New Year brings New Federal, State and Local Policy Changes in 2025

It’s hard to believe that a new year is just around the corner. The new year also means new rules and regulations levels that all business owners should be aware of and plan for.

Business Ownership Information Report

The biggest new regulation to be aware of is the need for all businesses, no matter the size, to file a Business Ownership Information report (“BOI”) with the federal government. This requirement comes from the Corporate Transparency Act, passed in 2021, and came into effect in 2024. Among its many provisions, it requires all business owners to fill out a BOI with the information of any shareholder or partner owning 25 percent or more of the business, or the information of anyone who may not have equity in the company but has “substantial control” over the company, like a corporate officer or director.

The BOI is administered by the Financial Crimes Enforcement Network (FinCen). The form can be filled out on their website and requires the names, addresses and identification, such as a passport or driver’s license, for each beneficial owner with more than 25-percent ownership in the company. While this form does not need to be filled out annually, if any of the information changes at any time, a new form must be updated with FinCen within 30 days of the change. For any new businesses formed in 2025 and beyond, this form must be completed within 30 days of entity formation.

While this form may sound somewhat trivial and an easy document to overlook, the penalties with non-compliance are far from insignificant: The federal government can fine you $10,000 and $591 per day of non-compliance, plus imprison any offenders for up to two years! The form is not complex and should not take terribly long to fill out, but those who miss the December 31, 2024 deadline may be subject to these draconian fines. You can find the BOI form at fincen.gov/boi

New Overtime Rules

The next change coming to business in 2025 is the Department of Labor’s new overtime rule, part of which came into effect on July 1, 2024 with the rest coming into effect on January 1, 2025. Beginning in January, the new overtime threshold is $1,128 per week, or $58,656 per year. This is an increase from the previous threshold of $684 per week. This means that if a salaried employee makes less than $1,128 per week, they are eligible for overtime pay on each hour over 40 worked per week.

As a reminder, any employee being paid salary vs. hourly wages must meet the federal requirements for executive employees: (1) they are paid the minimum threshold ($1,128 per week starting January 1), (2) the employee’s primary duty must be the management of a customarily recognized department, (3) the employee must customarily or regularly direct the work of two or more individuals, (4) the employee must have the authority to hire or fire employees, or the employee’s recommendation on hiring decisions must be given particular weight.

Tax Changes

2025 will also bring significant tax reform, regardless of who is in the White House and in control of Congress, as the Tax Cuts and Jobs Act expires at the end of 2025. Many of us pizzeria operators have benefitted since 2017 from bonus depreciation, allowing new equipment purchases and other expenses to be immediately deducted instead of amortized over the life of the equipment. Bonus depreciation has been slowly phasing out until it sunsets entirely at the end of next year. This year, businesses get 40 percent, in 2025, only 20 percent. So, as you are doing year-end planning, consult with your CPA to see if there is advantage to making a larger purchase in 2024 vs. 2025.

Additionally, the estate and gift tax exemption will be cut in half from nearly $14 million next year to about $7 million in 2026. While these are large figures, it’s important to think about the size of your estate at the age you think you may pass away, not its value today. While your estate may not be impacted in today’s dollars, it could be as your business and assets grow until the time of your death. Thus, 2025 is the year to meet with your CPA and estate planning attorney to ensure that you take advantage of the higher threshold before its expiration next year. There are many legal maneuvers that can be used to shield your assets from the estate and gift tax prior to your death if you plan properly.

How Can I Stay Up-to-Date on Changes?

Small businesses struggle to keep up with the many federal and state agency rule changes that occur seemingly monthly, without much fanfare or media attention. While many laws come into effect on January 1st each year, others can come into effect on July 1st  or sometimes in March or October. The rule making process by our bureaucratic agencies is long and complicated, and the rules that often come out of such process tend to be just as complicated as the process itself. Unfortunately, it’s up to us as business owners to stay up to date on all these rules to ensure that we are in compliance.

At the federal level, the agencies that have the most impact to our industry are the Department of Labor (DOL), the Food and Drug Administration (these regulations are usually enforced at the local health department level), and Occupational Safety and Health Administration (OSHA).

The best way to stay up to date on changes are to develop a relationship with a business attorney who can help keep you informed as to upcoming changes at the federal, state and local levels. Many attorneys will send out e-mail blasts or newsletters with upcoming changes that may impact your business. Oftentimes, state restaurant associations are also involved in the local legislative process and can help you stay up to date on new regulations that come out of state agencies and legislatures.

In general, 2025 is going to be a year of big policy changes, no matter which party gains control. I encourage you to stay up to date and voice your opinion on rulemaking or legislation that may impact your business, either with your lawmakers or directly with agencies themselves. Our voices as business owners can have a real impact in crafting legislation and rule making.