We've got some really exciting thing to cover today.
So, 4th of July, I think we,
we might have all expected this. At least I was expecting this,
so it's, it wasn't too much of a surprise,
but, uh. President Trump signed the big,
beautiful bill on the 4th of July with jets flying over him.
Of course, it was turned into a big political event,
and it was a big win, uh,
for what they were really trying to do, but. For all of us that
pay taxes, or especially us that we're,
we're digging into the tax code, and we want to know the impact on,
on individuals and businesses and, and investors.
Uh, we've spent quite a bit of time over the last.
It's only been, it was just three days ago that it was passed into
law. So we've spent a lot of time digging into the details.
In this episode, so there are hundreds and hundreds of things that we could
cover. And I don't get political,
like I. I really like low taxes for all of our clients.
And we're always looking for strategies to reduce those taxes where we can.
Legally and effectively using some unique or not so unique scenarios and planning.
Uhm. But there's hundreds,
millions of things in that bill that could potentially cover it.
We're gonna focus on the tax things and we're not even covering all the
tax things. And especially in this episode, I'm gonna spend,
it'll probably still be less than 10 minutes like most episodes.
I'm just gonna- I'm gonna do a high level, like,
touchpoint on some of the key tax implications.
And then, in the alliance calls, we're gonna dive in and we'll actually send
an announcement to all of the- all of the Behamton Company clients just- everyone,
we're gonna send out an email to everybody once we get a video recording
done and we're gonna have a tool that we're creating that'll help you estimate
your tax impact. Like specifically to you,
like what this bill will- will do to your tax situation.
Because there's- I know there's gonna be a lot of questions about that.
Umm, and when you're doing your tax projections,
whether you're meeting with someone or doing it your own with our tool,
on your own with our tools, you'll be able to estimate the impact from
these specific things. So I'm gonna cover nine- things.
So I'm gonna list out the nine, and then we'll just kind of- we'll
just dive into each of them. So the nine things,
the most, and actually this drives me crazy.
I see. If you follow me on Twitter or on X,
uhm, I'll see you like these- please pull. In the posts where they say,
we- we passed the bill, there's no tax on tips.
And I'm like, the nerdy accountant in the back of my- well,
actually, there are taxes on tips.
And here's the scenario. Like, so my- and that's not really a joke.
It's not that funny, but it's not that there's no taxes on tips.
There's less tax on tips. And you'll see why.
I'll explain why there's less tax on tips and why these blankest statements from
Republicans and Democrats, why they're- like,
either all forward or all against it, and they think it's black and white,
it's not actually black and white. And so that's why we're here.
We're diving into some of those details. But the three political ones that drive
me crazier, no tax on tips, no tax on overtime,
no tax on social security. We're going to- We're going talk about those three.
And those are actually the first three that we will talk about.
So, we got the tips, overtime and social security.
We'll talk about those. We're going to talk about the car loan interest deduction.
We're going to talk about the 100% bonus depreciation for businesses and investors.
Opportunities- own changes.
That's for investors. The salt deduction cap.
Salt is- it's the sales and local tax deduction.
That's the property taxes. That's the state taxes you pay.
And can deduct on your- personal taxes.
But we're going to talk about those. Because there was a limit for a
long time on them. Uh, then we'll talk about the estate and the gift
tax lifetime exemption. This is when you die.
There's a certain threshold of a net worth you can have and.
And have it tax free. And then last one.
The vehicle. What is going on with the electric vehicle tax credits.
So we'll talk about that as well. So the first one.
No tax on tips. I'm gonna,
I'm gonna reword this and just say. No
tax on some of your tips.
No tax on some tips. So the details of it.
Are that it's up to the first. So up to twenty five thousand dollars.
Of tips that you receive. Can be off. Offset with the deduction.
Essentially making it tax free can be offset with the deduction offsetting the tax
from that. Uh,
if you have. It's like if you're a w two employee.
You're you're w two. I'm expecting will look.
The exact same. And at the end of the year,
you'll file your taxes, but we're going to have a deduction.
If part of those were classified as tips, we'll have a deduction that can
bring that down. And for each of these things I'm going to talk about,
it's going to we're going to talk about the specific.
Dollar amounts like that, like up to 25,000.
And then there's usually the limitations. Like up to certain income amounts,
it might not even apply to you. And then there's like the timeline of
when it applies. Like, if it's a long term,
like. A forever, like a permanent tax break.
Um, or if it's just a couple years.
And I do have some building as a worksheet and we'll share this in
the next few days or next week as well along with the video of
the sources of all this. So, no tax on tips.
It's up to $25,000.
You can qualify. If your income is $150,000 or less.
If you're single or 3.0.0
$200,000 or less. If you file a married filing joint tax return.
And that one, that one's a permanent part of the tax code.
Oh, and there's, there's so many things here. Some of these,
I might, uh, uhh, I might be,
I might have some of the details off on the timeline,
but I believe that one is a permanent change.
Uhm, but let's get into the overtime.
So no tax on overtime is actually pretty similar to the.
The no tax on tips. It's same income threshold.
It's a permanent change. Uh,
hunt. So up to 150,000 of income.
If you're single or 300,000, if you're joint.
And. It's up to $12,500
of tax free overtime on single returns or $25,000 on
joint tax returns. So it's the same if you filed.
Or it's, it's about half if you file a single tax return.
Okay, then that here's this next one drives me crazy.
And here, here's why. If you remember, this is the social security one.
When someone says. No tax on social security.
Like social security taxation is a little more complex than it
seems. But some backstory on it is if social security is your only source
of income right now. If that's your only source of income.
Like no retirement, no, no pension, no retirement distributions,
no investment income. You're not taxed on social security anyways.
And so a lot of people receive their social security completely tax free anyways.
But here's one. What they did to, to add for,
to add more benefit, I guess, to, to people that are receiving social security
income. It's a $6,000.
So if you're 65 years or older, it's a $6,000 additional
deduction. In what parts of your income are taxable.
And it's actually, it's not even,
it's not even tied to social security specifically.
But what that does mean, like, if you have two jobs, cause, obviously social
security, uuuh, uuuh, doesn't cover a lot of people's,
like all their living costs, a lot of people have multiple sources of income
and retirement. So what it does, it just makes $6,000 more of your income.
If it was taxable, not taxable.
And so you're saving some time. In the tool we're building,
we're building out the tax impact on that as well.
And that's $6,000 per person. Umm,
so $12,000 if you're filing joint. And there is an income threshold on this
one. 75,000 if you're sh single,
150,000 of income if you're married filing joint.
Um, I know I'm kind of flying through these.
Some of these get pretty complex, but we will dive into the more details
later on the video. Uh, the next one is the deduction.
I actually really like this.
Like, right now, the tax code,
we're incentivized to do certain things through the tax code,
right? And whether we'd like it or not,
the government- is incentivizing us to do certain things,
we are incentivized to do certain things. Like, buy a house,
mortgage interest is deductible. Buy a car currently on your personal tax
return. It is not deductible.
The interest on your car. For a business,
for a business, it's deductible anyways. There's no change there.
But this is a personal car. It's up to one person a year,
or one car per person per year.
You can deduct up to $10,000 of interest from the,
like, on the phone. The car interest that you pay.
And it's got to be a U.S. made vehicle. There's going to be certain
thresholds for that. But say if you,
if you deduct $10,000 of interest, say you have $100,000 of income,
and you're, say, 20% tax bracket, or tax.
Right. You could save $2,000.
So the deduction, the $10,000 interest deduction reduces your taxable income.
And whatever tax rate is multiplied by your tax rate,
you would save about $2,000. So there's not,
like, not one of these is just massively life-changing for anybody,
but if someone fits in these different scenarios,
like say you have a car loan, say you're paid on overtime,
say you're paid on some tips. We'll see for you and,
and if you are, and you're, if you're over 65 years old,
if you add all these up, it could be pretty significant for you.
Uh, so the next one is the,
uh, the 100% bonus depreciation.
I've, I've probably said those words.
A thousand times on the, the podcast,
but talking about 100% bonus depreciation means this is for investors,
real estate investors, business owners. This is buying vehicles,
equipment, things you need. Eat anyways for your business instead of having to write
it off slowly, like over multiple years,
you can now write it off all in one year. So previously,
we did have kind of a workaround through something called the section 179.
That we could write off some of your, your equipment of vehicles,
but we couldn't create losses with that.
So there was a limitation to that. But now 100% bonus depreciation is back.
So creating losses, even if you got it,
even if you have a loan. And you haven't actually paid the cash,
but creating losses, opening up opportunities for tax projections and strategies
with that. Uh, this is,
it's pretty exciting for real estate investors, investors,
and business owners, for sure. Another one for.
So this is just going down the list is the opportunity zone changes.
So opportunity zones were scheduled to expire.
They're going to be done for next year. In opportunity zones,
or when you sell a property, you can roll the proceeds.
Or not even the proceeds. You can roll the gain from the sale of
that property into another property,
or into a fund that's in an opportunity zone,
and you don't have to pay tax on the gain in that year.
And then if you hang on to it for 10 years, you can get
tax-free growth. On the,
on the property as well. So you defer a gain and you could also
get tax-free growth. They're making that permanent. Which is pretty amazing.
And there's no, like, so I told you I was going to mention that
if there's income thresholds, there's no income thresholds with that.
And it would start for any properties that you buy in this year and
go into next year. Um,
so the next one is the, the salt deduction cap.
This is the sales and local tax deduction.
This is your property taxes and your income taxes.
For, since 2018, the maximum you could deduct for those things on your personal
taxes was $10,000.
They're quadrupling it. It's going up to $40,000.
This is one of the biggest changes, one of the biggest benefits for people
that own homes and pay taxes are in states that pay taxes because now
those can be deductible, not just up to the $10,000 limit but up to
$40,000. So f- If you have property taxes,
of course, property taxes and state taxes,
this will be a big benefit to you.
Umm, and that one, let's see, there really is,
there's a phase out Uuh,
$500,000 of income. So it starts phasing out.
It's the impact of that starts to limit.
So if you're at, say, a million dollars of income,
it'll be completely phased out. And there's not going to be any benefit to
you. So it's, It's helpful for,
especially if you're less than $500,000 of income.
And that starts, uhm,
that actually is, I believe that one is made permanent.
And it starts, it's all a 2025. It's a property taxes and state taxes
to pay in 2025. It's made permanent. Okay.
The, the next one. So this is number eight on my list of nine,
the estate and gift tax lifetime limit,
the exemption limit. So it was set to,
it was set to go back down to five,
a five million dollar limit of if you have net worth,
uh, net worth of five million. Um,
you could die and not pay any tax. But if you have a net
worth of six million and you die. That excess over the five
million, so the one million dollars, it's over the five million,
that excess million dollars, would be taxed at like a forty percent tax rate.
That's the estate tax. So this year,
or so. There, if you were to, yeah,
it's actually, this one,
I believe starts next year.
And the reason for that, there's actually some adjustments already in the tax.
So it's, it's kind of weird.
There's some moving parts
there, but.
It's just not as long as, you know, it's not going down 5 million.
If your net worth is less than the 13 million this year and 15
million next year. You're,
you should still do some estate planning. Just make sure you're on the right
path there, but you don't. You have to worry about some massive estate tax
bill, because this is, this is in law now and that's,
that makes it permanent. Um,
and then, oh, the last one, this one, there's really not a,
not a ton to talk about on this one, but they're terminating.
Hating the electric vehicle tax credits. So September 30th is the last day you
can qualify for the new, or the used electric vehicle credits.
So the $7,500 credit or the $4,000 used credit.
September 30th, 20. 25 this year is the last day you can qualify for
those credits. I don't, I,
doesn't look like there's going to be any other sort of type of credit.
Um, of course Trump has come out and tweeted.
It's kind of like the Trump and Elon. Going back and forth.
Sometimes they're best buds. Sometimes they're fighting.
But, um, he came out and he's like,
the government will not force you to buy electric vehicles,
which I don't think we want the government to force to do anything.
So I think, uh, we'll see. We'll see what that does to the economy
and those car manufacturers and such.
But it's ending September 30th. Okay,
that, that's it for this episode. Those are the nine.
I, I view those as like some of the nine.
Or things that impact a lot of people.
There's a lot more. We'll dive into more of it. And I honestly,
I could do an episode on each one of these things,
especially when we get into like strategizing and taking advantage or just making
sure you're maximizing. Or benefit of each of these, we probably will bring up
episodes on each of these of how you can save money,
reduce taxes, increase wealth, do all the,
the fun stuff that we talk about. Okay, we'll have a great rest of
the day and see you later.
