is full of both pitfalls and opportunities. Planning ahead—and knowing your rights—can save you money, stress, and sleepless nights.