From Main Street to Silicon Valley, the latest federal moves are rippling through tax strategy and planning. Startups may now rethink their entity choice thanks to expanded QSBS exclusions, while financial advisors are cautiously upbeat about client retirement prospects and tax burdens under the One Big Beautiful Bill Act (OBBBA). Meanwhile, the government shutdown continues into its second week, furloughing half of the IRS and raising new risks for refunds, audits, and processing delays. And as immigration and labor policy take a turn, the Trump administration is advancing stricter H-1B visa rules.
Finally, new clarity on 1099-K thresholds may bring welcome relief for gig workers and small online sellers.
Here’s what tax professionals need to know this week:
1. QSBS Expansion Could Reshape Startup Structuring
Trump’s newly signed tax legislation, dubbed the “One Big Beautiful Bill,” expands the Qualified Small Business Stock (QSBS) capital gains exclusion. The changes allow for up to $15 million in excluded gains for C corp stock acquired after July 4, 2025, and introduce a new tiered holding system: 50% exclusion after 3 years, 75% after 4 years, and 100% after 5.
Why it matters:
- This could accelerate startup interest in C corp formation, especially for VC-funded ventures.
- Gross asset caps also rise to $75M, broadening eligibility.
- Pass-through structures may still suit slower-growth or lifestyle businesses.
For tax advisors, it’s a prime opportunity to help founders evaluate entity choice in light of scale plans, capital needs, and exit strategy.
2. Financial Advisors Are Bullish Despite Noise
The inaugural Advisor Outlook Index from U.S. News-AdvisorFinder shows strong optimism among financial advisors on retirement readiness, taxes, and even AI. Despite market volatility and policy uncertainty, 72% of advisors say clients are on track for retirement, and 50% believe the tax climate will improve over the next year.
Key takeaways:
- The OBBBA’s permanence of TCJA-era rates and new deductions (like for seniors and tips) are seen as tax wins.
- Over 80% of advisors now use AI for admin and client comms.
- Confidence remains high in long-term planning fundamentals.
Advisors should continue preparing clients for regulatory shifts while leaning on AI tools to boost productivity.
3. H-1B Visa Program Faces New Restrictions
The Trump administration plans to publish a new rule tightening the H-1B visa program by December. Expected changes include narrower eligibility criteria, more scrutiny on third-party placements, and reduced flexibility for specialty occupation definitions. These moves revive components of a blocked 2020 rule.
Why it matters:
- The rule could hinder IT service firms and restrict placements at client sites.
- Universities and startups may face new hurdles in sponsoring talent.
- Legal experts warn of reduced competitiveness for U.S. companies.
Tax and HR advisors should flag visa status risks for affected clients and track final rule publication closely.
4. Shutdown Grinds On: IRS Halts Nearly Half of Operations
As the federal shutdown enters Day 10, the IRS has furloughed 34,000+ employees, with taxpayer assistance and audits paused. Only essential services like online system maintenance and payment processing continue.
Shutdown impact:
- Processing delays for amended returns, audits, and refund claims.
- Back-office casework for tax professionals may stall.
- Uncertainty looms around back pay despite 2019 protections.
Advisors should proactively communicate with clients about expected delays and maintain documentation for any time-sensitive filings.
5. 1099-K Rule Finalized: $20K/200 Transactions Threshold Returns
After years of confusion, the IRS has confirmed that, starting with 2025 income, taxpayers will only receive 1099-Ks from platforms like PayPal or eBay if they process more than $20,000 AND more than 200 transactions annually.
Key points:
- This reverses the $600 threshold previously floated.
- Most casual sellers and low-volume gig workers are now exempt.
- High-volume users should still track income, deduct expenses, and file accurately.
This is a welcome simplification for platforms and filers alike, though advisors should still monitor for mismatches or platform errors.
Your Takeaway This Week
From startup tax incentives to shutdown disruptions, it’s a week of mixed signals for both clients and advisors. Founders are weighing entity choice amid new QSBS benefits, while the IRS grinds to a halt during the shutdown. Meanwhile, H-1B restrictions, advisor optimism, and long-awaited clarity on gig economy reporting round out a highly consequential week.
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