2025 Tax Law Changes: A Planning Checklist

Hello,

Below is a breakdown of the tax implications of the BBB (Big Beautiful Bill).

Before we get into it, here are the results of the poll from last month:

What company in the S&P500 has had the highest average annual return since it went public?

Here is what you selected: Monster Beverage Corp - 30% Apple - 30% Axon Enterprise - 18% Costco - 13% Amazon - 9% Broadcom - 0%

Since IPO here are the average annual returns of each of the above: Broadcom: 40% Axon: 35.7% Monster: 32.8% Amazon: 32.8% Apple: 23.7% Costco: 18.9%

Monster was a good answer as it has one of the highest TOTAL return since IPO. Which isn't quite apples to apples as some of these companies IPO'd at different times.

What is interesting: Since Monster IPO'd in 1995 it has returned in total 480,976% Since Amazon IPO'd just 2 years later in 1997, it has returned in total 292,421%.

Had you invested $10,000 in Monster at IPO vs Amazon you would have ~$48million compared to ~$29million today.

That being said, I saw something recently that was a great illustration of "HAD I JUST INVESTED $$$$ IN X (pick your favorite stock), I WOULD BE SO RICH TODAY!"

See below:

“If I put $100 in Bitcoin in 2010 I’d have $2.8B now.”

No.

If you bought $100 of Bitcoin in 2010 and watched it go to:

$1k → $100k → $1.7M

and did nothing

Then watched $1.7M go to $170k

and still did nothing

Then watched $170k go to $110M

and still did nothing

Then watched $110M wither to $18M

and still did nothing

Then watched $18M surge to $390M

and still did nothing

Then watched $390M deteriorate to $85M Then watched $85M climb to $1.6B

and still did nothing

Then watched $1.6B shrink to $390M and still did nothing

Then watched $390M surge to $2.8B

and then for some reason finally decided to do something…

Then yes, $100 in 2010 would be worth $2.8B today.

The BBB:

What’s New (and Totally Different) There are several brand-new deductions and planning opportunities, particularly aimed at seniors and middle-income taxpayers:

Senior Deduction: Extra $6,000 deduction per qualifying individual age 65+ whether itemize or take standard deduction (phased out at $75k - $175k single and $150k - $250k married). Applies 2025–2028.

“No Tax on Tips” Deduction: Up to $25,000 deductible for tips, with income-based phaseouts of $150k - $400k single and $300k - $550k married.

Overtime Deduction: Similar $25,000 deduction for overtime income (with limits), phased out at same rate as tips.

Car Loan Interest: Deduction up to $10,000 on new U.S.-assembled car loans (not leases), with strict limitations and income phaseouts at $100k - $150k single and $200k - $250k married.

Charitable Deduction for Non-Itemizers: Up to $2,000 for married couples giving cash, beginning in 2026.

New Cap on Itemized Deductions: Those in the 37% tax bracket will see the benefit of their overall itemized deductions reduced to 35% beginning in 2026. For example, if you have $50,000 of itemized deductions normally you would save 37% or $18,500 now it is reduced to 35% or savings of $17,500.

AGI Floor for Charitable Contributions: Must exceed 0.5% of AGI to qualify (starting 2026). For example your AGI is $500,000, only charitable contributions above 0.5% or $2,500 can be deducted. “Trump Accounts”: New child-focused savings accounts based on IRA rules with strict contribution and investment limits. Designed for dependents under age 18. Employer contributions and Treasury pilot funding included. Initial $1,000 seed for children born 2025–2028. What’s Meaningfully Different Several notable changes could impact higher earners, business owners, and families planning large gifts or charitable contributions:

State and Local Tax (SALT) Deduction: Raised to $40,000 (or $20,000 for Married Filing Separately), with income-based phaseouts starting at $500,000 (or $250,000 for Married Filing Separately). For example previously if your property taxes and/or state income taxes exceeded $10,000 you could only deduct $10,000, now that is raised to $40,000.

Alternative Minimum Tax (AMT): More filers could be subject to AMT starting in 2026 as income thresholds revert to 2018 levels. Seven years of inflation adjustments have been removed for joint filers.

Adoption Credit: Up to $5,000 will now be refundable starting in 2025.

Green Energy Credits: Available through 2025 for clean vehicle and residential energy upgrades, with phased expiration timelines.

Full list of terminated credits includes: Clean Vehicle Credit, Previously Owned Clean Vehicle Credit, Commercial Clean Vehicle Credit, Alternative Fuel Refueling Property Credit, Residential Clean Energy Credit, Energy Efficient Home Improvement Credit, and New Energy Efficient Home Credit.

Qualified Opportunity Zones: New tiers for basis increases after five years—10% for regular zones, 30% for rural funds.

Bonus Depreciation & Section 179 Expensing: Enhanced limits on both, including 100% expensing reinstated for property placed in service on, or after January 20, 2025. Bonus depreciation is where businesses can expense 100% of the cost of eligible assets vs spreading the depreciation out over several years.

Qualified Small Business Stock (QSBS): Tiered gain exclusions now based on holding period (up to 100%) with higher per-issuer caps and asset thresholds. QSBS exclusion is a way to reduce capital gains tax on the sale of a business up to 10x the cost of starting the business or $10million, whichever is greater (adjusted to $15mil for QSBS issued after July 4th, 2025).

Exclusion of Interest on Rural or Agricultural Loans: New provision allows interest income to be excluded for qualified lenders. Other Notable Changes Estate Tax Exemption: Increased to $15 million per person in 2026, with portability and inflation adjustments.

Medicaid Changes: New work and residency requirements, with major funding cuts effective 2026.

529 Plan Expansion: Now includes a broader range of qualified K–12 education expenses, with the annual limit doubled to $20,000.

Student Loan Strategy: Income-Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF) remain viable options; Pay As You Earn (PAYE) may sunset post-2026—borrowers should review their repayment strategies soon.

Educator Expenses: Unreimbursed classroom costs now deductible again as miscellaneous itemized deductions.

Social Security Taxation: No change—benefits remain taxable up to 85%; no exclusion or credit was enacted. What’s Staying (Mostly) the Same

Tax Brackets: The existing brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) stay in place, but inflation adjustments in 2026 will slightly shrink the 22% bracket.

Standard Deduction: Modestly increased across all filing statuses in 2025 (e.g., Married Filing Jointly up to $31,500).

Itemized Deductions: Limits remain. Mortgage interest deduction is capped, and deductions for moving expenses, personal exemptions, and miscellaneous items continue to be repealed.

Mortgage Insurance Premiums: Now treated as qualified residence interest and deductible.

Child Tax Credit: The nonrefundable portion increases to $2,200 in 2025. The refundable portion ($1,700 in 2025) is now permanent and indexed for inflation. (Non-refundable vs Refundable example. Your tax bill is $200 and you have a $500 non-refundable tax credit. Your tax bill is now $0 vs if it was refundable you would receive a $300 refund.

QBI Deduction: Extended with higher income phaseouts—$150,000 for joint filers, $75,000 for others.

Student Loans: Debt discharged due to death or disability remains non- taxable. Employers can continue offering tax-free student loan repayment assistance. ABLE Accounts: Saver’s Credit eligibility and rollover rules from 529 plans remain intact.

Education Assistance and Dependent Care Benefits: Exclusion thresholds and rules unchanged.

Other Provisions: Cash contribution limits, HSA rules, and Pass-Through Entity Taxes (PTETs) stay the same.

Final Thoughts: What It All Means for You

The OBB brings a mix of changes—some permanent, some temporary—along with detailed updates to existing tax rules.

That said, the impact won’t look the same for everyone—actual outcomes depend heavily on your income and filing status.

For example, we ran some recent simulations comparing a clients tax return with the old law compared to what their return will look like under the new and it only changed their tax bill by a few hundred dollars.

If you are curious as to how the new bill might affect you, please reach out to us.

As always, thank you for reading.