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Miami Herald
19 hours ago
- Business
- Miami Herald
What you need to know about Trump's 'One Big, Beautiful Bill'
What you need to know about Trump's "One Big, Beautiful Bill" Ever since the first Trump Administration passed the Tax Cuts and Jobs Act (TCJA) in 2017, with most of its provisions expiring on December 31, 2025, observers have speculated about what would happen next. That question was finally answered on July 4, 2025, when President Trump signed the "One Big, Beautiful Bill (OBBB)" into law. His signature legislation makes the 2017 tax cuts permanent, along with several other important provisions. At 870 pages, the OBBB also contains a long list of additional changes that will affect taxpayers for years to come. Wealth Enhancement has broken down the list into some key highlights. Here's what to know about the new tax law. Estate and gift tax exemptions The TCJA doubled the lifetime gift and estate tax exemption, meaning that far fewer families would be subject to federal estate taxes. The expiration of the TCJA would have meant that many more people would face federal estate tax liabilities, but the new law has made the higher exemption amounts permanent. The OBBB increases the lifetime gift and estate tax exemption to $15 million per person ($30 million per married couple) starting in 2026. This will be indexed for inflation annually. This allows families a more long-term approach to wealth transfers without the uncertainty of potential tax increases from expiring tax provisions. People will have greater flexibility in deciding whether to gift during their lifetime or wait until death for the "step-up" in cost basis on assets. Tax cuts made permanent One of the top headlines of the OBBB is the fact that it permanently enacted the tax cuts that were enacted during the previous Trump administration. Federal income tax brackets will remain unchanged at 10%, 12%, 22%, 24%, 32%, 35%, 37%, indexed for inflation. This is a key point for taxpayers across income levels, particularly high-income earners. Without this change, tax brackets were previously scheduled to revert to 2017 levels, adjusted for inflation. This would have resulted in higher taxes for many people. The OBBB did not adjust the corporate tax rate, which was reduced from 35% to 21% when the TCJA was enacted. In addition, the TCJA created a new temporary provision called the Qualified Business Income Deduction (QBI). This 20% deduction was designed to help small business owners who were unable to benefit from the reduced corporate tax rate. Under the OBBB, the 20% QBI deduction for qualified business income (§199A) will remain unchanged and become permanent, along with an extended phaseout range. This will allow more people to qualify for this deduction. Standard deduction The OBBB slightly enhances and permanentizes the increased standard deduction amounts enacted under the TCJA. For 2025, the standard deduction is now $15,750 for individuals and $31,500 for married couples who file jointly. The law also creates an additional "Senior Bonus Deduction" of $6,000 for taxpayers ages 65+, effective in 2025. This provision is temporary and subject to phaseout, but while in effect, it has the potential to create a significant tax planning opportunity for seniors, whether they are utilizing the standard deduction or itemizing their deductions. Itemized deductions Under the OBBB, the standard deduction will receive a temporary enhancement from TCJA levels in 2025. For those itemizing their deductions, state and local taxes (or SALT) were capped at $10,000 under the TCJA. This cap in turn created the Pass Through Entity Tax (PTET) loophole, whereby state and local taxes are paid at the entity levels and passed down to shareholders in the form of a deduction that is not subject to the SALT cap. The OBBB will also increase the SALT cap to $40,000 (subject to phase out) starting in 2025, while keeping the PTET loophole in place. The SALT cap will likely increase the number of taxpayers taking the itemized deduction, especially in states with higher tax rates, such as New York, New Jersey, and California. In addition, the TCJA temporarily capped mortgage acquisition debt at $750,000 and temporarily eliminated miscellaneous itemized deductions. These changes were made permanent by the OBBB. New "above the line" deductions The new tax law is designed to create benefits for taxpayers who receive tips and overtime pay. It allows deductions for qualified tips and qualified overtime compensation. These measures are temporary and subject to phaseouts and caps. These changes could provide significant tax savings for service and hourly employees. However, it's important to note that Social Security and Medicare still apply, so earnings are not entirely tax-free. There is also a new tax deduction of up to $10,000 for car loan interest on new cars assembled in the United States. This deduction is subject to a cap. For taxpayers who make charitable cash donations, there will be a deduction available for non-itemizing taxpayers up to $1,000 (single) or $2,000 (married filing jointly) starting in 2026. Clean energy credits People who are interested in investing in energy efficiency updates for their homes or buying "clean" vehicles need to be aware that green energy tax credits previously scheduled to expire in 2032 will now expire within a year. Clean vehicle credits will now expire on September 30, 2025, while energy-efficient home improvement credits and residential clean energy credits will expire on December 31, 2025. Depreciation The OBBB restores 100% bonus depreciation for property placed in service from January 19, 2025. This is now permanent. Under Section 179, starting in 2026, the maximum deduction amount will increase to $2.5 million (with a phase-out threshold at $4 million). Our tax specialists recommend these strategies: Strategic timing of asset purchases Immediate expensing of qualified propertyMaximize deductions to significantly lower taxable income and tax liabilityConsider combining bonus depreciation and Section 179 for optimized tax benefits Real estate focus: Consider a cost segregation study to help make the most of bonus depreciation by reclassifying assets into eligible categories. Opportunity Zones The new tax law includes changes to Opportunity Zone (OZ) investments. These investment opportunities were created as part of the TCJA as a way for investors to invest in underserved communities in exchange for tax benefits. The new law accelerates the expiration of the current OZs to December 31, 2026 (two years early). It creates a new round of permanent, rolling 10-year designated zones starting in 2027. This strategy offers a 10% step-up in basis for investments held for at least five years. This increases to 30% for qualified rural OZs. For investors who are already invested in Qualified Opportunity Zones, any eligible capital gains invested before January 1, 2027, would be subject to the existing law and, as such, subject to gain inclusion on December 31, 2026. For investors who are considering QOZ investments in the future, these changes and enhancements are a positive sign. Other notable provisions Trump accounts: Tax-preferred savings account for children will provide an initial $1,000 federal subsidy per child born 2024-2028. Health savings accounts: The House proposed major changes in its initial bill, but the Senate did not include these in the final version. Personal exemptions: These have been suspended permanently. Alternative minimum tax: Increased exemption and phaseout thresholds have been made permanent. 529 plans: These educational savings accounts have been expanded to include home schooling and post-secondary credentials (including Certified Public Accountant or Certified Financial Planner). Child tax credit: Slight enhancement ($2,200); this is now permanent. 1099 MISC/NEC reporting requirements: Increased threshold to $2,000. This story was produced by Wealth Enhancement and reviewed and distributed by Stacker. © Stacker Media, LLC.
Yahoo
4 days ago
- Business
- Yahoo
I Asked ChatGPT What Trump's ‘Big Beautiful Bill' Means for Retirees' Taxes: Here's What It Said
While President Donald Trump's recently signed 'One Big Beautiful Bill' (OBBB) has more provisions than one could ever hope to break down in an article, it's big on tax changes, including those that will affect retirees. Check Out: Read Next: Overwhelmed at understanding it, I turned to ChatGPT to learn more about what it means specifically for retirees and their taxes (with fact-checking, of course!). Here's what ChatGPT said. One of the big things that the OBBB does is extend many of the tax breaks originally introduced under the 2017 Tax Cuts and Jobs Act (TCJA). However, it did make some adjustments that retirees need to pay close attention to. The OBBB maintains the current lower income tax brackets from the TCJA for now, 'which means retirees pulling from IRAs, 401(k)s, or other taxable retirement accounts will likely continue to benefit from lower marginal rates through at least 2025,' ChatGPT pointed out. However, some of those provisions will still end in 2026 unless further legislation is passed. 'That means higher taxes on retirement income could be around the corner — especially for those who delay Required Minimum Distributions (RMDs) or Roth conversions,' ChatGPT said. With current income tax rates remaining lower, it might be a good idea for retirees to consider converting their pretax retirement savings into Roth IRAs, ChatGPT suggested, 'locking in today's lower rate and avoiding potentially higher taxes in future years.' While the OBBB doesn't restrict Roth conversions, ChatGPT pointed out that it does underscore how limited a window retirees have to take advantage of current tax policy. Not only does the OBB uphold the estate tax exemption, which was scheduled to sunset in 2026, but it increases it to $15 million per individual. ChatGPT suggested, 'Retirees with larger estates should start working with advisors now to explore gifting strategies, trusts, or other tools while current limits are still in place.' The OBBB permanently extends the doubled standard deduction, an added benefit to retirees who no longer itemize deductions like mortgage interest or large charitable contributions, ChatGPT informed me. 'This simplifies filing and reduces taxable income for many,' it wrote. Retirees who do still itemize won't benefit from this change, unfortunately. Healthcare expenses are always a huge concern for retirees. The OBBB does not eliminate the ability to deduct qualified medical expenses over 7.5% of AGI, which is critical for retirees with significant healthcare costs. While these all sound like good things for retirees and their taxes, I asked ChatGPT if there were any downsides for retirees within the OBBB? One downside is that the OBBB doesn't address the way retirement income can push retirees into higher brackets for Medicare premiums (IRMAA) or taxation of Social Security benefits, ChatGPT wrote. Thus, 'Even with lower federal tax brackets, higher income can trigger other hidden costs — and retirees may still be caught off guard,' ChatGPT wrote. The One Big Beautiful Bill gives retirees short-term certainty with continued low tax rates, but it doesn't eliminate all of the 2026 sunset risks. 'Retirees should consider proactive moves now, like Roth conversions, income acceleration, or estate planning updates, while rates are still favorable,' ChatGPT wrote. ChatGPT also emphasized the importance of 'active planning.' Otherwise, 'Retirees could end up with a larger-than-necessary tax bill, or miss out on optimization strategies like bracket management or asset location.' More From GOBankingRates Warren Buffett: 10 Things Poor People Waste Money On This article originally appeared on I Asked ChatGPT What Trump's 'Big Beautiful Bill' Means for Retirees' Taxes: Here's What It Said Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Miami Herald
5 days ago
- Business
- Miami Herald
4 expiring tax breaks for homeowners in 2025
Several significant tax benefits that homeowners have relied on for years will disappear on December 31, 2025, reports NewHomeSource. Why it matters : These expiring tax breaks could mean thousands of dollars in additional taxes for homeowners across the country. The Tax Cuts and Jobs Act (TCJA), passed in 2017, was designed to reduce taxes for most Americans by simplifying the tax code and lowering rates. Many of its key provisions were designed to be temporary, with an expiration date of December 31, 2025. See More: 7 hidden costs of home ownership you need to know before buying While Congress passed the "One Big Beautiful Bill" on July 3, 2025, the legislation confirmed that several key homeowner tax benefits will still expire at year-end, despite extending others. 1. Energy Tax Credits Termination Under today's political climate, provisions like clean energy incentives were vulnerable to cuts, and now both the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit have been repealed for systems placed in service after December 31, 2025. The current tax law provides incentives for home energy improvements, including exterior doors, windows, and insulation materials. The credit covers 30% of costs with a maximum of $1,200. Heat pumps, biomass stoves, and boilers have a separate $2,000 annual limit. "I have encouraged clients this year to consider certain energy improvements earlier over waiting. Higher value improvements, such as geothermal heat pumps, should be prioritized," said Keith Schroeder, a Wisconsin-based tax expert who runs the hugely popular The Wealthy Accountant blog. Also eliminated is the current tax incentive for homes and businesses to install EV charging stations. 2. Mortgage Interest Deduction Remains Restricted The mortgage interest landscape won't improve for homeowners with larger mortgages. Currently, homeowners can deduct mortgage interest on up to $750,000 of mortgage debt. Before the TCJA, this limit was $1 million. The current restriction applies to mortgages taken after December 15, 2017. The reality : The new legislation makes this $750,000 limit permanent, confirming there's no indication this limit will ever return to the previous $1 million threshold. "Taxpayers have lived with this restriction since 2018, so it is business as usual," Schroeder said. "Income property owners may wish to shift mortgage debt from their primary residence and second home to the income property." See More: 7 biggest Tax Day tips for new homeowners 3. Mortgage Forgiveness Tax Break Expires Debt forgiveness becomes taxable again starting in 2026. The Mortgage Forgiveness Debt Relief Act, which has been extended multiple times, is set to expire at the end of 2025. This provision allows homeowners to exclude forgiven mortgage debt from their taxable income in cases of foreclosure, short sales, or loan modifications. "This is a very serious issue for distressed homeowners," Schroeder said. "Unless discharged in bankruptcy or to the extent of insolvency, debt forgiveness is included in income. In short, you can go from owing the bank to owing the government." Without this protection, homeowners who receive mortgage debt forgiveness after 2025 could face significant tax bills on the forgiven amounts. 4. New Home Builder Credit Ends The 45L New Energy Efficient Home Credit for homebuilders ends at the end of 2025, and it could impact home prices. This credit provided builders with incentives ranging from $500 to $5,000 for meeting certain energy efficiency standards such as Energy Star certification. "Since the loss of a tax credit is the same as a tax increase, homebuilders will feel the loss. Homebuyers may find the price of a home a bit higher to offset the homebuilder's loss," Schroeder said. "It always comes down to the end user." What this means: Homebuyers may face higher home prices as builders adjust to losing these tax More: 7 tax benefits of owning a home What Homeowners Should Do Now Planning becomes crucial as the December 31, 2025, deadline approaches, and these tax benefits potentially disappear. "My advice is to get those energy improvements and clean energy plans moving now," Schroeder said. "Planning has always been the best tax reduction tool." For prospective homebuyers, expect potential price increases as builders adjust to losing tax incentives. "The homebuilder may swallow some of the loss in difficult markets, but in the end, the homebuyer will pay more as homebuilders adjust to the new tax environment," Schroeder said. The bottom line: These expiring benefits represent real money for homeowners. The combination of eliminated energy credits and lost builder incentives alone could cost families thousands in additional taxes and higher home prices starting in is a platform for new home listings with homebuilder story was produced by NewHomeSource and reviewed and distributed by Stacker. © Stacker Media, LLC.
Business Journals
5 days ago
- Business
- Business Journals
How tariffs and taxes impact the construction industry (podcast)
In this podcast, Conor Flanagan, a tax partner at Citrin Cooperman, discusses the effects of taxes and tariffs on the construction industry, including increased costs that could be passed on to consumers. In the conversation, Flanagan explores the issues in-depth, discussing strategies contractors are using to mitigate these impacts and examining the effects of interest rates on project feasibility, where higher rates could delay or cancel projects. Flanagan also touches on the potential impacts of upcoming tax legislation, particularly the expiration of provisions in the Tax Cuts and Jobs Act (TCJA) and the implications for contractors, including pass-through entity deductions, depreciation changes and state tax deductions. Tune in to this podcast to hear: 00:30 An in-depth explanation of how tariffs affect the construction industry 02:14 Strategies to mitigate the impact of tariffs 03:12 A look at how interest rates affect the industry 05:37 How to prepare for future tax legislation 08:25 What contractors need to know about TCJA expirations Conor Flanagan is a tax partner at Citrin Cooperman with over 13 years of experience. He provides audit and tax services experience to his clients, mainly in the construction industry. He advises general contractors and sub-contractors with a focus on pass-through entities. 'Citrin Cooperman' is the brand name under which Citrin Cooperman Advisors LLC and Citrin Cooperman & Compan LLP, independently owned entities, provide professional services in an alternative practice structure in accordance with applicable professional standards.
Forbes
6 days ago
- Business
- Forbes
What Will The Tax Provisions Of The Big Budget Bill Really Do?
WASHINGTON, DC - JULY 04: President Donald Trump, joined by Republican lawmakers, signs the One, Big ... More Beautiful Bill Act into law. (Photo by) Now that the ink has dried on the big budget reconciliation bill passed by Congress on July 3, it is a good opportunity to look at what its tax provisions really mean for households and the economy. Step back from the details and, at 30,000 feet, the bill has four overriding characteristics. It is regressive, expensive, complicated, and it treats people who make roughly the same amount of money in very different ways. The bill's main focus is extending the individual provisions of the 2017 Tax Cut and Jobs Act (TCJA), which would have expired at the end of this year. But it also creates a new tax deduction for older adults; continues, restores, and makes permanent some corporate tax benefits; and adopts scaled-back versions of some of President Trump's campaign promises, such as tax-free tips and overtime. The biggest tax cuts come from the bill's extension of the TCJA's individual income tax rate reductions and higher standard deduction. The bill also temporarily raises the cap on the state and local (SALT) deduction to $40,000 for some households, and extends the 20 percent special deduction for pass-through businesses such as partnerships and sole proprietorships. The bill allows some owners of those firms to avoid the SALT deduction cap entirely by continuing to take advantage of state-enacted loopholes. The Measure Is Regressive It distributes most of its benefits to high-income Tax Policy Center finds the bill's revenue provisions would cut 2026 taxes on average by about $2,900. The biggest beneficiaries would be households making between $460,000 and $1.1 million (the 95th-99th income percentile), who would get an average tax cut of $21,000, raising their after-tax incomes by 4.4 percent. By contrast, middle-income households, who make between $67,000 and $119,000, can expect a 2026 tax cut averaging about $1,800, raising their after-tax incomes by 2.3 percent. The lowest-income households, who make less than about $35,000, will get a tax cut averaging $150, or less than 1 percent of their after-tax income. Bottom line: On average, all income groups benefit from the tax cuts. But high-income households benefit the most. Keep in mind, those estimates reflect only the bill's revenue provisions. Low-income households end up worse off after taking into account the bill's spending cuts, especially for Medicaid, SNAP (food stamps), and Affordable Care Act health insurance subsidies. The Bill Is Expensive. The congressional Joint Committee on Taxation estimates the final budget bill would slash federal revenues by more than $4.5 trillion over the next decade. Many costly provisions are set to expire within the 10-year budget window. But because future Congresses are likely to extend those provisions, as they just did for the TCJA, the true cost is likely to be much higher, according to the Committee for a Responsible Federal Budget (CRFB). To lower the net cost of the budget bill, lawmakers cut Medicaid and the Affordable Care Act subsidies and repealed many green energy tax breaks that were included in the 2022 Inflation Reduction Act. Including those spending reductions and tax hikes, the overall budget bill will increase the federal debt by $3.3 trillion over the next decade, the Congressional Budget Office projects. Additional interest adds another additional $700 billion, the CRFB estimates. The Bill Is Complex. The complications result from its many phase-ins and phase-outs, the income tests it imposes on various tax breaks, and the inherent intricacy of some provisions. For example, while Trump proposed 'no tax on tips,' Congress approved no tax on some tips. But the tax break is limited by the taxpayer's annual tip income, a household's total income, and even the kind of business the tip earner worked for, all of which will have to be reported on a tax return. Similarly, workers who earn overtime pay may get a tax break, but only on their first $12,500 in OT ($25,000 for joint filers) and if they earn less than $150,000 (or $300,000 for couples who file jointly). And they likely will face a raft of other anti-abuse rules that have yet to be written. Violating The Principle Of Horizontal Equity The idea is that equal incomes should be taxed the same way. There is no good economic reason why someone who makes a living through tips should get a tax break while someone who makes the same income through a salary does not. Or why certain business owners should get a special tax deduction and the ability to avoid any limits on their SALT deduction while all workers and other business owners get neither benefit. Congress extended some of what worked in TCJA—a higher standard deduction, limits on itemized deductions, an expanded child tax credit, and protection from the Alternative Minimum Tax (AMT). But it missed an opportunity to improve on other provisions. Instead, it made the tax code worse. At least, if history repeats itself, it will have an opportunity to revisit the tax code again soon.
