Anchin accounting partners Michael Belfer and Robert Smith recently walked PRC leaders through what they playfully dubbed “Christmas in July for accountants” — the passage of comprehensive tax legislation that brings both welcome relief and new complexities.
The Good News Story
For most PR agency owners, this legislation reads like a fulfilled wish list. The tax cuts that have defined the business landscape since 2017 are now permanent fixtures. This means agency principals can continue planning around that familiar 37% top rate rather than worrying about a jump back to nearly 40%.
Perhaps more significantly for agencies structured as partnerships or S-corps, the 20% pass-through deduction that has helped level the playing field with larger corporations is also here to stay. However, the speakers emphasized that eligibility depends on your specific service mix, making this worth discussing with your accounting and tax advisor.
Investing in Growth Gets Easier
For agencies considering office expansions or significant equipment investments, the restoration of 100% bonus depreciation removes a major obstacle. Whether you’re building out creative space or investing in production equipment, immediate deductibility rather than spreading costs over years can meaningfully impact cash flow.
The legislation also restores full deductibility for domestic research and development costs. As Smith noted, in an AI-driven world, many agencies are investing significantly in custom software development and new service delivery methods.
The Philanthropy Puzzle
The charitable giving landscape presents mixed news. Starting in 2026, even taxpayers taking the standard deduction can claim charitable contributions — boosting smaller donations across the board. However, high-earning agency principals face new hurdles, including a cap on itemized deduction benefits and a threshold requiring charitable giving above half a percent of income before any tax benefit kicks in.
The Anchin specialists strongly encouraged “bunching” charitable donations and utilizing donor-advised funds to maximize tax efficiency while maintaining philanthropic goals.
State Complications Ahead
Beyond federal changes, state-level developments demand attention. Washington State’s aggressive expansion of sales tax to cover digital advertising and marketing services starting this October represents a significant shift that could ripple to other states. Meanwhile, New York has broadened its interpretation of what constitutes taxable services versus exempt personalized reports.
Planning for Succession
With estate tax exemptions now permanently set at $15 million per person, agency owners have breathing room for succession strategies. Belfer highlighted the value of gifting strategies for agencies planning to sell but stressed that gifts should be made well before any sale discussions begin.
The Reality for PR Agencies
While this legislation provides substantial benefits for most PR agencies, the complexity requires thoughtful planning. With several provisions taking effect in 2026, agency owners have the remainder of 2025 to reassess their tax planning around charitable contributions, business investments, and estate strategies.
| Michael Belfer, CPA, MST, CGMA
Partner, Leader – Public Relations, Advertising and Media michael.belfer@anchin.com |
Robert Smith, CPA
Tax Partner, Leader – Emerging Companies Group robert.smith@anchin.com |
PRC Members can access the full recording of this session in our Resource Library.