Good Afternoon,
I hope this note finds you well and enjoying the summer.
Congress recently passed what's being called "Trump's Big Beautiful Bill." It's important to understand what is inside of the bill and how it might affect your financial picture. I've read through the details so you don't have to. The “One Big Beautiful Bill” is enormous at roughly 900 pages of dense legislative text when it became law on July 4, 2025. To spare you from the pain of reading 900 pages of legalese, I've broken it down for you in plain English. Here's what you need to know:
First, the big headline: the bill mostly extends many of the individual and business-friendly provisions from the 2017 Tax Cuts and Jobs Act. Think of it as a temporary extension rather than a major overhaul.
Here’s a quick rundown of the most important points:
Tax Cuts Extended, But the Clock Is Ticking
The current lower income tax brackets and larger standard deductions are sticking around for now. That means most people will continue to enjoy lower income taxes. However, these provisions are still scheduled to expire in 2026, so we’re already planning ahead.Business Owners: QBI (Qualified Business Income) Deduction Stays
If you’re self-employed or own a business, the 20% qualified business income deduction continues. That’s good news for many of our business-owner clients, and we’ll continue reviewing strategies to maximize this benefit.Family Benefits Tweaked, Not Transformed
There were small updates to the Child Tax Credit and other family-related benefits, but nothing major. Still, we’ll take every dollar where we can get it.Capital Gains and Dividend Tax Rates Remain Unchanged
There were no increases to long-term capital gains or qualified dividend tax rates. This helps maintain planning flexibility for those of you realizing gains or doing strategic tax harvesting.SALT Deduction Cap Remains at $10,000
The state and local tax deduction limit is still capped at $10,000. If you’re in a high-tax state, this may continue to limit itemized deductions.Estate Tax Exemption Still High
The bill helps preserve today’s historically high estate tax exemption. This is a valuable window for those considering wealth transfer strategies, and we’re happy to walk through your options.IRS Funding Scaled Back Slightly
The bill includes some cuts to the increased IRS enforcement funding put in place by previous legislation. While this doesn’t eliminate audits, it may mean fewer for higher-income earners and business owners. Of course, we’ll continue to keep everything above board regardless.Corporate Tax Rate Holds at 21%
This matters if you’re invested in U.S. companies, because it supports corporate earnings and, indirectly, equity markets. It’s a win for long-term investors.Looking Ahead to 2026
Many of these provisions still face a hard expiration date in 2026 unless Congress acts again. That gives us a planning window to work within, especially when it comes to tax strategy, estate planning, and income distribution in retirement.
The bottom line: this bill doesn’t change the rules dramatically, but it does extend some favorable provisions that we’ve already been using in your planning. As always, if you have questions or want to know how this might impact your personal situation, just reach out. I’m here to help you stay ahead of the curve.
Warm regards,
Johanna