With the passage of the new federal tax bill — dubbed the “One Big, Beautiful Bill” — there are some significant tax and financial changes on the way. This legislation makes permanent or expands many of the provisions originally introduced under the 2017 Tax Cuts and Jobs Act, which were previously set to expire after 2025.
We are listing a few of the bigger items within this article, but we encourage you to check back regularly at www.summitfc.net/blog for additional updates that may impact your tax return as more guidance becomes available from the bill.
New Tax Legislation Passed: Highlights from the One Big, Beautiful Bill
-
You can now deduct up to $1,000 if Single and $2,000 if Married in cash contributions to charities even if you don’t itemize your tax return (source).
-
“Trump Accounts” are available for newborns. The government will chip in $1,000 and the parents/family can contribute up to $5,000 per year. It’s an IRA and can jumpstart their retirement right away and cannot be touched for any reason before age 18 (source). Once these are available through our custodian, Charles Schwab, we’ll let you know!
-
Social Security Tax may be reduced for some retirees because of a new extra deduction of $6,000 per person aged 65 or older. The income limit is $150,000 for couples. It should reduce the number of people who pay taxes on Social Security from 66% up to 88% (source).
-
Corporate Tax Cuts from the 2017 Tax Cuts and Jobs Act are made permanent (source).
-
If a business buys a piece of equipment, it can write it off in 1 year.
-
Research and Development costs in the year it occurred are deductible.
-
Building a new Manufacturing facility can be written off 100% in year 1 if built before January 1, 2029.
-
There are Tax Credits for semiconductor firms to build manufacturing facilities in the US.
-
High Income Earners and Middle-Class Families all see benefits (source).
-
For people in the top 20%, they should save $13,000 per year versus if the 2017 Tax Cut and Jobs Act income tax reductions were to sunset.
-
High Property Tax States will benefit from higher SALT – $40,000 instead of $10,000 to write off if income is lower than $500,000.
-
Tips and Overtime are not taxed through 2028 up to $25,000 for Tips and $12,500 for Overtime but income limits do apply (source).
-
-
Some Low-Income Americans will lose Medicaid and Food Stamps (source).
-
Volunteer or Working requirements were added for able-bodied people without young children at home.
-
Hospitals estimate they will lose over $1 Trillion in revenue because of cuts to Medicaid and losses for services rendered because they won’t get paid for medical care for the poorest Americans (source).
-
-
Tax Credits for EVs will go away in September of 2025 instead of 2032 (source).
Speak With a Trusted Advisor
We feel that there is a lot going on in the world and it may be an appropriate time to touch base. If we haven’t spoken in a while, or you’ve had any changes to your family, finances, or risk tolerance, please contact us at (586) 226-2100 to schedule a review meeting. We would love to meet with you over the phone, Zoom, or face-to-face to strategize.
Sincerely,
with contributions from Robert Wink, James Wink, Zachary Bachner, and Daniel Ladzinski
Sources
(1) USAFacts – What’s in the One Big, Beautiful Bill?
(2) USA Today – Social Security Tax Breaks
(3) ASTHO – One Big, Beautiful Bill Law Summary
Open Enrollment Around The Corner
If you have a decision to make about your health insurance choices at work, or if you need help shopping for an appropriate health insurance plan because you’re retired or unemployed, please give us a call and we’d be happy to help: (586) 226-2100. We offer these services through an affiliated entity Summit Health Services, LLC.
Notes & Disclaimer: Investment advisory services are offered through Summit Financial Consulting LLC, an SEC registered investment advisory firm. Summit Financial Consulting Investment Advisory Firm Representatives do not render tax, legal, or accounting advice. Life/Annuity Insurance products and services offered by the individual insurance agent. Health insurance is offered through Summit Health Services, LLC and Property/Casualty (P&C) Insurance is offered through Summit Insurance Services, LLC and our local P&C agency partners. Please update Summit Financial Consulting LLC, if your investment objectives have changed or if the personal or financial information previously provided has changed. Past performance is no guarantee of future results. Representatives of Summit Financial Consulting LLC offer tax preparation services through Summit Tax Services. Summit Tax Services is a DBA of Heemer Klein & Company and they are owned and operated independently.