Month: July 2025

If you’re considering solar panels or other renewable energy upgrades, now may be your last chance to take full advantage of the 30 percent Residential Clean Energy Credit (RCEC).

What Is the RCEC?

The RCEC is a federal, non-refundable tax credit equal to 30 percent of the cost of qualified clean energy systems, including:

• Solar electric panels
• Solar water heaters
• Geothermal heat pumps
• Small wind energy systems

Eligible properties include primary and secondary residences, as well as rentals occupied by the taxpayer. Landlords who do not reside in the property are not eligible.

What’s Changing?

Currently, the RCEC remains at 30 percent through 2032, with step-downs in 2033 and 2034, and full expiration after 2034. However, new legislation could end the credit much sooner:

House Bill H.R. 1 would eliminate the credit for property installed after December 31, 2025.

The Senate bill follows H.R. 1 and terminates the credit after 2025.

This means 2025 may be the final year to claim the full benefit—regardless of the original phaseout schedule.

Why Act Now?

Installation takes time. From selecting a system to full installation and inspection, the entire process can span months. To qualify for the credit, you must place your system in service by December 31, 2025.

Although the RCEC is non-refundable, unused credits can carry forward to future tax years.

If you would like to discuss tax credits for renewable energy, please call me directly at 408-778-9651.

• By Leon Clinton
• July 18, 2025

If you’re considering the purchase of an electric vehicle for your business or personal use, now is the time to pay close attention.

On July 1, the U.S. Senate passed a tax bill that proposes to terminate the following three major electric vehicle tax credits, effective September 30, 2025:

• Section 45W—Commercial Clean Vehicles Credit. Up to $7,500 for light electric vehicles and up to $40,000 for heavy-duty commercial vehicles.
• Section 30D—New Clean Vehicle Credit. Up to $7,500 for qualifying new electric vehicles, with requirements for domestic sourcing of battery components and minerals.
• Section 25E—Previously Owned Clean Vehicle Credit. Up to $4,000, or 30 percent of the purchase price, for eligible used electric vehicles.

While the U.S. House of Representatives had initially proposed a December 31 termination, the current bill under consideration accelerates the sunset to September 30, 2025—and the House is expected to vote on this version soon, possibly before July 4.

Even if this bill stalls, the termination dates are likely to resurface in future legislation. So now is the time to act.

If you would like to discuss the purchase or lease of an electric vehicle, please call me on my direct line at 408-778-9651.

• By Leon Clinton
• July 15, 2025

Stock traders who seek to earn profits by frequently buying and selling stocks to capitalize on daily market movements can qualify as day traders for tax purposes. 

Day traders are in the business of buying and selling securities—in other words, they are businesspeople, not investors.

There are many tax advantages to qualifying as a day trader instead of as a passive investor:

• Your trading expenses are fully deductible as business expenses from both your trading income and non-trading income, such as W-2 income. These include home office expenses, business property such as computers and software, seminars and other educational materials, subscriptions, and other miscellaneous expenses. Traders may also fully deduct margin interest as business interest—a substantial deduction for many traders.
• If you’re a trader, you can elect to use mark-to-market accounting, which allows you to treat trading gains and losses as ordinary income and losses, rather than as capital gains and losses. Investors can’t do this.
• You don’t have to pay self-employment tax on your trading income (this is also true for investors in securities).

How do you qualify as a day trader for tax purposes? There are two tests you must pass: the trading test and the substantial activity test.

• Trading test. You must seek to profit from daily market movements, not from dividends, interest, or capital appreciation. Your typical holding period for securities absolutely must be 31 days or less—usually much less. You must also make frequent trades: 720 trades per year, 60 trades per month, and 16 trades per week is a bare minimum—most day traders trade more than this.
• Substantial activity test. Your trading activity must be substantial, continuous, and regular. You don’t have to work full-time at trading, but it should be the primary way you earn income. You should trade throughout the year. The more you trade, the more you’ll look like a day trader.

As with any activity that you want the IRS to view as a business, you should behave in a serious, businesslike manner: keep good business records; study securities trading; and have all necessary computers, software, and other equipment to trade effectively.

Some day traders form S corporations to enjoy tax-free employee benefits such as a 401(k) and deductible health insurance. However, these benefits will be meaningful only if your trading business earns a profit.

If you would like to discuss day trading, please call me directly at 408-778-9651.

• By Leon Clinton
• July 10, 2025