New Tax Bill and How it Might Impact You

Unless you've been completely off the grid, you're likely aware that new tax laws have recently taken effect following last week's congressional vote and the president's approval of the new federal budget. They have made many of the 2017 tax cuts permanent while also bringing about some changes.

If we have already met on tax planning, don’t worry, we will revisit your tax planner for 2025 and make sure to communicate with you this year on how the changes impacted you, if at all. We will also let you know if we recommend any action based upon the changes.

As a result of the new tax law, you may have received an email from the Social Security Administration on the 4th of July applauding the passing of the legislation, if you had a login with SSA.GOV. The email stated that “the new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries, providing relief to individuals and couples.” This new provision is called the Enhanced Senior Deduction. All of our retiree clients receive some form of Social Security benefit, so we want to be clear that the law does not eliminate taxes on your Social Security benefits. In fact, it does not eliminate Social Security taxability for any taxpayers.

The Enhanced Senior Deduction provides new tax deductions for taxpayers aged 65 and older of $6,000 for single filers and $12,000 for married filing jointly filers. This deduction is subject to income restrictions of up to $75,000 for single filers and $150,000 for married filing jointly filers. The deduction completely phases out at $175,000 for individuals and $250,000 for couples. Clients who do not even receive Social Security benefits, but are age 65 and older, may also receive the deduction, such as clients who receive STRS or other public pension benefits.

There are other tax changes within the new bill that may benefit clients as well, and our tax planning software reflected these changes within minutes of the bill’s signing:

• Increased standard deduction by $750 for single and $1,500 for married filing jointly

• State and local tax deduction, part of itemized deductions, previously limited to $10,000, now increased to a $40,000 limit, until it reverts back to $10,000 in 2030

• Child tax credit increases from $2,000 to $2,200 per child

• Deduct up to $10,000 of annual interest on (qualifying*) new car loans from 2025 to 2028

  • Does not require itemizing deductions

  • The car must be new and assembled in the United States, and subject to income limitations

• Charitable deduction for non-itemizers of $1,000 for single, $2,000 for married filing jointly, taking effect in 2026

• End of the Electric Vehicle Credit as of September 30, 2025

• “Trump Accounts” for child savings – a one-time $1,000 deposit to an investment account per child born between 2025 through 2028 that the child can access when they turn 18

• Some deductions for tips and overtime pay

Of course, there is much more we could share, but this provides the highlights that we felt are most relevant to our clients at this time. As always, please do not hesitate to reach out with questions. We are happy to help.