Our Big Bill Summary

Summary of The Big Beautiful Bill: Key Financial Ramifications for Wealth Planning

Signed into law on July 4, 2025, the “One Big Beautiful Bill Act” makes sweeping and permanent changes to the tax code, estate law, healthcare eligibility, and personal finance landscape. Below is a summary organized by category to help clients understand the ramifications.

1. Taxes: Personal and Corporate

Personal Tax Highlights:

• Permanently extends the Trump-era tax brackets from the 2017 Tax Cuts and Jobs Act (TCJA).
• Standard deduction remains elevated ($15,750 for individuals; $31,500 for couples for 2025).
• SALT (state and local tax) deduction cap raised from $10,000 to $40,000 for those earning under $500,000 (2025–2029).
• New deductions:
  • Tip and overtime income deduction for earners under $150,000.
  • Auto loan interest deduction (up to $10,000) on U.S.-built cars, with income limits.
  • $6,000 senior deduction for those 65+ earning under $75,000 (sunsets after 2028).
• Child Tax Credit increased to $2,200 per child, indexed for inflation beginning in 2026.
• Investors benefit from 20% Qualified Business Income deduction permanence. Individuals who receive income from LLCs, partnerships, S corporations, and sole proprietorships can deduct up to 20% of that income before applying their marginal tax rate.
• Social Security Taxation:
  • Social Security Taxation Thresholds (unchanged in the new law.) However, the Bill indirectly reduces how much of your benefits are taxed for low–to moderate-income retirees.
  • From 2025–2028, seniors age 65+ with AGI under $75,000 (single) or $150,000 (joint) can claim the $6,000 per-person senior bonus deduction.
  • Combined with the elevated standard deduction and the existing age-based deduction, total deductions can offset taxable income enough to keep provisional income below thresholds where Social Security becomes taxable.
• By reducing taxable income through these expanded deductions, more retirees may stay under tax thresholds, resulting in: Less or no tax on Social Security benefits and Lower overall tax liability.
• Greater efficiency when combining Roth conversions and benefit timing
• This makes it especially important for retirees to coordinate the start of Social Security with income levels and Roth conversion strategy during this four-year opportunity window.

Corporate Tax Highlights:

• 21% corporate tax rate made permanent.
• 100% bonus depreciation extended through 2029.
• Qualified Business Income (QBI) deduction, (Section 199A) made permanent.
• Immediate expensing of research and development costs reinstated.
• Domestic manufacturing and energy production incentives expanded.

2. Estate Planning

• Estate and gift tax exemption made permanent at $13.99 million per individual / $27.98 million per couple for 2025 (increasing to $15 million in 2026, with inflation-adjustments after that).
• Portability of unused exemption between spouses retained.
• Step-up in cost basis at death remains intact.
• Annual gift tax exclusion for 2025 will remain at $19,000.

Planning Note: This legislation offers a rare window of certainty. Families should consider using lifetime gifting, trust strategies, and multi-generational transfers under this high exemption threshold.

3. Retirement Planning

• No changes to IRA, Roth, or 401(k) contribution rules.
• Required Minimum Distribution (RMD) age and SECURE Act 2.0 provisions remain in place (currently age 73).
• Roth conversions and backdoor Roths still allowed.
• Seniors over age 65 earning under $75,000 benefit from a temporary $6,000 deduction.

Planning Note: The temporary $6,000 senior deduction through 2028 offers unique planning opportunities.

4. Investment Planning

• Long-term capital gains tax rates unchanged (0%, 15%, 20%).
• Step-up in basis at death preserved.
• Alternative Minimum Tax exemption levels made permanent, reducing risk of exposure.
• No new taxes on trades or financial transactions.

Planning Note: Taxable investment strategies like gain harvesting, charitable giving, municipal bonds, and generational wealth transfers remain tax-advantaged.

5. Healthcare

• New Medicaid work requirement: 80 hours/month for non-disabled adults aged 19–55.
• $35 monthly Medicaid copays introduced for non-poverty-level recipients.
• Stricter eligibility and recertification rules under The Affordable Care Act.
• No changes to Medicare eligibility, coverage, or Part D.

Planning Note: Clients relying on public programs or supporting adult children who do may need to reassess coverage and explore private alternatives.

6. Education & Family Financial Support

• Introduction of “Trump Accounts” – small tax-exempt savings accounts for minors (babies born between 025 and 2028), funded by one-time federal tax credits.
• Child Tax Credit increased to $2,200 per child.

Planning Note: Trump Accounts may be used to integrate with gifting strategies or seeding Roth IRAs for younger generations or funding future education and home purchases.

7. Business Owner Incentives

• Bonus depreciation and R&D expensing encourage capital investment.
• Manufacturing and energy incentives support new sectors.

Planning Note: Business owners should revisit entity structure, reinvestment plans, and Section 199A optimization.

8. Consumer Finance

• The mortgage interest adjustment remains available up to $750,000or eligible debt.
• Auto loan interest deduction (2025–2028) for U.S.-built vehicles, income-limited.

Planning Note: Clients should evaluate vehicle financing strategy and timing to take advantage of deduction.

Contact your ACM Wealth Advisor for any additional assistance or visit our website at www.acmwealth.com.

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