1
00:00:00,080 --> 00:00:02,991
Speaker 1: Hi, I'm Stacey Hyde
and I'm back for another episode

2
00:00:02,991 --> 00:00:07,184
of Better Financial Health in
15 minutes or less, and today

3
00:00:07,264 --> 00:00:10,271
I'd like to talk about the One
Big Beautiful Bill Act.

4
00:00:10,271 --> 00:00:14,627
Unless you've been under a rock
, you know that it passed, and

5
00:00:15,467 --> 00:00:18,353
what's been a little bit
surprising to me is some of the

6
00:00:18,460 --> 00:00:24,091
misconceptions around the bill,
because it did do a lot, but

7
00:00:24,131 --> 00:00:25,974
then there's some things that it
didn't do.

8
00:00:25,974 --> 00:00:28,806
You know tax-free Social
Security.

9
00:00:28,806 --> 00:00:30,951
That's not exactly what the
bill did.

10
00:00:30,951 --> 00:00:35,610
What it did was to provide an
extra standard.

11
00:00:35,610 --> 00:00:41,003
It's actually an extra
deduction for anyone 65 years

12
00:00:41,064 --> 00:00:43,231
and older of $6,000.

13
00:00:43,231 --> 00:00:48,232
So for a married couple, that's
an extra deduction of $12,000,

14
00:00:48,420 --> 00:00:51,512
whether you itemize or whether
you take the standard deduction,

15
00:00:51,512 --> 00:00:57,847
and that's huge, although it
does phase out if your income as

16
00:00:57,847 --> 00:01:00,451
a couple is over $150,000.

17
00:01:00,451 --> 00:01:05,706
And it completely phases out by
the time your income hits $250.

18
00:01:05,706 --> 00:01:13,540
So you really have a window
there that you're looking at and

19
00:01:13,540 --> 00:01:16,186
you don't even have to be
taking Social Security to get

20
00:01:16,206 --> 00:01:17,090
this.

21
00:01:17,090 --> 00:01:19,135
So if you're still working or
you've decided you're going to

22
00:01:19,174 --> 00:01:23,325
delay your Social Security to
$67, you still get this extra

23
00:01:23,364 --> 00:01:26,129
standard deduction, which is
pretty cool.

24
00:01:26,129 --> 00:01:27,534
That's a big one.

25
00:01:27,534 --> 00:01:33,834
The other is you can exclude
income from tips from your

26
00:01:33,935 --> 00:01:37,302
income, if your income is below
certain levels, and those levels

27
00:01:37,302 --> 00:01:38,242
are quite high.

28
00:01:38,242 --> 00:01:45,612
So if you're a server or if you
are a cosmetologist or do

29
00:01:45,673 --> 00:01:49,442
something like that and you have
tip income, your taxes are

30
00:01:49,504 --> 00:01:51,027
likely going to be a lot lower.

31
00:01:51,027 --> 00:01:57,164
One key thing to remember is
that if you are a server and

32
00:01:57,343 --> 00:02:00,754
your employer for large parties
puts a mandatory tip on there,

33
00:02:01,236 --> 00:02:04,346
that doesn't really count as a
tip, because that wasn't

34
00:02:04,445 --> 00:02:06,632
somebody choosing to add that.

35
00:02:06,632 --> 00:02:11,129
So I think you're going to see
a lot less of those get.

36
00:02:11,129 --> 00:02:14,585
On the larger checks, there can
be a lot of discretion because,

37
00:02:14,585 --> 00:02:19,521
yes, you run the risk of not
being tipped properly, but if

38
00:02:19,622 --> 00:02:25,050
you don't, then it won't be
tax-free like it would be

39
00:02:25,251 --> 00:02:25,771
otherwise.

40
00:02:25,771 --> 00:02:28,155
So that's a key point there.

41
00:02:29,561 --> 00:02:34,534
One other one that comes up is
the increase on what are known

42
00:02:34,594 --> 00:02:37,461
as SALT taxes state and local
government taxes.

43
00:02:37,461 --> 00:02:40,846
So property taxes, state income
taxes.

44
00:02:40,846 --> 00:02:44,349
That was capped at $10,000.

45
00:02:44,349 --> 00:02:48,740
It's now up to 40, unless you
are a high income taxpayer, and

46
00:02:48,760 --> 00:02:49,824
then it's still at 10.

47
00:02:49,824 --> 00:02:54,903
The key thing here is the
marriage penalty is still alive

48
00:02:54,963 --> 00:02:55,346
and well.

49
00:02:55,346 --> 00:03:00,741
A single person can take up to
40, but a married couple is also

50
00:03:00,741 --> 00:03:01,844
limited to 40.

51
00:03:01,844 --> 00:03:05,125
So that's a big planning
consideration there.

52
00:03:05,125 --> 00:03:09,645
So more people will be able to
deduct their state and local

53
00:03:09,686 --> 00:03:14,284
taxes, particularly if you pay
property taxes and also live in

54
00:03:14,324 --> 00:03:17,481
an income tax state, that's
something to consider.

55
00:03:17,481 --> 00:03:22,225
That is an itemized deduction,
but if you live in a state where

56
00:03:22,225 --> 00:03:24,687
you are paying a lot in taxes,
this will really really if you

57
00:03:24,602 --> 00:03:25,127
live in a state where you are
paying a lot in taxes, this will

58
00:03:25,127 --> 00:03:25,824
really really help you.

59
00:03:25,824 --> 00:03:28,610
I know I've run some
projections for some of our

60
00:03:28,650 --> 00:03:32,739
clients, particularly our single
clients, and it's made a huge

61
00:03:32,818 --> 00:03:36,485
difference in their tax burden
projected for 2025.

62
00:03:37,307 --> 00:03:41,759
The other thing that's a little
bit strange is that up to

63
00:03:41,819 --> 00:03:49,008
$10,000 of car loan interest is
deductible and to have that

64
00:03:49,109 --> 00:03:52,117
level of car loan interest,
that's a lot.

65
00:03:52,117 --> 00:03:56,306
So a lot more people will be
able to get some help if they're

66
00:03:56,306 --> 00:03:58,337
needing to buy a new car.

67
00:03:58,337 --> 00:04:02,908
But like most things you know
mortgage interest and things

68
00:04:02,968 --> 00:04:07,138
like that you still you're
paying interest and a deduction

69
00:04:07,959 --> 00:04:13,968
only offsets whatever percentage
of that interest that coincides

70
00:04:13,968 --> 00:04:15,217
with your tax rate.

71
00:04:15,217 --> 00:04:19,867
So if you're in the 22% tax
bracket, being able to deduct

72
00:04:19,906 --> 00:04:23,502
that interest is only going to
save you 22 cents on the dollar

73
00:04:23,783 --> 00:04:24,526
of that interest.

74
00:04:24,526 --> 00:04:27,576
So don't think, hey, it's
deductible, I'm going to go out

75
00:04:27,596 --> 00:04:30,341
and buy a car, although I'm sure
the car salesman would love to

76
00:04:30,401 --> 00:04:31,024
tell you that.

77
00:04:31,024 --> 00:04:33,182
So those are kind of the key
things.

78
00:04:33,182 --> 00:04:37,507
The child tax credit has also
gone up a little bit.

79
00:04:37,507 --> 00:04:41,500
We're going to see more
inflation indexing of this.

80
00:04:42,442 --> 00:04:46,507
And also, starting next year, if
you give to charity but don't

81
00:04:46,689 --> 00:04:53,615
itemize, you're going to.

82
00:04:53,615 --> 00:04:55,603
If you think back during COVID,
people were able to deduct $300

83
00:04:55,603 --> 00:04:57,290
or $600 from their tax return
for charitable giving, even if

84
00:04:57,310 --> 00:04:57,752
they didn't itemize.

85
00:04:57,752 --> 00:04:59,798
Well, they brought back a
version of that.

86
00:04:59,798 --> 00:05:05,327
Starting next year it's $1,000
or $2,000, even if you don't

87
00:05:05,447 --> 00:05:07,096
itemize to charity, which will
be great.

88
00:05:07,096 --> 00:05:12,187
The downside is is if you're
very charitably inclined and you

89
00:05:12,187 --> 00:05:16,379
give a lot of money away,
starting next year, if you

90
00:05:16,678 --> 00:05:20,442
itemize the first half percent
of your AGI.

91
00:05:20,442 --> 00:05:27,290
So if you made $100,000, the
first $500 that you give away is

92
00:05:27,290 --> 00:05:31,862
not going to be deductible,
even if you itemize Now above

93
00:05:31,942 --> 00:05:36,137
that amount, you can deduct it,
but you're going to lose that

94
00:05:36,257 --> 00:05:39,483
first half percent, which I
think that was a revenue

95
00:05:39,562 --> 00:05:40,925
generator for that.

96
00:05:40,925 --> 00:05:42,918
That is not true of this year.

97
00:05:42,918 --> 00:05:47,557
So if you are a big charitable
giver, you may want to go ahead

98
00:05:47,619 --> 00:05:51,548
and accelerate some charitable
deductions into this year.

99
00:05:53,235 --> 00:06:01,029
The key thing to remember is
most of these um options do have

100
00:06:01,029 --> 00:06:02,651
income caps on them.

101
00:06:02,651 --> 00:06:06,920
So you want to really look at
it and they're based on your

102
00:06:07,084 --> 00:06:09,874
adjusted gross income, not your
taxable income.

103
00:06:09,874 --> 00:06:14,166
Your adjusted gross income is
all of your income that comes in

104
00:06:14,166 --> 00:06:14,166
.

105
00:06:14,166 --> 00:06:16,915
So if you're on Social Security
, it's the taxable portion of

106
00:06:16,954 --> 00:06:20,726
your Social Security, it's your
IRA distributions, it's your

107
00:06:20,747 --> 00:06:26,333
pension, it's your salary
Whatever it shows on your W-2 is

108
00:06:26,333 --> 00:06:27,353
your taxable income.

109
00:06:27,353 --> 00:06:33,060
So you want to pay real close
attention to that because it

110
00:06:33,139 --> 00:06:34,500
could have an impact.

111
00:06:34,500 --> 00:06:43,249
That might be a reason if
you're and some of these are

112
00:06:43,269 --> 00:06:45,353
absolute like if you're over a
certain amount, your state and

113
00:06:45,394 --> 00:06:47,406
local taxes are capped at 10,
not 40.

114
00:06:47,406 --> 00:06:53,302
So it's real important that you
fall where you expect to fall

115
00:06:53,403 --> 00:06:55,045
if you are a higher income
taxpayer.

116
00:06:55,065 --> 00:06:55,987
Same thing with tips.

117
00:06:55,987 --> 00:06:59,951
The tax-free portion of tips is
$25,000.

118
00:06:59,951 --> 00:07:05,858
There's also some starting next
year's tax-free portion of

119
00:07:06,060 --> 00:07:08,607
overtime, which is also going to
help out a lot of people.

120
00:07:08,607 --> 00:07:16,459
But the tax-free overtime is
just it's not the base pay that

121
00:07:16,500 --> 00:07:22,555
you get paid for those extra
hours, it's that 50% or 100%

122
00:07:22,615 --> 00:07:26,790
that you get paid for the extra
hours and there's some income

123
00:07:26,829 --> 00:07:28,074
caps on those as well.

124
00:07:28,074 --> 00:07:32,923
But the crazy thing to remember
is all these income caps are

125
00:07:33,023 --> 00:07:33,384
different.

126
00:07:33,384 --> 00:07:36,615
It would be so easy if
everything was the same.

127
00:07:36,675 --> 00:07:41,274
That said, if you make less than
$100,000 as a single and

128
00:07:41,314 --> 00:07:43,499
$200,000 is a couple, these are
the rules.

129
00:07:43,499 --> 00:07:48,211
No, the rules are different for
every single item in these,

130
00:07:48,350 --> 00:07:51,019
which is why I'm not going
through and saying them.

131
00:07:51,019 --> 00:07:58,653
We will include a link on our
website to a good summary of

132
00:07:58,713 --> 00:08:02,225
these so that if you want to
look at them, you can and get

133
00:08:02,286 --> 00:08:05,567
the see if different ones apply
to you and if you need to pay

134
00:08:05,608 --> 00:08:06,069
attention.

135
00:08:06,069 --> 00:08:11,826
But just remember, most all of
these are tied to adjusted gross

136
00:08:11,826 --> 00:08:15,536
income, so that's your income
before you take any deductions

137
00:08:15,637 --> 00:08:20,170
away, and so that's the number
that you want to look at and

138
00:08:20,209 --> 00:08:21,333
potentially manage.

139
00:08:21,333 --> 00:08:27,750
If you can make more pre-tax
401k contributions or if you're

140
00:08:28,271 --> 00:08:31,983
older and can contribute to
charity through your IRA as a

141
00:08:32,023 --> 00:08:34,528
qualified charitable
distribution, those kind of

142
00:08:34,568 --> 00:08:37,514
things actually hold down your
adjusted gross income.

143
00:08:38,777 --> 00:08:43,837
A lot of things can pull down
your taxable income, but that's

144
00:08:43,918 --> 00:08:48,692
not going to help you qualify
for some of these, for example,

145
00:08:48,753 --> 00:08:50,076
the extra senior deduction.

146
00:08:50,076 --> 00:08:56,148
So be mindful of that and I do
think for most people they will

147
00:08:56,187 --> 00:08:59,912
pay less in taxes next April and
in the next three years next

148
00:09:00,111 --> 00:09:04,235
April and in the next three
years, but beyond that we will

149
00:09:04,296 --> 00:09:05,216
see what happens.

150
00:09:05,216 --> 00:09:10,721
And because they did say that
the tax rates were permanent.

151
00:09:10,721 --> 00:09:18,129
But the thing you have to
remember about our tax system is

152
00:09:18,129 --> 00:09:19,572
many things are permanent.

153
00:09:19,572 --> 00:09:21,456
It means it's permanent for the
next, probably through the end

154
00:09:21,495 --> 00:09:25,041
of this administration, because
then there'll be a new Congress,

155
00:09:25,041 --> 00:09:29,014
there'll be a new president and
they will have different goals

156
00:09:29,075 --> 00:09:29,756
and priorities.

157
00:09:29,756 --> 00:09:33,154
So I think the only thing we
can plan on is change.

158
00:09:33,154 --> 00:09:36,552
But that doesn't mean that you
shouldn't spend a little bit of

159
00:09:36,591 --> 00:09:40,408
time seeing whether any of these
apply to you and if you can

160
00:09:40,447 --> 00:09:43,230
save a little money by being
proactive.

161
00:09:43,230 --> 00:09:44,533
Thanks for tuning in.

162
00:09:44,533 --> 00:09:47,878
This has been another episode
of Better Financial Health in 15

163
00:09:47,878 --> 00:09:48,619
Minutes or Less.