Robert W Morris & Company PC

If you’ve been hearing about the new “Big Beautiful Bill Act” and wondering how it might impact your taxes, your savings, or your investment strategy, you’re not alone. This sweeping new law—enacted on July 4, 2025—includes some major updates to the U.S. tax code that could have a meaningful effect on your financial picture.

As your trusted advisors, we’re breaking down the most important changes—especially those that impact individuals, families, and small business owners. We’re also highlighting planning opportunities and steps you can take right now to make the most of these updates. And of course, if you have questions, we’re here to help.

Permanent Individual Tax Rate Cuts

The individual tax rate reductions first introduced in 2017 were set to expire in 2025—but now, they’re permanent.

What this means for you:

• You’ll continue to benefit from lower income tax rates across brackets.

• This makes Roth IRA conversions, capital gains planning, and timing of income even more important in long-term strategies.

• With lower tax rates, it may make sense to realize income now vs. later—especially if you’re in or nearing retirement.

Higher Standard Deductions

The standard deduction has been permanently increased, indexed for inflation. For tax year 2025, the amounts are:

• $15,750 for single filers

• $23,625 for heads of household

• $31,500 for married couples filing jointly

Why it matters:

• Fewer taxpayers will itemize deductions, simplifying your return.

• For investors and landlords, careful planning around deductible expenses and timing of deductions becomes more strategic.

Temporary Boost in SALT Deduction Cap

Through 2029, the deduction for state and local taxes (SALT) is increased to $40,000 for those with income under $500,000. After that, it reverts to the prior $10,000 cap.

Tax opportunity:

• High-income individuals in states with high property or income taxes may be able to capture significantly more in deductions—which could affect AMT exposure and overall tax liability.

• There’s an investment opportunity here too: freeing up more after-tax income might allow for greater contributions to IRAs, 529 plans, or brokerage accounts.

Expanded Child Tax Credit

Families can now claim a $2,200 credit per qualifying child, with a refundable portion of $1,400 made permanent.

Income phaseouts now begin at $200,000 (single) and $400,000 (joint).

Financial planning note:

• This is a valuable cash flow tool for families—especially those with kids in childcare or school.

• We recommend using this extra tax relief to build emergency funds, reduce debt, or invest for future education expenses.

Senior Deduction for Retirees

Taxpayers age 64 and older can now claim up to a $6,000 deduction (phased out for income above $75,000 single / $150,000 joint). This provision lasts through 2028.

What to consider:

• This deduction may open the door for strategic Roth conversions—since the effective taxable income threshold is lower.

• It may also affect Social Security taxability and Medicare premium brackets. Let’s plan ahead to manage that efficiently.

Exemption for Tips & Overtime Pay

Workers earning under $150,000 annually will now see tips and overtime pay excluded from income taxes, up to $25,000 per year. This is in effect through 2028.

If you or your children work in hospitality or trades:

• You’ll keep more of what you earn.

• Consider setting up Roth IRAs or brokerage accounts to invest that untaxed income and build long-term wealth.

New 'Trump Accounts' for Children

These tax-deferred savings accounts are available to children born between 2024 and 2028.

• Initial contribution of $1,000 from the government

• Parents can contribute up to $5,000 annually

• Withdrawals begin at age 18 and are taxed at that time

Why this matters:

• This is a unique hybrid of a college savings account and Roth IRA, with flexibility to be used for education, home purchases, or business startup costs.

• For families, we recommend planning these accounts alongside 529s and custodial accounts to maximize flexibility and tax advantage.

Full Expensing for R&E Costs (2025–2029)

If your business conducts domestic research and development, you can fully deduct those expenses immediately.

Strategic move:

• Consider shifting R&D activities onshore, and front-load qualifying investments.

• This also makes Section 174 planning more attractive for small firms.

100% Bonus Depreciation for Production Property

Invest in qualified property and deduct the full cost in the first year.

For capital-heavy industries (construction, manufacturing, logistics), this means:

• Lower taxable income now

• Increased cash flow for reinvestment or retirement contributions

Employer-Provided Childcare Credit Increased

The credit has been boosted to 40% of eligible costs, with a max of $500,000 (or $600,000 for small businesses).

This is a win-win:

• Helps with talent retention

• Offers a substantial tax credit for a cost you may already be incurring

Permanent Paid Family & Medical Leave Credit

If you offer paid family leave, you’ll now permanently qualify for a tax credit.

Long-term advantage:

• Allows you to stay competitive in benefits without sacrificing your bottom line

• Aligns with your employee retention strategy, especially in today’s tight labor market

We know these kinds of legislative updates can feel overwhelming, but they don’t have to be. At RWM & Company, we’re committed to turning complex tax code changes into clear, actionable strategies that work for your life and business. Whether you’re wondering how to update your tax strategy, invest smarter under the new rules, or take full advantage of the benefits for your family or business—we’re here for you, so feel free to contact us anytime.