By Pamela Sosa

The Big Beautiful Bill…or is it?  Not since the Tax Cuts and Jobs Act of 2017 (TCJA) has there been such sweeping legislation affecting personal and business income taxes. Each year there are changes. Some are minor and most are adjustments for inflation.  This year’s changes consist of new provisions and the extension of others that were set to sunset in 2025.

The fourteen provisions that affect most individuals:

1) Tax brackets adjust each year, but they were reduced and expanded in 2017, along with the elimination of the marriage penalty, under the TCJA. These cuts were made permanent in The Tax Act of 2025.

2) The standard deduction was permanently increased and further enhanced.

3) The Child Tax Credit was increased to $2,200 per child and indexed for inflation. The $500 credit for other dependents was made permanent.

4) Previously, the deduction for state and local taxes (SALT) was capped at $10,000 and was set to sunset this year. It has been increased to $40,000 for 2025, $40,400 for 2026 and then will follow a 1% each year for 2027-2029. There are limitations for higher income taxpayers.

5) The exclusion for Estate and Gift Tax is now $15 million.

6) Alternative Minimum tax thresholds have been permanently increased.

7) Personal exemptions were eliminated under TCJA and are now permanently eliminated except for a temporary deduction for seniors for the years 2025-2028.

8) There is a new, but temporary, deduction for interest on American made automobiles, overtime and tip income.

9) Child and Dependent Care credits were increased as was the income level threshold.

10) Education credits now require Social Security and Employer Identification Numbers.

11) A new tax deferred investment account was created, called a Trump Account. Similar to an IRA for kids, $5,000 can be contributed annually, until the child reaches the age of 18. The child must have a social security number. Contributions can come from parents, other relatives, even employers. This becomes effective after December 31,2025.

12) 529 Accounts for educational savings have been increased from $10,000 to $20,000 for K-12 expenses.

13) Charitable donations of up to 60% of your income have now been made permanent, with a deduction of up to $2,000 for non-itemizers.

14) Energy Credits are mostly gone now.

This is not intended to be tax advice. These are just some highlights (and possibly lowlights). The purpose is to give you some information and allow you to bring questions to your accountant, who can then determine how these provisions may, or may not, affect you. They love questions!

Pamela Sosa is the President of Standard Mortgage Financial Services, Inc. She can be reached at pamsosa@standardmortgagefinancial.com