Is California Tax Burden Heavy? Accountants Share Tax Reduction Strategies

Los Angeles Taiwanese-American Chamber of Commerce held a “Financial and Business Seminar” at the Great Los Angeles Taiwan Club on Sunday, March 9th. Yip Chun-lin, CEO of Asia America Accounting Research and Development Foundation, shared insights on “2025 Tax Reporting Considerations”, providing tax reduction advice and the latest financial policy analysis for California residents facing high tax burdens.

California’s individual income tax rates can go as high as 13.3%, coupled with federal taxes, making the tax burden on residents substantial. Yip Chun-lin suggested taxpayers make good use of various tax exemptions, such as reassessing property values to reduce property tax burdens; taxpayers purchasing clean energy vehicles and engaging in energy-efficient home renovations can apply for electric vehicle tax incentives through IRS Form 15400 and energy-efficient home renovation tax benefits through IRS Form 5695.

Yip Chun-lin believes that despite recent significant staff reductions at the Internal Revenue Service (IRS), with the development of artificial intelligence technology, tax audits will become stricter in the future, financial transaction transparency will increase, and tax compliance requirements will be more rigorous.

Regarding tax changes in 2025, the Trump administration has proposed multiple tax reduction and fiscal reform measures covering areas such as individual and corporate taxes, tariff policies, and green energy subsidies.

Yip Chun-lin stated that the “Tax Cuts and Jobs Act” (TCJA) will become a permanent law, including maintaining the highest individual income tax rate at 37%, a lifetime estate tax exemption of $13 million, and a corporate income tax rate of 21%.

For companies producing in the United States, Trump plans to reduce the corporate income tax rate to 20% and reinstate a 100% bonus depreciation policy, providing significant tax incentives. Additionally, individual tax cuts will be expanded, such as tax breaks for first-time homebuyers, tax-free income for service industry tips, exemption of social security benefits for retirees, and tax deduction for interest on loans for American-made vehicles.

The Trump administration has also lowered most income tax rates, increased standard deduction amounts and child tax credits, and provided a 20% deduction of income for small businesses through “Pass-through Entities”. Furthermore, the establishment of the “External Revenue Service” responsible for collecting tariffs, taxes, and related revenues from foreign sources has been proposed.

Trump’s plan includes raising import tariffs, imposing tariffs of 10% to 20% on global imports, and potentially up to 60% on Chinese imports.

Overall, the seminar provided California residents with the latest tax filing guidelines and future tax change analyses to help businesses and individuals plan strategies in advance to maximize tax benefits and reduce tax burdens.