An interview with Stefan Hendrickson, CPA/ABV, Tax Associate Director, Dean Dorton.
In your view, what are the most important provisions of the OBBBA that individuals and families should know about?
The big headline for the OBBBA for the majority of taxpayers is the extension of many of the 2017 Tax Cuts and Jobs Act provisions, most notably making permanent the top marginal tax rate of 37%, the increased standard deduction, the limitations on the deduction of taxes and mortgage interest, as well as the extension of the Qualified Business Income Deduction.
However, the OBBBA expands on those provisions by increasing the State and Local Income Tax Deduction from $10,000 to $40,000 for eligible taxpayers, creates a bonus senior deduction of $6,000 for eligible taxpayers 65 and older, allows for the deduction of interest on personal auto loans, creates a $1,000 charitable donation for non-itemizing filers and increases the lifetime exemption for estate tax to $15,000,000 per individual with portability. Many of these provisions are also indexed for inflation to increase ratably over time.
How do the changes under the OBBBA impact small business owners specifically?
Beyond the extension of the Qualified Business Income Deduction, the reinstatement of 100% bonus depreciation, including for Qualified Improvement Property, is a significant opportunity for business owners to incorporate into year-end tax planning.
Are there any overlooked opportunities within the OBBBA that could benefit clients if they plan ahead?
With the extension of the 2017 Tax Cuts and Jobs Act income tax brackets and rates, a significant opportunity for many taxpayers exists to manage taxable income to maximize the value of deductions. The gaps between income tax rates can yield significant tax savings through proper planning.
If you could give clients one piece of advice about adapting to the OBBBA, what would it be?
Numerous provisions in the OBBBA reference “eligible taxpayers”, as the deductions are phased out based upon income thresholds. It is important to discuss with your professional advisors both the timing of income recognition and incurring deductions to maximize the benefit of the Act’s planning opportunities.
Can you share a bit about your background and what led you to become a CPA?
I was raised in a family of self-employed business owners and always gravitated toward the finances of the operations. I wanted to find a way to utilize my background in my career and found that becoming a CPA would allow me to work with businesses and individuals to help solve problems proactively.
What types of clients do you typically serve, and what areas of tax or accounting do you specialize in?
My practice focus is mainly on closely held businesses and their owners in a wide array of industries. I assist my clients with everything from day-to-day accounting, financial statement preparation, income tax compliance and planning, succession planning, acquisition and merger advisory services and estate and gift planning, to help them maximize their business and personal financial positions.
What do you think are the most common tax planning mistakes individuals or business owners make?
The most common tax planning mistake I find with clients is failing to plan. In the vast majority of cases, we can come to good results with communication throughout the year, but once we are into filing season, the ability to navigate tax planning solutions lessens or the cost of those solutions increases.
What are a few proactive tax strategies families or businesses should be considering right now?
One OBBBA change that negatively impacts many taxpayers is the implementation in 2026 of a charitable deduction floor and cap on benefits. For tax years beginning 1/1/26 and forward, only charitable contributions in excess of 0.5% of adjusted gross income are deductible and the maximum benefit allowed on charitable contributions is 35%. That makes charitable giving planning before December 31, 2025 potentially more valuable to taxpayers.
How do you collaborate with financial planners, attorneys, and other professionals to help clients achieve their goals?
I always tell clients that professional advice is only as good as it is timely. I stress having open lines of communication between the client’s advisor circle to share information and ensure that we provide planning opportunities proactively.
What do you enjoy most about serving clients in this community?
Lexingtonians care deeply about our city and our families, which is represented in the quality of life we have here that makes it a great place to raise our children. So, anything I can do to help the people that create that community motivates me to go to work everyday.
What is the most common question you receive from a new client and what is your answer?
The most common question I get is usually some form of what my fees are and how I will help them save tax dollars. My response is that the largest expense anyone incurs in their lifetime, on average, is housing and second is income taxes at 17% of their lifetime earnings. Therefore, good tax advice and planning will save significant dollars throughout an individual’s lifetime and any investment in that advice will more than payoff in the long term.
Outside of your professional work, what are some interests or activities you’re passionate about that help people get to know you better?
I have teenage children and am involved in their activities and school, but also have a passion to help charitable organizations within the community, lending my skills and advice as needed. I’m a long time golfer who loves to get in a round whenever possible, but have also become a recent convert to pickleball and we play as a family as much as we can.