Trump’s Big Beautiful Bill: A Summary

Trump’s Big Beautiful Bill: A Summary

Over the July 4^th weekend, Trump signed his new tax bill, dubbed “The Big Beautiful Bill”.  Rather than focusing on the silly name of it, I figured why not go through some of the bigger components in hopes to keep us all informed.  I’m sure I’ll write more on this later, as well, once we fully digest and learning any unique planning opportunities.

The Change of No Change

In an odd way, the biggest thing to come out of the tax bill is really no changes.  What I mean by that is the new piece of legislation has made Trump’s 2017 tax rates permanent.  These income tax rates were set to sunset soon and revert to the pre-2017 tax rates, so in a way, this was probably the largest impact on most of us.

Deductions

When I focus on the new pieces of the bill that were much talked about, but never existed before, there are a handful that jump out to me.  For starters, through 2028, you can deduct up to $25,000 per year of your tip income.  For those of you in the service business who rely on tips as a main source of income, this is rather large for you.  Sadly, I nor most people I know function that way, but that doesn’t mean there aren’t many of you out there, and this will certainly help tremendously.   The same provisions are in place for overtime pay through 2028, up to a deduction limit of $12,500.

There is also an interesting deduction from 2025-2028 of up to $10,000 on auto loans interest.  I find this one a bit peculiar if I am being frank (and don’t call me Shirley).  Hadn’t heard much about this provision prior, and I suppose it is being implemented to entice new car purchases.  Nonetheless, I suppose any tax break is welcome, so might as well tack this bad boy on.

Now, one of the new tax bill inclusions I find most unique is this: Trump Accounts for child savings from 2025 through 2028.  This is for children born between 2025-2028 who will get a one-time $1,000 credit to a Trump investment account.  I’m not sure this will have a huge impact for anyone, really, but admittedly, I’ll likely write more on this in a future blog once I analyze it further to understand if I am missing anything or any cool planning opportunities.  But for now, know if you have a kid born during those years, there is a neat little extra benefit.

Adjustments

Turning my attention to adjustments in the tax bill, I’ll start with the estate and gift tax exemption.  This had been set at $13.99 million for an individual and double that for married filing jointly.  This was due to sunset as well, but now is adjusted upward to $15 million for an individual and double that for married filing jointly beginning in 2026.  It will also adjust upwards due to inflation in subsequent years.  Not many people out there will go over that 15/30 million dollar threshold for their estate.  This certainly opens the door for unique planning opportunities, as there is a lot of leeway for most Americans.

Standard deduction got a little overhaul as well, going from $15,000 for single filers to $15,750 starting 2025, and again double those figures if you are married filing jointly.  If you are over 65, however, you get a nice little bonus deduction, as it is being referred to in the tax bill.  If you are in this category through 2028, you get an additional $7,600 and $8,000 for an unmarried/non-surviving spouse. 

For those who itemize, you may have a nice little benefit from now through 2029.  The State and local tax deduction (commonly referred to as SALT) had a limit of only $10,000 that you could deduct.  Moving forward for the next couple of years, the deduction limit will be increased to $40,000, increasing 1% a year through 2029.  However, for those high earners making over $500,000 a year, you will start to be phased down accordingly.  Nice help for those living in high-income tax states.

From what I have read thus far, these are seemingly the changes that I think impact most of us, and thus wanted to focus here to start educating.  On an aside, I find what is happening in politics extremely interesting these days.  On one hand, you have Trump passing tax savings laws, and on the other, you see NYC perhaps going down a completely different path of a potential socialist mayor in Zohran Mamdani.  Talk about two polarizing and opposite tactics.  All I know is the winds of change are here, and we will be here to guide you every step of the way.

Also, as a reminder, if anyone has questions on how things impact them specifically, don’t hesitate to reach out or contact our Tax company for help moving forward.

As always, stay wealthy, healthy, and happy.