06/21/2025
That "Big Beautiful Bill". As you know by now, it's passed the house, with changes, and moved to the Senate. I want to cover a few of the things in it, which I think are relevant to most of my clients. Here are a few of the house approved items that await Senate approval, that COULD be in your future:
1) The standard deduction would temporarily increase by $2000 for joint filers, $1500 for heads of household and $1000 for single filers. It would apply for 2025-2028. That would make the standard deduction for married folks $32000.00, for head of household folks $24000.00 and for single folks, $16,000.00. After 2028, it would decrease to the 2024 (last filing year) rates, indexed for inflation.
If you are 65 and up, you would a $4000.00 bonus per person. This would also be temporary - 2025-2028. There are incomes phase out limits.
2) Child tax credit would temporarily rise to $2500 per child aged 0 - 16, up from the $2000 per child now. Also 2025-2028, and after that would revert back to the $2000, indexed for inflation. Again pretty healthy phase out limits. Without this change, in 2026, it's going back to $1,000 per child, so we're hoping this passes for sure.
3) Lifetime estate and gift tax exemption amount would be extended and increased - up to 15,000,000.00 for those who pass in 2026. Otherwise, it goes back to 7 million in 2026.
4) A new kind of tax advantaged savings account would be made available, if the bill passes. It would let parents open an account for each child under age 8. Contributions up to $5000.00 per year, adjusted yearly for inflation, come be made to the account until the child reaches 18. No distributions would be allowed until the child turns 18. Between 18 and 25 years of age, withdrawals can't exceed 1/2 the value of the account balance as it was when the child turned 18. At age 31, the account would terminate and the remaining balance would go to the child. It would be called a Trump account. Contributions aren't deductible. Tax on the earnings would be deferred until withdrawal. Earnings could be taxed as long term capital gains if used for college, starting a business or buying a first home. Anything else, would be taxed as ordinary income (just the earnings, not the principal). If using it for anything else than the above items, and if removed before age 30, there would be a 10% levy. And the government would pitch in a one time $1000 payment for each US child with a social security number born after 2024 and before 2029. Treasury would set up a Trump account for each child who doesn't otherwise have one.
So think on these, and how they will effect your taxes if they are passed. We think we will get the final passing at least by the end of July. Once the Senate makes their changes, the house has to approve them before it becomes law. So reach out to your representatives if you feel strongly about it, and lets wait and see what's in store.
I'll keep you posted.
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