My colleagues and I have been diving deep into the fine print of the One Big Beautiful Bill. Let me tell you, this isn’t political theater. It’s a real shift in tax policy that favors working families, retirees, and small business owners in ways we haven’t seen in a long time.
Here’s the breakdown of some areas we believe will greatly help most of our clients!
Market Update
Markets had a mixed reaction to the bill’s passage. Tech stocks jumped as investors anticipated stronger consumer spending. Bonds sold off slightly as concerns about long-term deficits came into focus. The Federal Reserve remains data dependent, but this new wave of tax relief could put more wind in the sails of the consumer economy heading into the fall.
Wealth Strategy
Here’s how the new law impacts middle-income households, retirees, and entrepreneurs
1. Tips and Overtime Deduction
You can exclude up to $25,000 per year in cash tips from federal income tax
Overtime pay is deductible up to $12,500 for single filers and $25,000 for joint filers
These benefits begin to phase out at $150,000 for single filers and $300,000 for joint filers
2. Car Loan Interest Deduction
You can now deduct up to $10,000 per year in interest for loans on vehicles assembled in the United States
This is limited to filers with income under $100,000 for individuals and $200,000 for couples filing jointly
3. Seniors’ Deduction
Retirees age 65 and older receive an additional $6,000 deduction
This begins to phase out at $75,000 for individuals and $150,000 for joint filers
This is designed to make Social Security benefits tax free for the majority of retirees
4. SALT Deduction Expansion
The state and local tax deduction cap increases to $40,000 for filers under $500,000 of adjusted gross income
This will primarily help homeowners in higher tax states
5. Standard Deduction and Brackets
The expanded standard deduction from the Tax Cuts and Jobs Act is now permanent
It begins with a bump in 2025
- Single: $15,750
- Head of Household: $23,625
- Married Filing Jointly: $31,500
From there, it grows each year through 2028
- Single filers
- 2026: $16,750
- 2027: $17,750
- 2028: $18,750
- Married filing jointly
- 2026: $33,500
- 2027: $35,500
- 2028: $37,500
These increases are indexed for inflation and will especially benefit households that do not itemize. This makes the deduction more valuable every year and reduces taxable income significantly over time. Income brackets remain locked at 12%, 22%, and 24% for most middle income earners
6. Child Tax Credit
The credit increases from $2,000 to $2,200 per child and is now indexed to inflation
Income phaseouts remain consistent with prior law
7. Trump Accounts and Baby Bonuses
Each child receives a one-time $1,000 deposit into a tax free account
Families can contribute up to $5,000 per year
Newborns receive an additional $1,000 baby investment account
8. Small Business Provisions
The Qualified Business Income deduction increases from 20% to 23% and is now permanent
It begins phasing in at $75,000 for single filers and $175,000 for joint filers
Section 179 expensing now allows up to $2,500,000 in equipment and fixed asset deductions
Bonus depreciation is restored at 100% through 2029
Research and development costs for U.S. based activities are now fully deductible in the year incurred
9. Summary
A household earning around $80,000 could see more than $10,000 in total tax relief
Nearly 90% of retirees may owe zero federal tax on their Social Security
Business owners gain valuable tools for immediate write offs and reinvestment
Lifestyle Tip
You know what summer’s really for? Saying yes to things just because they sound fun. Host a backyard bocce tournament. Try paddleboarding even if you fall off five times. Grill something you’ve never heard of. This weekend could be the one your friends or relatives talk about in ten years. Make it count.
You May Not Know
If you own more than one property, the expanded SALT deduction might work in your favor. Under the new rules, a primary residence and a second home can each contribute to your state and local tax total, up to the new $40,000 cap. While you can’t double-dip on property taxes, you can now claim a lot more than before if your total state and local taxes exceed the old $10,000 limit. For folks with real estate in higher-tax areas, this could be a significant write off that had previously been capped away.
Final Thought
As always, if you’d like to review your financial, tax, or estate planning strategy, contact us to schedule a check-in.
