2025 Tax Season, Clean Hydrogen Production Tax Credit, and Tariffs
Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving them time and money. As of November 1, 2024, Probity began operating as a division of MS Consultants. Read more about the exciting news here.
Tax Policy/News:
January 27: 2025 Tax Filing Season Starts as IRS Begins Accepting Returns Today
The IRS officially opened the 2025 tax filing season, now accepting and processing 2024 federal individual tax returns. Over 140 million returns are expected by the April 15 deadline, with more than half filed through tax professionals. Taxpayers in federally declared disaster areas may have extended filing deadlines.
To streamline filing, the IRS encourages electronic submissions with direct deposit for quicker and more secure refunds, as paper checks are significantly more prone to issues. Free filing options include IRS Free File for those earning $84,000 or less, Direct File for simplified online submission, and the Volunteer Income Tax Assistance (VITA) program for eligible taxpayers, including individuals with disabilities or limited English proficiency.
Most refunds are issued within 21 days, but refunds tied to Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) won’t be disbursed until March 3 due to PATH Act rules. Taxpayers are advised to wait for all income forms, such as 1099s, before filing and to choose reputable tax professionals to avoid scams.
New features this season include expanded IRS Online Account tools, redesigned notices for clarity, mobile-adaptive tax forms, and voicebots offering assistance in English and Spanish. Taxpayers should remain vigilant against scams and fraudulent communications and visit IRS.gov for secure guidance and resources.
January 21: Treasury Issues Final Guidance on Clean Hydrogen Production Tax Credit
The U.S. Treasury Department has finalized regulations for the Section 45V clean hydrogen production tax credit, providing clarity on Carbon Intensity (CI) calculations and eligibility requirements.
Key provisions address the "well-to-gate" emissions framework, including feedstock, processing, and electricity usage emissions. Hydrogen must meet a CI threshold of less than 4 kilograms of CO2 per kilogram to qualify for credits, with higher credit values for lower CI levels.
The rules establish standards for clean electricity use, including "additionality" (newly constructed renewable sources within 36 months), deliverability (same grid region), and hourly matching, which will transition from annual matching by 2029 to hourly in 2030. The guidelines also treat Renewable Natural Gas (RNG) similarly to electricity, requiring monthly emissions tracking.
While the incoming administration and Republican-led Congress have expressed skepticism about Inflation Reduction Act provisions, bipartisan support for hydrogen and substantial industry investment may preserve the credit’s framework. The rules aim to balance emissions reductions with industry flexibility, fostering growth in clean hydrogen production.
Economic News/Policy:
January 27: Trump Administration Orders Sweeping Freeze of Federal Aid
The Trump administration has issued a directive halting all federal financial assistance tied to executive orders pausing funds for infrastructure, energy, diversity initiatives, and foreign aid.
The Office of Management and Budget memo exempts Social Security and Medicare but leaves questions about whether other forms of aid provided through states or organizations will be impacted.
The freeze, affecting billions in grants and programs, follows earlier orders suspending funding from the Inflation Reduction Act and bipartisan infrastructure law. The memo's vague language has created confusion about implementation and potential legal challenges.
Critics, including Senate Minority Leader Chuck Schumer, have condemned the move as illegal, accusing the administration of violating impoundment laws requiring Congressional consent to withhold funds. Advocacy groups warn the freeze could severely disrupt essential services, with the National Council of Nonprofits highlighting risks to organizations that support vulnerable communities.
The freeze, slated to begin at 5 p.m. Tuesday, has prompted calls for immediate reversal, as its broad scope raises concerns over its impact on households and local economies.
January 23: Supreme Court Allows Small Business Registration Rule to Take Effect, Aimed at Money Laundering
The Supreme Court reinstated the Corporate Transparency Act (CTA), requiring owners of approximately 32.6 million small businesses to register personal information, including photo IDs and home addresses, with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The CTA, enacted in 2021, aims to combat money laundering and the misuse of anonymous shell companies.
The registration requirement had been blocked by a Texas federal judge who ruled that Congress lacked authority to pass the law. The Supreme Court’s decision allows enforcement while the case proceeds, though uncertainty remains about how vigorously the Trump administration will enforce it.
Business groups, including the National Small Business Association, have criticized the measure as burdensome and are urging Congress to delay or repeal the mandate. Supporters of the law argue it is essential for law enforcement to combat financial crimes effectively. Advocacy groups emphasized the importance of lifting the veil on anonymous entities to track illicit money trails. Meanwhile, small business representatives are calling for penalty relief and clearer compliance guidelines amidst the ongoing legal and legislative debate.
January 23: 5 Questions Facing Trump on Trade Ahead of Feb. 1 Tariff Deadline
President Donald Trump’s trade policies are under scrutiny as he prepares for a potential February 1 deadline to impose new tariffs on Canada, Mexico, and China.
Despite initial threats of Day 1 tariffs, Trump has delayed decisions and scaled back proposals, including a 10% tariff on Chinese goods, down from earlier suggestions of up to 100%. Business leaders are now eager for clarity on the size, timing, and scope of his trade measures.
Trump’s reassessment of the USMCA suggests possible labor-focused revisions, reflecting priorities to protect American workers, farmers, and businesses. Appointments of Republicans to labor agencies signal plans to overhaul Biden-era labor policies, potentially reshaping trade rules.
Businesses are also weighing how tariffs might influence supply chains, with concerns over inflation and sourcing alternatives to China, though experts warn that rerouted trade could still rely on Chinese production.
Supporters of tariffs are confident Trump will deliver on campaign promises, citing the potential to bolster U.S. industrial capacity. Additionally, tariffs could serve as a revenue source to offset costly legislative priorities, including extending 2017 tax cuts set to expire. Congress may play a role in shaping trade policy through reconciliation as the administration finalizes its broader economic agenda.
January 23: Trump: ‘We Have to Get Democrats’ to Approve Tax Cuts
President Donald Trump announced efforts to collaborate with Democrats on extending and expanding his 2017 tax cuts, despite Republican plans to use budget reconciliation to bypass Democratic support.
Speaking at the World Economic Forum, Trump proposed reducing the corporate tax rate from 21% to 15% for U.S.-based manufacturers and renewing expiring personal income tax cuts.
Republicans are divided on key provisions, such as the $10,000 cap on state and local tax (SALT) deductions and green energy credits from the Inflation Reduction Act, which some GOP members support due to their local benefits.
Meanwhile, Democrats, including House Minority Leader Hakeem Jeffries, have expressed interest in targeted measures like research and development and low-income housing tax credits but criticized broader Republican proposals for favoring the wealthy.
Trump’s plan to bundle tax cuts with policies on energy, immigration, and defense faces challenges as Republicans weigh whether to prioritize separate wins or pursue a comprehensive package. Democrats remain skeptical, with Jeffries accusing Republicans of advancing tax cuts that burden working-class Americans without meaningful bipartisan dialogue.
Technology:
January 25: Will States Lead the Way on AI Regulation?
As artificial intelligence (AI) evolves rapidly, state governments are increasingly shaping the regulatory landscape.
In 2024, California alone introduced 18 AI-related laws, though Governor Gavin Newsom vetoed a prominent bill mandating stricter testing for AI companies. States have introduced over 400 AI-related bills in the past year, emphasizing a shift toward localized regulation as federal efforts remain slow.
Mark Weatherford, a former state and federal cybersecurity leader, predicts states will continue to lead on AI regulation in 2025 due to their ability to act more quickly than the federal government. However, he warns of challenges in harmonizing diverse state laws, which could create compliance burdens for companies operating nationally.
Weatherford also highlighted the growing focus on synthetic data as a solution to data privacy and bias concerns in AI systems. He argues that high-quality synthetic data could become essential as traditional datasets become overused or limited.
Despite growing regulation, the balance between innovation and oversight remains a challenge. Weatherford and other experts advocate for policies that address risks like AI misuse without stifling progress. With bipartisan interest but slow federal momentum, states are expected to continue pushing forward while grappling with the need for consistency across jurisdictions.
January 23: Trump Says He Will Use Energy Emergency Declaration to Approve More Power for AI
President Donald Trump announced plans to use his energy emergency declaration to expedite approvals for power stations dedicated to artificial intelligence (AI) centers.
Speaking at the World Economic Forum, Trump emphasized the need for energy independence for AI facilities, allowing them to attach their own generating plants directly to their operations without relying on utilities. The declaration enables Trump to bypass lengthy approval processes, allowing construction to begin immediately.
Trump cited the significant energy demands of AI, estimating that the U.S. will need to double its current electricity capacity to support the sector's growth. Companies will be permitted to use various energy sources, including coal as a backup. This follows Trump’s earlier announcement of a $500 billion investment in AI infrastructure.
Critics, such as Tyson Slocum of Public Citizen, have condemned the move, warning it could lead to higher utility costs, degraded air quality, and increased greenhouse gas emissions. The energy emergency declaration, made on Trump’s first day in office, grants broad powers to expand energy production, aligning with his administration's focus on AI development and energy policy shifts.
January 21: Trump Announces a $500 Billion AI Infrastructure Investment in the US
President Donald Trump, alongside leaders from OpenAI, SoftBank, and Oracle, announced Stargate, a $500 billion initiative to develop AI infrastructure in the United States.
The project will begin with an initial $100 billion investment and aims to create 100,000 jobs while establishing advanced data centers across the country. The first facility, a 1-million-square-foot data center in Texas, is already under construction.
OpenAI CEO Sam Altman emphasized the project’s significance in maintaining U.S. leadership in AI, particularly against competition from China. SoftBank will handle financing, while OpenAI oversees operations, with Oracle providing expertise as a major U.S. data center operator. Trump called the initiative the largest AI infrastructure project in history, citing its economic and strategic importance.
The announcement also highlighted the need for semiconductor plants and energy resources to meet the demands of next-generation AI. Despite optimism, the plan has drawn comparisons to earlier industrial projects with mixed success. Critics remain cautious about its long-term outcomes, particularly following Trump’s reversal of a 2023 Biden-era executive order aimed at regulating AI risks.
Energy and Environmental Policy/News:
January 22: Trump Freezes Inflation Reduction Act Funding
President Donald Trump signed an executive order halting funding disbursements under the Inflation Reduction Act (IRA) and the bipartisan Infrastructure Investment and Jobs Act as part of his broader “Terminating the Green New Deal” initiative.
The freeze targets programs like the National Electric Vehicle Infrastructure Formula Program and EV tax credits, with federal agencies given 90 days to review and recommend spending priorities. Trump also revoked Biden’s executive order mandating that 50% of new vehicles sold by 2030 be electric and withdrew the U.S. from the Paris Agreement.
The White House clarified that the funding pause applies to programs identified in Section 2 of the order, which broadly addresses energy exploration and national security, though specific projects are not listed.
Despite the freeze, $96.7 billion in IRA clean energy grants had already been obligated under the Biden administration, including major investments in solar and EV battery manufacturing. The move underscores Trump’s commitment to scaling back federal clean energy programs and prioritizing domestic energy production.
January 21: 2025 Renewable Energy Outlook: Full Speed Ahead as Second Trump Administration Begins
The U.S. renewable energy sector begins 2025 with strong momentum from the Inflation Reduction Act (IRA) and rising electricity demand, despite uncertainties under President Trump’s second term.
Challenges like interconnection delays and site reform hurdles persist, while proposed rollbacks of IRA provisions and offshore wind projects could impact progress.
Still, experts remain optimistic about the sector’s resilience, pointing to advancements in energy storage, solar, and offshore wind technologies.
Surging load growth, driven by data centers and electrification, underscores the need for a robust grid, while state policies and private investments continue to drive clean energy adoption. Industry leaders believe the economic benefits of renewables will sustain growth, even amid federal policy shifts.
For Fun:
January 25: The Only Person in the World with a Functioning Pig Organ is Thriving After a Record 2 Months
Towana Looney, a 53-year-old Alabama woman, has become the longest-living recipient of a gene-edited pig organ, thriving for 61 days and counting with a transplanted pig kidney.
The groundbreaking procedure, conducted at NYU Langone Health, marks a significant step toward addressing the critical shortage of human transplant organs.
Looney, whose own kidney failed after years on dialysis, had been deemed unlikely to receive a human transplant due to high levels of antibodies. Doctors used lessons from earlier pig organ experiments to treat initial signs of rejection three weeks post-surgery, and her kidney function has remained normal since.
Her recovery highlights the potential of xenotransplantation, with formal clinical trials anticipated later this year. Over 100,000 people in the U.S. await transplants, and scientists are working to refine the use of genetically modified pig organs to meet this demand.
Looney is now an advocate for others considering pig transplants, sharing her experience with those facing long waits for human organs. While the long-term viability of her kidney remains uncertain, her success offers hope for future advancements in the field.
January 21: AI Hallucinations Can’t Be Stopped — But These Techniques Can Limit Their Damage
Large language models (LLMs) are inherently prone to generating false or fabricated information, known as hallucinations, due to their design of predicting statistically likely responses based on training data.
These errors, which range from misattributions to entirely fabricated facts, occur because models compress vast amounts of information into parameters, inevitably losing some accuracy.
Techniques such as retrieval-augmented generation (RAG), internal self-reflection, and consistency checks aim to reduce these hallucinations, with newer models like OpenAI’s GPT-4 showing lower rates of error. However, trade-offs remain, as models often prioritize completeness over accuracy, increasing their likelihood of overconfidence in false answers.
Researchers are exploring novel methods, such as mapping LLM internal neuron activity or using external validation systems, to improve factual reliability. Despite progress, experts caution that LLMs should not replace traditional fact-checking tools for critical queries, emphasizing cautious reliance until these systems become more dependable.