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What Does the "One Big Beautiful Bill" Legislation Mean For You?

Over the summer, a major piece of federal legislation—formally known as the “One Big Beautiful Bill Act”—was signed into law on July 4th. This bill introduces sweeping changes across tax policy, entitlement spending, and federal priorities; all which may carry implications for your financial strategy. Please note that this is a high-level, broad review of select items we believe may be important to our audience.

Highlights for Individual Taxpayers: 

  • 2017 Tax Cuts Made Permanent – Lower marginal rates and increased standard deductions are here to stay (…at least for now!)

  • New Standard Deduction Amounts (starting 2025): 
    • $15,750 (Single)
    • $23,625 (Head of Household)
    • $31,500 (Married Filing Jointly)
    • *Planning note – Higher standard deductions mean that less taxpayers will itemize their deductions, which means your charitable contributions, state and local taxes, medical expenses and mortgage interest paid WILL NOT reduce your taxable income (if you use the standard deduction). As such, if you make regular charitable contributions, for example, it may be more advantageous to aggregate several years of gifting into one year; perhaps consider funding a Donor-Advised Fund.
  • New Temporary Deduction for Seniors (65 or older for 2025 – 2028) 
    • Deduction set at $6,000 for an individual or $12,000 for joint filers; starts to phase out at $75,000 (single) or $150,000 (joint) of Modified Adjusted Gross Income (MAGI)
    • This new deduction is available whether a household uses the standard deduction or itemizes; it is in addition to the extra $2,000 (single) or $3,200 (married) filers who are 65+ or blind receive
    • *Planning note – If your income is close to the phaseout levels, consider how you might reduce your MAGI with strategies like capital loss recognition and/or withdrawing less funds from an IRA and/or annuity, for example. Conversely, if your income falls below those levels, you might want to consider using these new deductions (if you qualify for them) to recognize additional income (e.g., capital gains or Roth conversions.)
  • Itemized Deduction Update Summary: 
    • State & Local Taxes (SALT) – limit increased to $40K for incomes under $500K (discussed more below)
    • Mortgage interest – retains $750,000 indebtedness and adds the ability to deduct mortgage insurance premiums
    • Gifts to charity – starting in 2026, gifts will be reduced by 0.5% of taxpayer’s Adjusted Gross Income (AGI); a few new rules have been created on how to calculate the total deductible gift based on the type of charity (public or private) and the source of the gift (cash or appreciated securities)
    • Medical expenses – unchanged – qualified medical and dental expenses exceeding 7.5% of AGI are deductible
    • NEW deduction for “educator expenses” has been added starting in 2026 for educators that spend personal funds on education materials
    • Overall itemized deductions reduced for taxpayers in the 37% bracket
  • New Deductions Available Whether You Itemize Your Deductions or Take the Standard Deduction: 
    • Charitable contribution of up to $1,000 (single) / $2,000 (married) – MUST be made in cash and not securities or household items – funds CANNOT be made to fund a donor-advised fund & the contribution is NOT subject to the 0.5% floor discussed above (2026 and later)
    • Tip income - Deduction of up to $25,000 for workers (both joint/single) who earn income through “qualified tips” – phaseout starts at $150,000 single/$300,000 married (2025 – 2028)
    • Overtime pay - Deduction of $25,000 (joint) and $12,500 (single) for qualified overtime compensation paid above an employee’s normal rate. Phaseouts are the same as those for the tip income deduction (2025 – 2028)
    • Auto loan interest deduction of up to $10,000 for “qualified passenger vehicle loan interest” (2025 – 2028) – eligible vehicles include new cars (not pre-owned), vans, SUVs, pickup trucks and motorcycles made for operating on public roads and 1) having a gross vehicle weight of less than 14,000 pounds, 2) vehicle must be assembled in the US (which can be confirmed by checking the VIN), and 3) must have been purchased in 2025; deduction starts to phase out for incomes of $100,000 (single) & $200,000 (joint)
    • *Planning note – If you donate to charity make sure to plan whether you will use the itemized or regular deduction. If you receive tip income, the IRS will be issuing a list of approved occupations by October 2025.
  • Temporary SALT Deduction Cap Raised to $40,000 for incomes under $500K (2025–2029). 
    • This deduction has been increased from $10,000 and includes state income and real estate taxes
    • BE CAREFUL – if your income is between $500K - $600K, as the additional $30K deduction will phase out
    • NOTE – for owners of passthrough businesses (e.g., partnerships & S corps) the Bill DOES NOT include any restrictions on state-level Pass-Through Entity Taxes (PTETs) which allow these owners to circumvent the SALT cap
  • Child Tax Credit Increased (starts 2026): 
    • $2,200 total per child (non-refundable); $1,700 refundable
    • Income phaseouts: $200K (single) / $400K (joint)
  • Alternative Minimum Tax (AMT) Exemption Phaseout: 
    • Exemptions permanently extended
    • Phaseout thresholds will be reduced in 2026 to $500,000 for single and $1M for joint filers & the phaseout rate increased to 50% from 25%
    • *Planning note – New rules will create an increased probability that certain taxpayers (even those making $100k - $200k) might be subject to the AMT, so planning your income recognition carefully makes sense.
  • Honorable mentions: 
    • Expanded eligibility for HSA contributions
    • New eligible expenses for 529 plans
    • 529A ABLE contributions extended up to the current gift exclusion limit plus the beneficiary’s compensation up to the federal poverty line
    • Increase to the amount of Child and Dependent Care Credits available
  • “Trump Accounts” for Children: 
    • Tax-advantaged savings accounts with $1,000 credit from government (only for newborns); $5,000 annual contribution limit for parents, family and employers; employer contribution is capped at $2,500 within that $5,000 limit; contributions made after-tax
    • Deferred savings plan & funds can be invested
    • No distributions until the beneficiary turns 18
    • Distributions would be taxed at ordinary income tax rates
  • Estate Tax Exemption Raised to $15M Per Person: 
    • Starts in 2026 with further inflation adjustments thereafter
  • Energy Credit Updates (Time-Sensitive):  
    • The Clean Vehicle - Terminates the new and used electric vehicle credits for vehicles acquired AFTER September 30, 2025
    • Residential Clean Energy Credit Ends in 2025 – Accelerated expiration of 30% credit
    • Alt. Fuel Refueling Credit – Eliminated starting July 2026
    • Energy Efficient Home Improvement Credit - Eliminated starting 2026

What This Means for You…. 

Every situation is different. Some provisions could enhance after-tax income or create new portfolio opportunities; others may increase tax liability. We encourage you to review your specific tax scenario soon in order to take advantage of planning opportunities.

A few things you might want to consider this year are A) making large charitable contributions in 2025 vs. 2026, B) reviewing the impact on Roth conversions even if you are in a “low income” year, C) for employees with Incentive Stock Options (ISOs), deciding whether to exercise these before 2026 when there is a greater chance of being subject to AMT and finally D) reviewing purchases that qualify for clean energy tax credits before these credits sunset.

Here’s to saving some tax dollars!!

NCM Capital Management


Disclosures: This is not an offer or solicitation for the purchase or sale of any security or asset. While the information presented herein is believed to be reliable, no representation or warranty is made concerning its accuracy. The views expressed are those of NCM Capital Management, LLC and are subject to change at any time based on market and other conditions and NCM does not undertake to update or supplement its newsletter or any of the information contained therein. Past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable. There is no guarantee that the investment strategies discussed above will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision. Investment advisory services are offered through NCM Capital Management, LLC, an SEC-registered wealth advisory firm domiciled in New Jersey. This communication is not to be construed or interpreted as a solicitation or offer to sell investment advisory services.  For additional information about NCM Capital Management, LLC, you may request a copy of our disclosure statement as set forth on Form ADV. Readers are encouraged to consult with their own professional advisers, including investment advisers and tax/legal advisors. NCM Capital Management, LLC does not provide legal or tax advice. NCM Capital Management, LLC can assist in determining a suitable investing approach for individuals, which may or may not resemble the strategies outlined herein.