“In any given moment, we have two options: to step forward into growth or step back into safety.”
The One Big Beautiful Bill (OBBB) passed the House and Senate.
Here are a few highlights:
Tax provisions
- Permanent extension of the 2017 tax cuts and jobs act (TCJA), which was supposed to expire at the end of this year. This keeps the top income bracket at 37%.
- Increased Standard deduction– $1000 for individuals, $2000 for couples married filing jointly, and a temporary $6000 increase for seniors through 2028. This, in effect, reduces taxes for many people, especially those over 65. This could increase the amount and the benefits of a Roth Conversion for those of 65 years of age.
- Car loan interest deduction– $10,000 deduction of auto loan interest for U.S.-made vehicles, expires 2029.
- Increase in child tax credit– $200 for 2025 and will adjust for inflation in the future.
- An increased estate tax exemption – This was increased from $13.99 million to $15 million for individuals and from $27.98 to $30 million for those married filing jointly.
- Savings accounts for newborns– Accounts will be funded with $1000 from government contributions and are eligible to receive up to $5,000 per year in parental after-tax contributions—more on this in upcoming FFF.
- Small business deduction– Expands the Section 199A deduction for small businesses.
- Business incentives – These include reinstating 100% immediate expensing for machinery, equipment and R&D expenses and allowing full expensing for new factories (to encourage domestic manufacturing).
There are some spending cuts that affect Medicaid, the Affordable Care Act, and a few other programs.
This can affect your financial plan in a few ways:
- Tax planning – with the extension of the TCJA, the increase in the standard deduction, and small business deductions, review your tax plan with your CPA and Riverbend 🙂.
- Health Savings Accounts– with the OBBB if you are participating in Medicare Part A and are still working and have a High Deductable Healthcare Plan (HDHP), you can still contribute to HSA. Previously, once you were on Medicare, you must stop contributing to your Health Savings Account.
- Education planning- The OBBB made some significant changes to 529 educational plans. Withdrawals have previously been limited to tuition on K-12 education. Now, the bill expands the use of 529 plan funds for tutoring, textbooks, test preparation, online learning, and homeschooling materials. Special educational expenses, such as speech therapy, occupational therapy, and adaptive learning software, are also now included.
OF COURSE, check with your CPA and your financial advisor (wink wink) to see how you can take advantage of these new changes.
Check out our new video on, Every Business Owner Should Do THIS Before Retiring.
