Summertime Bills

Happy Summer to you!  We have been busy with friends and family around the grill, packing floaties to cool down the children, and catching up on my annual dosage of vitamin D.  My farmer’s tan has never been more defined!  I hope you are enjoying the summer in your own way.  

This season has also been a busy one in our office and in our nation’s capital.  We’ve added yet another service to further enhance the financial planning advice we can give.  This one is around your estate plan and helping to organize and understand it better.  You’ve also undoubtedly heard of the recently passed bill.  Well, I’ve got some highlights for you.  Finally, I’d like your opinion on this newsletter to see how I can make it better for you.

Another service is coming!

Do you have an estate plan that is easy to read and understand? 🤔 This is me giving a skeptical look to the kind of person that would ask this question. Is any estate plan easy to read or understand? For as long as I’ve been doing this, the answer has always been, “No, I’m not 100% sure what the documents say.” And that’s part of the problem, isn’t it? We procrastinate for years to create an estate plan, then we agonize over the details of who gets what and possibly how. Finally, when the thing gets notarized and completed, we’re not even really sure what it says because we never went to law school.

This is why we have partnered with Wealth.com to allow us to analyze your estate plan and pull out the essential details, such as:

• Who your successor and backup successor trustees are

• Who the guardian for your children are

• The order of operations for distribution of assets

• Whether there are specific gifts

• Whether there is a spendthrift clause

• Whether the distributions look different if one spouse passes before the other

• Etc…

The analysis helps us to understand how you will end up passing your assets. Below is a page from a sample analysis:

It provides a visual aid where possible to help with understanding the flow of your estate plan.  A full sample report can be found here.

If you’d like to have this kind of analysis done, please make sure we have a copy of all of your estate planning documents.  We will provide the analysis on your next annual review.  The best way to share the documents with me is in the Vault in Right Capital.

The "One Big Beautiful Bill Act" - What You Need to Know

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) became law. This massive 870-page legislation will significantly impact your financial planning, taxes, and benefits. With such a large piece of legislation, it is impractical to provide an exhaustive summary here, so I’m picking out the updates that I think will be the most important for you and the other clients that I serve.  This will be an ongoing process as I continue to dive deeper into the impact of these updates to your financial plan. 

Key Takeaways for Your Financial Plan

Actions Needed:

• Review 2025 tax planning for new senior deduction

• Assess healthcare coverage if under 65

• Consider Medicaid alternatives if applicable

• Budget for potential healthcare cost increases

• Complete clean energy projects now before the deadline

Tax Time Impacts:

• Most will benefit from permanent tax rates and higher exemptions

• SALT cap provides temporary relief through 2029

• Estate planning may need updates for higher exemptions

Looking Ahead:

• Monitor potential Roth IRA RMD changes

• Consider long-term care insurance planning affected by Medicaid

• Review strategies for gifting to 501(c)(3) non-profit organizations

1. The Additional Senior Deduction – ACTION REQUIRED

Starting with your 2025 tax returns, taxpayers aged 65 and older can claim an additional $6,000 deduction ($12,000 for married couples) on top of the standard deduction. This deduction starts to phase out for single filers earning over $75,000 and married couples earning over $150,000. Review your 2025 tax planning with your accountant to ensure you’re getting this deduction if you qualify.

2. Affordable Care Act (ACA) Subsidies Eliminated – ACTION REQUIRED

Enhanced premium tax credits expire December 31, 2025, and new restrictions limit marketplace subsidies. Average premiums could increase by $500+ monthly for those buying individual coverage. If you’re under 65 and buy individual health insurance, budget for significant premium increases and consider employer coverage or Medicare if eligible.

3. Medicaid Cuts and Work Requirements – ACTION REQUIRED

Medicaid faces $1 trillion in cuts over 10 years, with new work requirements for able-bodied adults starting December 2026. Recipients must work, volunteer, or attend school at least 80 hours monthly. If you or family members rely on Medicaid, review alternative coverage options now and consider how you may pay for long-term care if you haven’t already.

4. Repeal of Clean Energy Credits - ACTION REQUIRED

If you’re in the market for an EV, you better act fast.  The $7,500 credit for a new EV and $4,000 for a used EV will go away on September 30, 2025.  The 30% solar credit expires on December 31, 2025.  And the $1,200 energy efficiency improvements (windows, doors, insulation, heating, etc…) go away at the end of the year as well.  If these were on your to-do list, make sure you take quick action on them.

5. Tax Rates Made Permanent – TAX TIME IMPACT

The Tax Cuts and Jobs Act tax rates that were set to expire in 2025 are now permanent, including the 37% top rate and enhanced standard deduction. The $15,750 standard deduction for singles ($31,500 for married couples) continues, along with the current seven-bracket structure. Your tax rates won’t increase in 2026 as previously expected. This provides long-term planning certainty for retirement income strategies.

6. State and Local Tax (SALT) Cap Increase – TAX TIME IMPACT

The state and local tax deduction cap increases to $40,000 for taxpayers (both single and married filing jointly) earning under $500,000, reverting to $10,000 in 2030. This particularly benefits clients in high-tax states like California and New York. Review whether itemizing makes sense with the higher SALT cap. This is temporary through 2029, so tax planning strategies should account for the reversion.

7. Estate Tax Exemption Permanently Increased – TAX TIME IMPACT

Starting January 1, 2026, the estate tax exemption increases to $15 million per person ($30 million for married couples), up from $13.99 million in 2025. Unlike previous temporary increases, this is permanent and indexed for inflation. The 40% tax rate on amounts above the exemption remains unchanged. Most people will no longer need complex estate planning strategies, though those with substantial assets should still consider advanced planning.

8. Potential Future Changes to Roth IRAs – Looking Ahead

The Treasury Department will study imposing Required Minimum Distributions (RMDs) on Roth IRAs and large 401(k) balances. Currently, Roth IRAs have no lifetime RMDs. This study could lead to future changes affecting tax-free growth strategies. No immediate changes are required, but monitor developments for future Roth conversion strategies.

9. 529 Plan Expansions – Looking Ahead

529 education savings plans can now be used for K-12 tutoring, caregiving certifications, and easier rollovers to Roth IRAs. This provides more flexibility for grandparents and retirees supporting family education expenses. Expanded uses provide more tax-advantaged savings opportunities for family support. Consider how these changes might benefit your family’s education funding strategies.

10. Charitable Deductions While Not Itemizing – Looking Ahead

Previously, charitable donations made little tax impact for those using the standard deduction and not itemizing unless it was a rather large donation. Starting in 2026, individuals can deduct $1,000 of contributions to non-profit organizations, often coded by the IRS as 501(c)(3) organizations. Joint filers can deduct $2,000. The gifts need to be cash contributions.

My thoughts on all of this

There are some meaningful updates in this bill. Individuals who are over age 65 will see some additional tax deductions, while the rest of us may benefit from the higher SALT limits. I didn’t highlight the reduction or exemption of taxes on tips and overtime, but many will benefit there as well. Health insurance is potentially costing more, and those who can keep Medicaid will have some strings attached. Much of this falls in the tax category, so I recommend speaking with your tax advisor if you’d like to know specific dollar impacts to your situation. This is mostly an initial look at this bill, and I’m sure that there are more nuances that are buried in there that we will understand better as time goes on. It’s a bit of a mixed bag, but one thing is clear: it’s finally paying to be older!

I plan on reviewing the impact of these law changes during your next Annual Review, but if you feel that we need to take action on something because of your specific situation, please reach out to me or Kimberly.

This isn’t the only bill that I’ve got my eye on.  I’ve also been watching Genius Act, Clarity Act and Anti-CBDC Act.  These may be flying under the radar compared to the amount of press OBBBA has gotten, but they deserve to be discussed as well.  Stay tuned for an upcoming newsletter where I break down what they are and why it might matter to your finances.  

Survey Says…

I’ve enjoyed writing these newsletters to keep you informed of my thoughts on what's happening in the world.   My goal has been to share the information that I think is valuable and applicable to your long-term financial well-being.   After nearly a year of it, I'd like to hear your opinion on how you think it's going.  It should only take two minutes to complete it but it will be very valuable in shaping the future of it.  Thank you!

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