Building a Stronger Future: Why Lasting Investment Reforms Matter More Than Temporary Policies
Key Takeaways
Temporary tax policies often leave businesses and individual taxpayers uncertain about long-term planning.
Permanence in tax legislation encourages investment, strategic growth, and greater compliance confidence.
Short-term incentives that phase out may provide no real benefit if businesses can't rely on them in future years.
Clear, consistent policy favors LLCs, S-Corps, and high-net-worth individuals as they navigate complex planning and compliance decisions.
For businesses in Maryland, Virginia, and D.C., long-term federal tax certainty allows better integration with local economic development strategies.
Tax Policy Certainty Matters: Why Long-Term Reform Trumps Temporary Incentives
For business owners, entrepreneurs, and high-net-worth individuals in Maryland, Virginia, and Washington D.C., tax planning is more than a financial necessity—it's a core part of future strategy. Unfortunately, federal tax policies often change with every budget cycle or political shift. Temporary provisions, which are designed to sunset or phase out, may offer short-term relief but tend to complicate long-term planning.
At Thienel Law, we help our clients make strategic decisions in an environment where laws can—and often do—change rapidly. But temporary tax measures present a unique challenge. They're unpredictable. And that uncertainty makes it harder for businesses and families to invest, grow, or preserve wealth with confidence. In this post, we'll explain why permanent, long-term tax reforms produce better outcomes and how businesses in the DMV region should plan accordingly.
Temporary vs. Permanent Tax Policy: What's the Difference?
Temporary tax policies are those enacted for a limited period—sometimes just one or two years. A common example is a bonus depreciation rule that only applies for a single tax year or a deduction that gradually phases out over five years and disappears entirely unless extended by Congress. These policies may be extended multiple times (as we've seen with certain expired tax credits), but they're not guaranteed.
Permanent tax policies, by contrast, remain in the Internal Revenue Code indefinitely unless specifically amended or repealed. Their continuity provides a foundation on which businesses and individuals can plan over a multi-year horizon.
While temporary incentives may sound appealing in the short run, they often create a "cliff effect"—a sudden expiration of benefits that can disrupt tax planning and cash flow decisions. This is especially problematic in capital-intensive industries or for business owners considering long-term investments.
Why Temporary Tax Provisions Are Risky for Business Planning
Imagine a small business in Maryland considering purchasing $500,000 of new equipment. If a federal tax deduction for capital expenditures is only available this year but set to phase out next year, should the business accelerate its investment? Should it delay and risk losing the deduction? Worse, if Congress lets the provision expire amid political gridlock, what does that mean for depreciation schedules?
This kind of regulatory uncertainty introduces friction into decision-making. Instead of focusing on hiring, research, or service delivery, business owners must hedge their bets on legislative activity—something entirely outside their control.
For pass-through entities like LLCs, partnerships, and S-Corps, the issue is even more disruptive. After the Tax Cuts and Jobs Act of 2017 introduced the 20% qualified business income deduction under IRC §199A, businesses benefited—but only temporarily. This provision is set to expire in 2026 unless extended. Business owners are already asking: what then?
Strategies for entity structure, executive compensation, and capital reinvestment are deeply influenced by these rules. If you don't know whether a major deduction will still be around in two years, how can you design an efficient, forward-looking plan?
Permanent Tax Rules Create a More Stable Environment
Permanence is a key ingredient in effective tax planning. Why? Because it allows individuals and entities to:
Commit to long-term investments with predictable tax outcomes.
Plan succession and estate strategies in tandem with known transfer tax and income tax provisions.
Negotiate contracts, leases, or joint ventures that align with stable fiscal policies.
For example, an S-Corporation in Northern Virginia that's preparing to exit or merge with a private buyer will face different valuation and negotiation dynamics if a major deduction or rate schedule is set to vanish in the next year. Permanent policies help both sides of that transaction understand the true after-tax value of earnings and assets.
At the individual level, high-net-worth taxpayers in D.C. or Montgomery County may be designing trusts or gifting strategies around the current estate and gift tax exemptions—set to reduce drastically in 2026. Without assurances on exemption levels or capital gains treatment, it's difficult to determine whether to act now or later.
Long-term clarity allows professionals, families, and businesses to make intentional decisions, not rushed ones.
The Estate Planning Impacts: A Cautionary Note
Our estate planning clients often ask how best to use their lifetime gifting exemptions, structure family LLCs, or allocate investment gains between heirs. In an environment with expiring provisions or uncertain step-up basis rules, short-term changes can lead to overcorrections that carry long-term consequences.
Let's take a Maryland entrepreneur with a net worth of $15 million. If estate tax exemptions revert to pre-2018 levels in 2026 without Congressional action, their upcoming wealth transfer strategy could be significantly impacted. Should they gift now to lock in protections? Or wait and see what Congress does in an election year?
Decisions like these involve far more than tax calculations—they affect family dynamics, business continuity, and philanthropic goals. Long-term legislative certainty gives clients the space to make values-based, rather than urgency-based, decisions.
For Business Owners: Strategy Hinges on Consistency
For LLCs, partnerships, and closely held companies in the DMV area, permanent tax rules allow for more sophisticated planning. Consider these common scenarios:
A Virginia-based consulting firm looking to offer equity incentives to key employees must weigh long-term tax treatment on restricted stock, options, or profit interests. Temporary tax rules may obscure the best strategy.
A Washington D.C. media startup considering international expansion needs clarity around global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) deductions, which have undergone significant policy shifts.
A Maryland construction company wants to reinvest via equipment and technology upgrades, but changing bonus depreciation rules alter the financing calculus.
Across industries, consistent tax rules allow companies to align investments with growth rather than react to legislative changes.
How DMV Taxpayers Should Think About Long-Term Planning
As attorneys advising clients across Maryland, Virginia, and Washington D.C., we see firsthand how temporary measures introduce complexity. The best way forward? Focus on planning strategies rooted in long-term principles:
1. Prioritize Structure: Entity selection, trust design, and operating agreements should anticipate change but not rely on volatile provisions.
2. Build Flexibility: Use flexible planning tools—like grantor trusts or optional purchase rights—that allow adaptation to future tax changes.
3. Monitor Legislation: Even if Congress passes temporary relief today, keep one eye on what sunsetting provisions could trigger tomorrow.
4. Stress-Test Scenarios: Run best-case and worst-case tax projections under various future policy environments.
An Insight Often Overlooked: Paralysis Has a Cost
Many taxpayers, especially entrepreneurs and professionals with complex portfolios, assume they must wait for clarity from Washington before taking action. That mindset can be costly. It may delay a beneficial restructuring, prevent a timely gift, or postpone investment in a strategically critical area.
Our perspective? While you can't predict policy, you can prepare for it. Long-term planning isn't about certainty—it's about resilience. The best plans aren't built to survive one tax cycle. They're designed to last through multiple administrations, market changes, and family transitions.
That's where an experienced business and tax attorney comes in—not just to explain the laws, but to help you plan around them in a way that builds confidence through strategic flexibility.
Why It Matters in the DMV Region
Maryland, Virginia, and Washington D.C. each have distinct tax structures. Add to that the potential changes from shifting federal policies, and compliance quickly becomes more than a checklist—it's a chessboard.
For instance:
Maryland has an inheritance tax that impacts estate strategy in ways not seen in other states.
D.C.'s high-income earners face some of the most aggressive local tax rates in the country.
Virginia's business tax environment is relatively favorable, but temporary federal rules can still disrupt planning.
If federal tax changes lapse or expire without renewal, state-level implications can be magnified—leading to unintended exposure or missed savings. Coordinating state and federal strategy is essential, especially in a capital region that thrives on cross-state economic activity.
Conclusion: Plan for the Long Term—We'll Help You Do It
Temporary tax breaks may make headlines, but they rarely make good strategy. Smart planning calls for a long view—one that aligns your financial goals with stable, thoughtful structures that can weather changes in policy.
If you're a business owner, professional, or high-net-worth individual in Maryland, Virginia, or Washington D.C., and you're wondering how current—or expiring—policies could affect your next move, don't wait for legislation to dictate your plan.
Instead, take control.
Thienel Law is here to equip you with clear, customized guidance rooted in long-term tax and business planning.
If you're unsure how this applies to your business or personal situation, we're here to help. Schedule a consultation with Steve Thienel to get advice tailored to your goals.