here has been much discussion about extending the soon-to-expire provisions of the 2017 Tax Cut and Jobs Act (TCJA), and it appears that at least part of it will be extended later this summer (more about its benefits that should already be used for the 2025 tax year later).

Among the many other proposals under consideration is no tax for anybody who makes less than $150,000 a year. Eliminating taxes on overtime pay, tipped wages, and retirees’ Social Security are also on the table. Of course, to pass any tax savings, lawmakers will need to raise the debt ceiling. Among the possibilities would be raising the tax rate for people making more than $1 million to 40 percent.

Although significant tax rate changes could become reality, unlike the proposed tax rate increase for millionaires, cutting the corporate tax rate that is currently at 21 percent to as low as 20 percent or even 15 percent is considered more likely.

Earlier cuts in the corporate tax rate were designed to stimulate business investment and economic growth by allowing corporations to retain most of their earnings. Obviously, it’s not of much help to the shareholders, partners, and LLC members who are all taxed at the personal income tax rate.

While the personal income tax rate remains a mystery down the road, the federal estate tax exclusion amount increases to $13.99 million from the 2024 level of $13.61 million. Remaining unchanged is the personal exemption of $0 eliminated as part of the TCJA and the maximum child tax credit of $2,000 per qualifying child, with a refundable amount of $2,700.

Unlike the estate planning changes, Roth IRA and solo Roth IRAs used by many self-storage facility operators and developers as individual retirement accounts that offer tax-free growth and tax-free withdrawals in retirement have already seen rate changes. Those changes already mean 401(k) limit increases and higher income thresholds for Roth IRA contributions.

Already announced for 2025 are higher income thresholds for Roth IRA contributions. For Roth IRA contributions in 2025, the income phase-out range for taxpayers increases to between $150,000 and $165,000 for singles and heads of household, up from between $146,000 and $161,000. For married couples filing jointly, the income phase-out range rises to between $236,000 and $246,000, up from between $230,000 and $240,000.

For those self-storage facility operators and developers who are self-employed or in a one-person business, a solo 401(k) can be an excellent option. A Roth solo 401(k) offers higher contribution limits than a Roth IRA without the income limitations that accompany a Roth IRA. The IRS also announced several changes to retirement-related items, including 401(k) limit increases and higher income thresholds for Roth IRA contributions.

For 2025, the amount individuals can contribute to their 401(k) plans will increase to $23,500, up from $23,000 for 2024. This change applies to those who participate in 401(k) plans, as well as 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan.

The IRS also revealed that, starting in 2025, the 401(k) catch-up contribution limit will remain at $7,500 for participants aged 50 and older. However, under a change made as part of the SECURE 2.0 Act, a higher catch-up contribution limit applies to investors aged 60 to 63. This higher catch-up contribution limit is $11,250 instead of $7,500.

In the meantime, consider the many other bills, proposed or a reality, and their impact on the self-storage industry. Any new legislation is expected to pare spending on many of the previous administration’s green energy policies.

There seems to be a reluctance by lawmakers on both sides of the aisle to completely eliminate the clean energy tax credits. Whether phased out or otherwise restricted to reduce their cost, there would be consequences for all electricity ratepayers.

Beyond the impact on electricity costs, the green energy tax credits include a subsidy for carbon capture, which is supported by the fossil fuel industry.

Of slightly more interest are the advanced manufacturing credit and tech-neutral credits for electricity investment and production. Those credits range from support for wind and solar power to nuclear and geothermal energy as well as biofuels.

Before the TCJA, business interest expense was generally deductible in the year the interest was paid or accrued, subject to certain limitations. The TCJA imposed a limit on the deductibility of business interest expense equal to 30 percent of earnings before interest and tax (EBIT).

Proposed legislation would restore the limitation on business interest expense based on EBITDA (earnings before interest, taxes, depreciation, and amortization) rather than EBIT, allowing self-storage developers and many other businesses to claim a tax deduction for their interest expense.

Although federal law allows any business interest expense limited under section 163(j) and nondeductible in the current year to be carried forward indefinitely, it’s often a different story at the state level.

There are many nuances to state conformity with federal tax law, but any changes to the Section 163 business interest expense deduction limitation or other tax provisions are not immediately (or ever) adopted by the states. Obviously, this could add more complexity and affect calculation of business expenses on the self-storage operation’s state tax returns.

With the 2017 Tax Cuts and Jobs Act (TCJA) set to expire at the end of 2025, some lawmakers, not all, favor a broad extension of its sunsetting provisions. High on the list is extending the Qualified Business Income (QSI) deduction of 20 percent of QBI income that benefits so many self-storage facility operators and developers.

Aside from the fate of the personal tax breaks made possible by the TCJA, the soon-to-expire bonus depreciation is probably among the most important to watch. When enacted as part of the TCJA, bonus depreciation allowed a self-storage facility to immediately write-off 100 percent of the cost of eligible property acquired and placed in service before 2023. That bonus percentage has decreased each year after 2023 by 20 percent. That means a 40 percent write-off in 2025 before fully phasing out beginning Jan. 1, 2027.

Extending the expiring TCJA would decrease federal tax revenue by $4.5 trillion from 2025 through 2034. Long-run GDP would be 1.1 percent higher, offsetting $710 billion, or 16 percent, of the revenue losses. Long-run GNP (a measure of American incomes) would only rise by 0.4 percent, as some of the benefits of the tax cuts and larger economy go to foreigners in the form of higher interest payments on the debt.

All of which might, according to many pundits, throw us into a recession.

The aggressive U.S. tariff policy has triggered a significant slowdown in the U.S. economy this year and next, with the possibility of a recession increasing, according to economists polled by Reuters.

Regardless of whether a recession is on the horizon or already here, “recession proofing” the self-storage business can ensure survival if tough times occur and a better bottom line if they don’t. Fortunately, there are steps that every self-storage facility operator and developer can take to ensure their business is prepared, survives, and profits.

During a recession, every business is constantly under financial attack from all sides; dwindling revenue, increasing expenses, and customer and employee retention problems make advance preparation vital. This does not mean hunkering down too soon, but rather employing cheap and easy strategies to prepare for a recession and creating a contingency plan to help the business act faster and smarter.

While big changes, such as postponing capital spending, should not be implemented until it is clear a downturn is occurring, other changes make sense even if a recession never comes. That can mean shoring up the self-storage business and its cash reserves despite the current state of the economy.

In the middle of an economic downturn, the operation may find itself forced to quickly cut costs, leading to hasty decisions. After all, a recession is not the right time for a self-storage facility operator or developer to discover what is and isn’t profitable and/or cost effective.

Operations that are weak going into a recession spend their time putting out fires, playing defense, and simply trying to keep their heads above water. Successful businesses do more than keep the wheels on the bus, they have planned their long-run strategies.

One thing is certain: Running a self-storage facility is going to be even more challenging than usual in the next couple of years. Keeping abreast of new tax rules at both the federal and state level can help avoid potential expenses or missed deductions later.

Every business should be flexible. It should be ready to capture a quick recovery as well as quick to cut back quickly if warranted. The future may see a change in customer preferences, price changes from suppliers, and a whole new way of doing business. Thus, the first step is to ensure that the self-storage operation can survive under the new conditions. Once that’s achieved, look to growing the business.