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We're Officially in a Recession, So Make These 5 Money Moves Now
Personal Finance
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It has been more than ten years since the United States’ economy has gone through a recession, and when the National Bureau of Economic Research announced in June that we have officially entered another, it hit many Americans like a body blow. The dark financial times we experienced between December of 2007 and June of 2009 may seem like a picnic in the days ahead: the dramatic job losses related to COVID-19 do not bode well for a quick recovery, so it’s important that you take steps now to protect your finances and make sure that you are prepared. Below are the steps you should be taking immediately, in case things get worse. 1. Evaluate what you’re spending and see what you can eliminate or cut. There’s no doubt that the economy has been booming, and if you’ve been letting yourself indulge in a pre-made meal service; subscriptions to a variety of premium channels, apps and other paid media; personal trainer and gym memberships; or simply buying a lot more shoes; now is the time to buckle down and change your habits. The things that you’ve felt free to spend on have been nice, but they are “wants” rather than “needs.” Make a list of what you’re spending on and see what you can eliminate or cut back on, because if your available cash is cut, you will need it for essentials. 2. Take the money you’ve saved from step one and put it in your emergency fund. If you’re the type of person who reads and follows financial advice, then you already know that you should have between three- and six-months’ equivalent of your monthly expenses set aside in your savings account in case of an emergency. In the midst of a recession you want to boost that fund’s holding so that you’re prepared for a possible job loss. If your company closes or you’re laid off, a recession is a hard time to find replacement income. Think of it in the same way that a bear tucks in and eats more when a bad winter is approaching. If you’re forced to hibernate, you want to make sure that you have enough to live on. 3. Eliminate any debt you’re carrying, and especially high interest debt. When the financial picture is looking rosy, it’s easy to commit to long-term debt, and to ignore the fact that you’re paying too much in interest. But once lean times arrive, those extra expenses eat away at money you could be spending on essentials. Take a look at your outstanding debt and figure out which ones are costing you the most. Knock them out first, making sure that you are paying more than the minimum monthly payment on each of your payments. It may feel impossible, but if you commit to methodically knocking them off your list, you’ll eventually accomplish your goal. 4. Apply for a Home Equity Line of Credit (HELOC). You might not feel like you need extra cash in hand – and may feel uncomfortable tapping into the equity you have in your home – but taking out a home equity line of credit allows you the security of knowing that the money is available in case you need it. The beauty of a HELOC is that there is no requirement that you actually touch the money. You just know that it’s there in case things get tough. Though it may be tempting to put off applying for a home equity line of credit until you actually need it, getting approved for a loan may get harder as the economy worsens, and especially if you lose your job. Apply for it and get approved now so that you’re already set up in case the worst happens. 5. Identify an additional source of income. That may sound more easily said than done, but the truth is that there has never been an easier time to make money on the side. The internet has a plethora of platforms that allow you to bring in cash, including: sites where you can sell used goods and clothing you no longer want; sites where you can sell crafts that you have made; and sites where you can market your professional skills on a freelance basis. It may feel unnecessary now, and even something that you don’t feel like or have time to do, but whether you use the money you make to pay down debt, build up your emergency fund, or find the income you rely upon eliminated, you will be glad that you established yourself early. It’s too late to worry about what will happen if we have a recession. It’s here now and is likely to be with us for a while. Taking the steps outlined above can help you get through it with minimal discomfort and without putting yourself into a financial hole.
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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.
