As your financial planner, I want to keep you informed about key legislative changes that could impact your financial plan. On July 4, 2025, a major piece of tax legislation—the Make American Workers and Families Thrive Again Act—was signed into law. This extensive bill makes permanent or modifies many of the tax rules originally introduced in 2017, many of which were set to expire at the end of this year. These updates will influence everything from how much you pay in income taxes to the strategies we use for retirement planning, charitable giving, business deductions, and estate planning.
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Some of the most relevant changes include permanently extended tax brackets, a higher standard deduction, and a $15 million estate and gift tax exemption that will now be indexed for inflation. For business owners, the Qualified Business Income (QBI) deduction and expanded Section 179 expensing limits offer continued opportunities for tax efficiency. There’s also a new savings tool for families with young children and enhancements to charitable giving deductions, even for those who don’t itemize. We’ll continue reviewing your financial plan with these updates in mind and reach out with recommendations where adjustments may be beneficial.
The Highlights of the tax law are as follows:
- Tax Brackets: The 10%, 12%, 22%, 24%, 32%, 35%, and 37% income tax rates are now permanent.
- Personal Exemption: Permanently eliminated. Seniors (65+) receive a $6,000 deduction (2025–2028), phased out at $150,000 (joint) / $75,000 (single).
- Standard Deduction (2025): Increased to $31,500 (joint), $23,625 (head of household), and $15,750 (single), with inflation adjustments thereafter.
- Itemized Deductions: Still allowed but limited for those in the 37% bracket.
- SALT (State And Local Taxes) Deduction: Cap raised to $40,000 in 2025, increasing 1% annually through 2029, then reverting to $10,000. Phased down for MAGI over $500,000.
- Child Tax Credit: $2,200 credit made permanent, with inflation adjustments. Phases out at $400,000 (joint) / $200,000 (single).
- QBI Deduction: Made permanent for small businesses and self-employed individuals.
- Estate & Gift Tax: Exemption set permanently at $15 million, indexed for inflation.
- AMT: Exemption and phase-out thresholds made permanent.
- Mortgage Interest: Deductible on loans up to $750,000.
- Tip & Overtime Deductions: Above-the-line deductions allowed through 2027, with caps and income phase-outs.
- Vehicle Interest Deduction: Up to $10,000 for U.S.-assembled personal-use vehicles, phased out over $100,000 income.
- Charitable Contributions: Without itemizing, there is a charitable deduction allowed of $2,000 (joint filers) and $1,000 (single filers).
- Trump Deferred Account: New tax-advantaged savings plan for children born 2025–2028. $5,000 annual contribution limit, $1,000 government seed, tax-deferred growth.
- Section 179 Expensing: Limit increased to $2.5 million, with phase-out starting at $4 million.
- Opportunity Zones: Incentives extended through 2033.
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Next Steps: Further guidance is expected by the Internal Revenue Service (IRS), as the Act passed without full committee hearings. Regarding filing your tax returns we encourage you to work with a qualified tax professional to navigate the changes and ensure tax efficiency moving forward on your tax returns.
With these updates, financial planning strategies around retirement, charitable giving, business ownership, and estate planning may need adjustments. If you have any questions or would like to review your plan, in light of these tax updates, please feel free to reach out so we can discuss the best strategies for you and your family.
© 2025 Irene Zurowski CFP® CRPS®
Financial Advisor
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