IRS guidance and key appointments set the stage for 2025

Year’s end is fast approaching for preparers and taxpayers alike, making the regulatory clarity from the Internal Revenue Service’s November wave of guidance a welcome addition across the profession. But with notable tax figures set to bow out in the face of new appointees, experts are awaiting the full brunt of changes to come.

One such announcement is President-elect Donald Trump’s nomination of former U.S. Representative Billy Long as the next commissioner of the IRS. “Since leaving Congress, Billy has worked as a business and tax advisor, helping small businesses navigate the complexities of complying with the IRS rules and regulations. … Taxpayers and the wonderful employees of the IRS will love having Billy at the helm,” Trump said in a Truth Social post this month.

Danny Werfel, who was nominated to the position by President Joe Biden last year, said he was ready to stay in the role for the remainder of his term, which is slated to end on Nov. 12, 2027. According to the conditions of the role, however, he serves at the pleasure of the sitting president.

The IRS has launched numerous campaigns under Werfel’s tenure, ranging from reclaiming more than $1 billion in delinquent taxes from millionaires to the addition of payments and Spanish translations to Business Tax Accounts.

“While much more work remains for the IRS to get where it needs to be, there should be no doubt the agency has accomplished many things during the past two years,” Werfel said in a statement. “These efforts to serve taxpayers and improve tax administration will continue to intensify and accelerate in upcoming months and into the future.”

Read more: Two years in: IRS highlights improvements under IRA

David Samuel Johnson is another new face, whose nomination to succeed the late J. Russell George as the next Treasury Inspector General for Tax Administration was approved this month by the Senate Finance Committee. 

If confirmed, Johnson said during his November confirmation hearing that a core focus of his would be to “provide candid, reliable and pertinent information to Congress, the Treasury Secretary and the IRS Commissioner” to improve the agency’s operational efficiency.

Trump has been active since Nov. 6 in making nominations for various positions with influence over the accounting space, including Paul Atkins to replace outgoing Securities and Exchange Commission Chairman Gary Gensler.

Read more: IRS reforms bring relief, but Trump win clouds future plans

Learn more about the recent noteworthy guidance and final rules published by the IRS last month and how filing benchmarks have changed accordingly.

IRS phasing in new Form 1099-K thresholds

The Internal Revenue Service is helping ease the transitory burden of its Form 1099-K information reporting threshold by issuing Notice 2024-85 last month, setting the benchmark at $2,500 for 2025.

The previous $20,000 and 200 transaction threshold was originally cut to $600 by the American Rescue Plan Act of 2021, prompting outcry from taxpayers and professionals regarding the potential flood of forms. The IRS quelled these worries by gradually rolling out the new threshold, starting with establishing a $5,000 threshold for the 2024 calendar year.

“There are a variety of examples throughout history where the IRS — to protect taxpayers from undue burden or from potentially being overtaxed — where we have either delayed implementation or ramped implementation,” IRS Commissioner Danny Werfel said during a congressional hearing in February.

Read more: IRS phases in Form 1099-K threshold at $2,500 in 2025

Chris Ratcliffe/Bloomberg

IRS issues final regs on clean energy partnership credits

The IRS published its final regulations last month for assisting entities that co-own clean energy projects with accessing clean energy tax credits through elective pay.

Set to take effect on Jan. 19 of next year, the new rules allow elective-pay-eligible entities ranging from state and local governments to churches and nonprofit organizations to utilize incentives by deeming specific clean-energy credits as refundable. 

The regulations go on to further clarify how eligible organizations can remain compliant when jointly investing in clean energy projects, as well as add further adjustments to how such projects can classify themselves to not be treated as partnerships and take advantage of elective pay.

Read more: Final regs issued for clean energy partnership credits

R&D Credit claim revision period extended

The transition period for filers revising research and development tax credit claims has been extended through Jan.10, 2026.

The new process, which allows taxpayers 45 days to fine-tune their research credit claim being submitted for refund prior to the IRS’s final decision, comes from an October 2021 initiative to cut down on dubious filings. 

The changes require taxpayers to provide the IRS with information regarding the business components to which the Section 41 research credit claim relates for that year, all research activities performed for each business component and the total qualified employee wage expenses, total qualified supply expenses and total qualified contract research expenses for the claim year. These rules apply for any claims posed after June 18 of this year.

Read more: IRS extends R&D tax credit transition period

IRS to accept duplicate dependent returns with IP PIN

Beginning in the 2025 filing season, the IRS will start accepting electronically filed tax returns claiming dependents featured on another taxpayer’s return, provided the second taxpayer uses a valid Identification Protection Personal Identification Number.

The agency will begin taking Forms 1040, 1040-NR and 1040-SS starting next season, helping cut down on the time between when the IRS receives the forms and when reimbursements are distributed — all while preserving the level of security against identity theft risks.

E-filed returns claiming duplicate dependents will continue to be rejected unless a valid IP PIN is provided.

Read more: IRS to accept duplicate dependent returns with an IP PIN

401(k) limit increases, IRA limit stays the same

The IRS has raised its contributions cap for individual 401(k) plans for the 2025 tax year to $23,500 as part of its annual cost-of-living adjustments, while the $7,000 individual retirement account limit remains unchanged.

Guidance issued last month that outlined numerous cost-of-living adjustments highlighted how employees with 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan benefit from the increase. Both the annual contribution limit and catch-up contribution limits for IRA plan participants aged 50 and older remain constant at $7,000 and $1,000 for 2025, even with the latter adjusted under the SECURE 2.0 Act of 2022.

Read more: IRS increases 401(k) limit, keeps IRA limit the same