Financial Opportunities Uncovered: A Keeler & Nadler Family Wealth Podcast

The Hidden Gems of the 2025 Tax Bill You Need to Know About

• Andy Keeler

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Tax legislation can be overwhelming, especially when it spans 870 pages of dense policy changes. Our latest deep dive untangles the recently passed "Big Beautiful Bill" (BBB) to spotlight the provisions most likely to impact your financial future.

The BBB primarily extends many provisions from the 2017 Tax Cuts and Jobs Act that were scheduled to sunset at the end of 2025. Most notably, the current tax rates have been made permanent, eliminating a significant source of uncertainty for long-term financial planning. But beyond these extensions, several transformative changes and new provisions deserve your attention.

Perhaps most impactful for residents of high-tax states is the quadrupling of the SALT (State and Local Tax) deduction cap from $10,000 to $40,000. This change alone could save qualifying taxpayers thousands in federal taxes and is retroactive to 2025, creating immediate planning opportunities. For families, the Child Tax Credit increases to $2,200 per child, while Americans 65 and older could see some benefits as well.

Some of the most innovative provisions target specific income types: tipped employees can exclude up to $25,000 of their tips from taxation, while all workers can exclude up to $12,500 of overtime wages. Car buyers financing American-assembled vehicles can deduct up to $10,000 in annual loan interest. Looking further ahead, the "Trump accounts" program will provide government-funded investment accounts for children born between 2025-2028.

Whether you're planning your 2025 tax strategy or looking at long-term estate planning with the new $15 million per person exemption, understanding these changes is crucial. Connect with us to explore how these provisions might create new financial opportunities for you and your family.

The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations.

It is only intended to provide education about finance, tax, retirement and related planning topics. To determine which investments or strategies may be appropriate for you, consult your financial, tax or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results.

Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Keeler & Nadler Family Wealth is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Keeler & Nadler Family Wealth and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Keeler & Nadler Family Wealth unless a client service agreement is in place.


Andy Keeler:

Today on the Financial Opportunities Uncovered podcast, we sort through the two reams of eight and a half by 11 paper that makes up the big beautiful bill. Joining me to highlight a few of the items that will likely affect a lot of our clients are Abby Rose and Mike Klubnick. Abby is a CPA and the director of tax here at Keeler Nadler. She's also a financial advisor, and Mike is an associate advisor here, who happens to have a penchant for what some of us call pain. Well, mike calls it detail. Welcome, abby and Mike. Hello, hi, thanks for having us. So you know, until 2021, the Better Business Bureau pretty much had a monopoly on the BBB acronym, until the folks in Washington started getting cute. First it was the Build Back Better bill in 2021, which never passed, and now the Big Beautiful bill. So if I use the term BBB, take it to mean the bill passed in July 2025. This thing really just extends many of the provisions of the Tax Cuts and Jobs Act in 2017. Right, abby.

Abby Rose:

That's correct. So a lot of it is just making what was temporary from the Tax Cuts and Jobs Act more permanent. So there's obviously a lot more to it and they did add some things to it and made changes, but for the most part a lot of it is just being made permanent rather than sunsetting this year, which it was supposed to.

Andy Keeler:

I was going to ask you about that. It seemed like we were coming up on a deadline. They said the bill would sunset at the end of 2025. So in 2026, had this bill not passed or nothing changed otherwise, we would have gone back to pre-2017, more or less deductions and all that kind of stuff.

Abby Rose:

Yeah, tax rates would have gone back, deductions would have gone back, exactly Gotcha.

Andy Keeler:

So kind of take me through some of the permanent extensions that passed here recently.

Abby Rose:

Sure. So some of the big ones that again, these are just extending out to make permanent what they did in 2017. The tax rates stay the same, so we're still seeing those lower tax rates than we're used to. Those are made permanent. They're also keeping the increased standard deduction. So for single 15,750. Head of household 23,625. Married, filing jointly is 31,500. Those are 2025 numbers. One of the biggest ones that they made permanent but also made a tweak to, was what we call the SALT cap, so that is state and local income taxes and it's your itemized deductions, also known as your Schedule A deductions, as we call it around here. So that SALT cap really affected a lot of people back when they passed the Tax Cuts and Jobs Act.

Andy Keeler:

Which was how much.

Abby Rose:

So they capped it at $10,000.

Andy Keeler:

Okay.

Abby Rose:

So back in 2017, before, it was unlimited how much you could deduct for real estate taxes and state and local income taxes, and then, with the passing of the 2017 Tax Cuts and Jobs Act, they capped that at $10,000. So some folks, especially local to us, pay more than $10,000 in real estate taxes alone. So they received it was a pain point for them because they weren't getting the most out of their itemized deductions by having that cap. So one of the changes that they made this year is increasing that SALT cap to $40,000.

Abby Rose:

So that's a large increase and something that we see beneficial obviously in our industry and there's a lot of tax planning that we can do behind that but gives a lot more tax back to the taxpayers, I think.

Andy Keeler:

But it's still a cap.

Abby Rose:

It is still a cap. I mean, obviously, real estate taxes and state and local income taxes above 40,000, it's still a big number, but some folks could still see it as an issue. So the other good thing about the SALT cap is they actually, unlike some of the other changes that they're making with the bill, they made it retroactive to 2025. So it's one of the few things that they made changes to that we can actually plan for this year versus going into effect next year. So we have got about six months to plan for some of these changes and that is one of them. So that's something that we can plan for with 2025 taxes. There also is still an income phase out and it's about $500,000 of modified adjusted gross income. So that's something that was also included. So that's essentially what they're saying is, it'll never go below $10,000 of a cap, but you could see less than a $40,000 cap. You could have a $30,000 cap if your income is high enough.

Andy Keeler:

I see.

Abby Rose:

So there is an income phase-out to that SALT cap.

Andy Keeler:

And they also extended the Child and Dependent Care Tax Credit. So how much is that?

Abby Rose:

As for the Child Tax Credit, starting this year in 2025, it's retroactive back. We are going from a $2,000 credit to a $2,200 credit per child. Okay, but the amount of the credit that is refundable remains the same.

Andy Keeler:

What does refundable mean?

Abby Rose:

So it essentially says if you have $2,000 or $2,200 of tax liability, you can take the full credit. If you have $1,000 of tax liability, they're making only $1,400 of that refundable to you.

Andy Keeler:

So if you had $1,000 in tax liability, you get to take $1,400 instead of $1,000?.

Abby Rose:

Correct.

Andy Keeler:

Okay, that's a nice little bonus.

Abby Rose:

Correct. So there's kind of two different layers to it. There's the total credit, which is again for 2025, is $2,200 per child. But they're saying of that $2,200, only a portion of it is refundable to you. You can't exceed more than that for your tax liability.

Andy Keeler:

So more or less what you're saying is everybody that has a child is going to get $1,400.

Abby Rose:

Correct Even if you had no income, if you had no taxable income, no tax liability, it's $1,400 refundable per child.

Andy Keeler:

Okay, one thing that I like to help listeners understand is credits are a way that you can kind of understand the policy or goal that the government is trying to achieve, and essentially, a child tax credit is encouraging people to have kids. Sure, why would the government do that? Because they want a strong labor force.

Andy Keeler:

The government do that Because they want a strong labor force A strong labor force leads to strong economies and for us to be competitive on the global scale. So just a quick aside on that. How about the dependent care tax credit?

Abby Rose:

So that one's a little that one also has multi-layers. As it stands now, you currently can deduct 20% to 35% of qualifying expenses. There's also a dollar cap on that. So if you have one child it's $3,000 of eligible expenses. If you've got two or more children it's $6,000. So as it stands now, if you have two children you get a $1,200 credit for dependent total, for a dependent care credit. So there's the multi-layer. Like I mentioned, there's a cap on the amount of qualifying expenses. So even if you paid $100,000 to daycare, they're only allowing 6,000 for two or more kids to be qualifying expenses. So that's the first layer. The second layer is that you can deduct 20% to 35% is the current range. So that's how I get to on the low end. It's twelve hundred dollars of maximum.

Abby Rose:

OK so they are changing it for going forward with the big beautiful bill where you could deduct up to 50 percent if your income is low enough. So they're actually encouraging additional credits for lower income families with this the threshold the income threshold is actually fairly low, but they are increasing that range to 50% maximum again of those capped qualifying expenses the $3,000 and $6,000 that I mentioned. That remains unchanged.

Andy Keeler:

Okay, so they went ahead and extended or made permanent the QBI deduction, which that's basically the qualified business income deduction that what we call pass-through entities like S-Corps and that kind of small businesses generally would use that deduction. How about the alternative minimum tax? What happened there?

Abby Rose:

So similar to the QBI deduction. They just made that permanent. So alternative minimum tax AMT has been around for a long time. But back in 2017, when they did the Tax Cuts and Jobs Act, essentially nobody fell into AMT because they were making the income limits so high. So from the Big Beautiful Bill perspective, they just extended that. So the same amount of people that we would expect the last couple years to qualify for AMT would fall into AMT, but it's a very small percentage of individuals.

Andy Keeler:

Okay, how about mortgage interest deduction?

Abby Rose:

So the mortgage interest deduction is actually an itemized deduction. So I know we talked about those salt limits so that plays a role in the itemized deductions. Back in 2017, they capped the first $750,000 of mortgage to be eligible for this deduction, so they've just made that permanent. They've kept that cap on the mortgage interest.

Andy Keeler:

Okay, and then they made permanent the exclusion of miscellaneous itemized deductions on Schedule A. You mentioned Schedule A before. That's basically where you show all your itemized deductions. So what are some examples of some of the miscellaneous itemized deductions?

Abby Rose:

Sure. So yeah, those were, you know kind of other catch-all deductions, as we called them. They were things like moving expenses, tax preparation fees, investment advisor fees, home office expenses the only exception to that is that educator expenses. That remains deductible, so that's the only one that actually stuck back around. So those again, it's just extending what they did in 2017. That was one thing on the docket that they had maybe talked about bringing back, but it was nixed again.

Andy Keeler:

All right. Well, thanks Abby for monopolizing the conversation so far. Mike's feeling a little left out here, so we're going to give him an opportunity to tell us about this new senior deduction of $6,000 per person. So what gives there?

Mike Klubnick:

Thanks, andy. One of the new additions to the tax code as part of the big beautiful bill, as you said, is this new senior deduction. What that is is, for individuals who are 65 years and older, they're going to get an additional $6,000 personal exemption. So what that means is they're going to be able to deduct an additional $6,000 from their adjusted gross income, reducing their taxable income by that amount. For married couples, that'll be a $12,000 deduction total. So if you're making as a single filer, $75,000, if you're filing jointly $150,000, that deduction is going to start to phase out, and it's also only a temporary deduction at this time. So that'll be in place as of right now for tax year starting in 2025 through 2028.

Abby Rose:

Gotcha, and I guess they're classifying a senior as 65 or older, so for whatever that's worth.

Andy Keeler:

I'm not there yet, even though I have received AARP cards in the mail. We won't get into that. So it should be said that this $6,000 per person senior deduction we mentioned that it's available to those that are 65 or older. Some reports have indicated that Social Security recipients will be paying less in taxes. The reality is that because this $6,000 per person senior deduction is available to anyone 65 or older, there could be a scenario where someone isn't even getting Social Security. They're not eligible for Social Security. They've decided to delay taking Social Security, maybe until age 70. They get this deduction anyway. So this really isn't a reduction in Social Security tax, as much as it's a senior deduction. So the estate tax exemption amount for years after 2017, we talked about sort of doomsday coming in 2025 and the exemption amounts going back to the pre 2017 lower numbers, which I think were like 5.5 million, 6 million a piece, which is still $12 million per couple. Where do we stand with respect to the estate tax exemption under the new bill?

Mike Klubnick:

In 2025,. The current estate tax exemption amount is $13.9 million per individual.

Andy Keeler:

In 2026,.

Mike Klubnick:

That's going to jump up to $15 million per individual.

Abby Rose:

Thanks for keeping it round. Numbers for us, yeah no doubt, no doubt.

Andy Keeler:

So you double that. That's basically saying that a married couple could leave $30 million without paying any estate tax.

Mike Klubnick:

Yeah, and that's actually a really good point, andy. One of the things that exists today in the tax law that didn't change was that married couples are allowed to use what's called portability and transfer their estate tax exemption to their spouse when the first spouse predeceases them. So, as you said, in 2026, if one spouse dies, they can essentially transfer that $15 million estate tax credit to the surviving spouse and have a total of $30 million of assets that would be exempt from estate taxes.

Andy Keeler:

Yeah, and it's sort of a given. Nowadays we sort of take it for granted that that's how it worked. But years, years ago, prior to 2017, you had to have what some people called a credit shelter trust or an a b trust to really take advantage of that, and they essentially said they I don't think the attorneys were real happy about it, but in 2017 they basically said this is the amount you both get it. You don't have to have a fancy estate plan to take advantage of it. So we're also hearing a lot of radio chatter about tip income and how that's taxed. So where did we shake out on that?

Mike Klubnick:

So the Big Beautiful Bill includes some provisions that provide some tax relief for tipped employees. They'll get a deduction of up to $25,000 on their tax return of TIP income. So what that means is the first $25,000 of TIP income that they receive is essentially going to be reduced and taken off of their AGI and not flow through to their taxable income. There are income limits for that. It's $150,000 of AGI for a single filer, $300,000 for married filing jointly, and similarly to tips. You heard a lot about overtime wages as part of the Big Beautiful Bill and removing taxes on that. There is also a provision that reduces the taxation or eliminates taxation on $12,500 of overtime wages with the same income thresholds as for tips.

Abby Rose:

So a couple of nice tax relief options for yeah, and both of those are just something to note. Those are not permanent, so those only apply for years 2025 through 2028. So I know we're kind of bouncing around through permanent versus temporary. And then the tip income. What I thought was kind of interesting, a little fun provision for them to throw in If you're married filing separate, you can't deduct it. So, for whatever reason they said, if you file separately from your spouse you cannot deduct the tip income.

Andy Keeler:

So take me through this tip thing, the $25,000. Essentially, you're saying the first $25,000, if you're under a certain income threshold. I think you said it was a 150? 150 150.

Mike Klubnick:

Yes.

Andy Keeler:

So you're single, you're working at the bar and your total income is, say, 110. They take 25,000. Let's say it's all tips. They take 25,000 off of that. Is that accurate? So they're lowering your taxable income by that amount. But now let's say instead that your income is 160. Are they phasing that 25 then out, starting at 150? So there's a phase out, that's correct. Starting at 150.

Andy Keeler:

So there's a phase out. That's correct, okay, so even at like, let's say 160, you may still get a break on some of your tip income, but if you're over, let's say, 300,000, if you were single over 300,000, wow, that's a pretty good job in the bar time.

Mike Klubnick:

Pretty good tip income.

Abby Rose:

I'm in the wrong business.

Andy Keeler:

Then you would get no benefit or, no, they wouldn't wipe out any of the tip income. Does that make sense?

Abby Rose:

That's correct. And one thing that I think is interesting on the tips is mainly because I've seen the feedback online about it is people think there's going to be a change in their paycheck because of this. And one thing that I've explained to people is it's a deduction on your tax return, so you actually you know when you get paid you're not actually going to see the benefit of this. You're still going to pay your taxes like every other person. It's a deduction on your tax return during filing. So I think that's something important to note, because I think when people heard, oh my gosh, there's no tax on tips, people were like my sweet, my paycheck is going to go up and it's actually not going to.

Andy Keeler:

All right, I want to pivot to something I've never seen before. It's a car loan interest deduction. Abby, can you tell us a little bit about that?

Abby Rose:

Yes, so there's a couple key points. You know, like we've been going through the other ones. It's another temporary deduction. It's similar to these other deductions that we're talking about where it's outside the itemized Schedule A deductions, what we call above the line deductions. So the deduction amount is up to $10,000 per year for cars assembled in the US and then there is income phase outs. So for single filers it's $100,000. For joint filers it's $200,000. And then you lose all deductibility once you reach $150,000 of income for single and $250,000 of income for joint couples.

Andy Keeler:

Again, this is for cars assembled in the US and the list of cars assembled in the US is pretty broad Tesla, of course, honda is one, but even say, toyota has some models that are assembled in the US. It gets a little seedy when you go to some of the obvious US car. We call them US car makers, like Ford and General Motors, because some of those vehicles it's sort of debatable as to whether they're actually assembled here, debatable as to whether they're actually assembled here. So I think we're going to have to take a little time to sort through which manufacturers qualify and which ones don't. But a $10,000 per year interest deduction.

Abby Rose:

That's an expensive car.

Andy Keeler:

That's a heck of a car.

Abby Rose:

That is one heck of a car, or a heck of an interest rate, I guess yeah.

Andy Keeler:

And that's per year, not for the life of the car or over 60 months. That's a big deal, all right, we also heard a little bit about Trump accounts. What can you tell us about that?

Mike Klubnick:

Well, we're still trying to figure out all of the details with them, but what we have figured out is that they'll first be open for each child born between 2025 and 2028.

Mike Klubnick:

Between 2025 and 2028.

Mike Klubnick:

And those children will get a $1,000 investment from the US government, which can be invested in broad market stock market funds.

Mike Klubnick:

Each parent will be able to invest up to $5,000 per year into the account, and that also includes an additional $2,500, which can come from the parent's employer. The accounts themselves will not be able to be accessed until the child is 18, at which point they will have similar rules to what you would see in an IRA, in the sense that there would be a 10% penalty to withdraw money from the account before age 59 and a half. There is some language that has come out of the bill that I think is still being clarified about what would be considered a qualified expense versus a non-qualified expense, because those qualified expenses after the child turns 18, you'll be able to withdraw funds and pay capital gains taxes on the money in the account, versus a non-qualified expense, which would be subject to ordinary income tax rates. So some of the details on how they're differentiating those are a little bit murky. So far we've heard things around education, maybe a possible mortgage for a young kid, but again, still some details to come on that.

Andy Keeler:

But taxed at ordinary income rates, not capital gain rates.

Mike Klubnick:

It depends, yeah, for what the IRS defines as a qualified expense for use of the funds coming from these shrimp accounts that is expected to be taxed at capital gains rates.

Andy Keeler:

That makes sense.

Mike Klubnick:

And then non-qualified expenses will be ordinary income tax rates.

Andy Keeler:

Yeah, that computes.

Mike Klubnick:

What those qualified and non-qualified expenses are. I think there's still a little bit of murkiness around that.

Andy Keeler:

Okay. So, Abby, you talked a lot earlier about Schedule A deductions. One of those is charitable donations. There's a kind of interesting provision in there about charitable donations for folks that don't itemize.

Abby Rose:

Correct, which feels very COVID-like, because they did also have something similar during COVID where you could do $500 deduction for single, $1,000 for a married couple of charitable donations and still be able to deduct it even if you didn't itemize your deduction. So it feels very much like that. This year it's $1,000 single and $2,000 for married filing joint. So again, those that may not benefit from itemizing their deductions because they don't have enough charitable donations, real estate taxes and mortgage interest, still get at least some sort of a charitable donation deduction on their tax return. Got it?

Andy Keeler:

Abby. Mike thanks for keeping us up to date on sorting through 870 pages to find things that will increase our clients' wealth, and if you're feeling a little murky on some of the outcomes here, feel free to nerd out with us in future episodes or reach out to us directly. As always, we thank our listeners. I'm Andy Keeler, and this is Financial Opportunities Uncovered brought to you by Keeler and Adler Family Wealth. If you have questions on anything you heard in this episode or have an idea for a future episode, connect with us on LinkedIn or shoot me an email at andykeeler at knwealthcom.

Speaker 4:

The opinions expressed in this program are for general information purposes only and are not intended to provide specific advice or recommendations. It is only intended to provide education about finance tax, retirement and related planning topics. To determine which investment strategies are appropriate for you, consult your finance, tax or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always, please remember, investing involves risk and possible loss of principle. Please seek advice from a licensed professional. Keeler and nadler family wealth is a registered investment advisor. Advisory services are only offered to clients or prospective clients where keeler and nadler family wealth and its representatives are property licensed or exempt from licensure. No advice may be rendered by Keillor and Nadler Family Wealth unless a client service agreement is in place. Thank you,