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Here’s What Happened in the World of Small Business in June 2021
Newsworthy
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Here are five things that happened this past month that affect your small business. 1) There’s a tight labor market nationwide these days, and it’s giving workers more leverage. The economy’s recovery is giving low-wage workers more leverage, as “ballooning job openings in fields requiring minimal education” combine with a shrinking labor force. For some, this means higher wages, bonuses, or competing offers. “Average weekly wages in leisure and hospitality, the sector that suffered the steepest job losses in 2020, were up 10.4% in May from February 2020.” (Source: The Wall Street Journal) Why this is important for your business: If you operate in an affected industry, you may already be experiencing some of these hiring difficulties. You aren’t the only one. 2) A surge in inflation may be around for a while – but it’s temporary. Inflation has been a hot topic in the news this month, as the US sees rising prices on various consumer goods. According to two Federal Reserve officials, this period of high inflation “may last longer than anticipated but should still ease over time as the economy settles back to normal.” (Source: Reuters) Why this is important for your business: You may be feeling the pinch of higher prices from your suppliers, or perhaps you’ve had to raise prices for your customers to keep up with rising costs. Keep a close eye on this. 3) Business travel could be on the rebound. Travel is way up nationwide, but much of it is leisure – for now. Signs indicate that business travel will continue to bounce back after more than a year of lockdowns and travel restrictions. The CEO of Hyatt Hotels believes things will be closer to normal in the autumn. “Most of the bankers, consultants and lawyers that I’m talking to are gearing up to be back on the road, so I think that will really take hold in a more affirmative way in the fall,” he said. (Source: CNBC) Why this is important for your business: It’s time to decide whether your business will resume travel for employees. If you’ve gotten by just fine with Zoom meetings over the past year, maybe you’ll decide not to travel as often going forward. 4) With no more PPP, struggling businesses must find funding elsewhere. The federal government’s Paycheck Protection Program (PPP) has completed its second round, so businesses still struggling from effects of the pandemic are looking for funding elsewhere. “Small business loan approval percentages at big banks... climbed slightly from 13.4% in April from 13.5% in May 2021… Small banks’ approvals jumped higher from 18.2% in April, to 18.7% in May.” (Source: Forbes) Why this is important for your business: If your business is still reeling from the economic impacts of COVID-19, new PPP funds don’t look likely. You’ll have to seek funding elsewhere. 5) G-7 countries have reached a historic deal on global corporate tax reform. Finance ministers of the G-7 countries – Canada, France, Germany, Italy, Japan, the U.K. and the U.S. – “have backed a U.S. proposal that calls for corporations around the world to pay at least a 15% tax on earnings.” If finalized, this would “represent a significant development in global taxation.” (Source: CNBC) Why this is important for your business: Companies with international operations would see changes to their taxation under this proposal – but it’s still a long way from being adopted. Stay tuned.
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
