July 5, 2025 • 23 mins
To get a comprehensive tax and legal plan get to my law firm KKOS Lawyers: https://kkoslawyers.com
In this special episode, Mat Sorensen breaks down President Trump’s newly signed tax legislation, known as the “Big Beautiful Bill," and what it means for your personal and business taxes. With sweeping changes taking effect in 2025, Mat outlines the most impactful provisions for individuals, small business owners, and real estate investors.
0:00 - Introduction to The Big Beautiful Bill
5:14 - Individual Tax Breaks Explained
9:19 - State and Local Tax Deductions
15:34 - Senior, Tips, and Overtime Benefits
18:42 - Small Business Owner Benefits
19:39 - Next Steps and Bill Timeline
- Grab my FREE Ultimate Tax Strategy Guide HERE!
- You don't want to miss this! Secure your tickets for the most significant business, tax & legal event of the year: Main Street 360
- Looking to connect with a rock star law firm? KKOS is only a click away!
- Are you ready to get certified in EVERY strategy I teach? Start your journey with a FREE 15-minute discovery call to explore the Main Street Tax Pro Certification.
- Check out our YOUTUBE Channel Here: https://www.youtube.com/markjkohler
- Craving more content? Check out my Instagram!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome everyone to the Main Street Business Podcast
.
This is Matt Sorensen.
In today's special episode, I'mgoing over the big, beautiful
bill.
This is President Trump'slandmark legislation that was
just signed into law on July 4th.
Now in today's special episode,I go over the final bill, which
was the Senate bill that later,a day or two later, passed in
the House and was just signedinto law by President Trump on
(00:23):
July 4th.
There's a lot of tax breaks inhere for individuals and small
business owners.
I detail what is in and what'sout in this final legislation,
please enjoy.
The Senate just passed the taxlegislation.
This is the big, beautiful billwe've been talking about.
It's been all over the news,but it is now passed the Senate.
(00:43):
It is already past the House.
It'll be awaiting Trump'ssignature.
Now in today's video, I'm goingto break down what's in the bill
.
I'm specifically focused on thetax deductions.
There's a lot of other issuesand things happening in the bill
, not what I'm doing in today'svideo.
I'm going to talk about the taxbenefits and the tax perks in
the bill for you as anindividual or as a small
business owner.
Next, I'm going to go over theprocess and what to expect next.
(01:06):
There's a couple steps that aregoing to be necessary along the
way.
There could be some derailmentshere.
Likely this thing is going tosell through, but there are some
issues that still need to beresolved.
And then I'm going to go overwhat goes into effect in 2025.
There are a number ofprovisions that go into effect
in 2025, and there's otherprovisions that go into effect
in 2026.
So it's important you knowwhat's going to matter on this
(01:27):
year's tax return versus what'sgoing to be mattering in the
future.
Now I want to go over a coupleof important notes at the
beginning here.
First, there was tax reformnine years ago.
What happened tax reform nineyears ago is there are a number
of provisions that are set toexpire.
For example, lower individualrates, doubling of the standard
deduction, qbi, small businessdeduction those things are all
(01:49):
going away.
This is the last year of thosebig tax breaks that came about
nine years ago.
However, this legislation isextending many of those,
improving some of them, reducingothers and adding things in All
right, so we're going to begoing over all of that.
Now.
The key thing you need to knowhere is there was a prior house
(02:10):
bill.
It's very similar to this billthat just passed the Senate.
But this bill that passed theSenate has had a number of
changes just in the last fewdays alone.
It passed this morning 51 to 50.
Okay, the vice president, jdVance, had to vote on this bill
for it to pass the Senate, butit was passed and this is now
going to be signed by PresidentTrump.
Now I'm going to go over somethings that still need to happen
(02:32):
.
President Trump said he wantsto sign this by the 4th of July,
and even today he just said I'mnot sure I'll be able to sign
it by the 4th of July becausethere's still some procedural
things and a vote that needs tohappen in the house as well.
All right, let's break throughthe provisions that are going to
go over and save you money asan individual first and I want
to talk about any of you who aresmall business owners or real
(02:53):
estate investors.
There's a number of provisionsthat are super beneficial to you
as well.
But let's hit the individualones, because those apply to
everybody, and this is theSenate bill.
What you've heard about thehouse bill, by the way, doesn't
matter.
The Senate bill is going tocontrol.
This.
Thing's going to go right backto the House where they're going
to have to vote on this.
So the Senate bill is what'sgoing to be critical here.
All right.
First, individual rates.
(03:13):
Individual rates are going downfor everybody 2% to 3%.
I don't care if you're lowincome, middle income, high
income, tax bracket, your ratebracket.
Your rate is going to be two to3% less because of this bill.
Now, this provision is in effectin 2026.
We already have the lower ratesstill for 2025 that are going
to expire.
Everyone's bumping up.
Next year, for example, let'ssay you're in a 12% tax bracket
(03:37):
right now.
Next year, you're going to bein a 15% tax bracket.
Your bracket's going up 3%.
You make a hundred grand a yearand you're in that bracket.
That's going to cost you $3,000.
Okay.
So what's happening, though, isthey're maintaining the lower
rates, so you're going to getthat in 2026, moving forward.
Now the highest rate 39.6% thatused to be the old high rate was
(03:57):
reduced to 37.
37 will stay the highestbracket and the highest rate in
the federal tax code.
Now there was talk aboutPresident Trump saying he was
willing to negotiate up to a39.6% rate for those making 2
million or more.
That never happened.
The highest bracket is stillsitting now at 37% and that's
what passed the Senate.
Now this is permanent and thisis a critical point on these tax
(04:21):
provisions.
Most of these are permanent.
Some of them are only good forthree to four years.
I'll be mentioning which iswhich share as we go through
them.
But the rate reduction 37% maxrate, everyone else getting two
to 3%, no matter what bracketyou're in, that is permanent.
It won't expire again.
All right.
Next let's talk about thestandard deduction.
This is the second mostimportant one that impacts every
(04:42):
individual tax filer.
The standard deduction issomething you take on your tax
turn where you say, hey, I'm notitemizing all of my deductions,
I'm not taking charitabledeductions, I'm not taking
mortgage interest, I'm nottaking state and local tax
deduction.
These are all higher incometaxpayer deductions typically,
or at least middle upper incometax deductions I'm not taking
those, I just want to take thestandard deduction.
(05:03):
Income tax deductions I'm nottaking those, I just want to
take the standard deduction.
Just give me a regulardeduction so I don't have to
track all that.
Well, that is mostly somethingthat middle income, lower income
filers take as the standarddeduction.
Under the standard deductionright now, the Senate bill is
$32,000 for married, $16,000single.
This starts in 2026.
If that is not if this was notpassed, though, by the way, this
(05:23):
would be half that Okay.
So that would be 16,000 marriedand, you know, an 8,000 single
in 2026 without this passing.
So this is again one of thosethings that's set to expire in
tax year 2026, but the doublingof the standard deduction was
maintained and again madepermanent under the Senate's
bill.
All right, child tax credit.
(05:44):
This is one that variedsignificantly from the House
bill that passed about a monthago.
Under the child tax credit,what the Senate did is they said
, $2,200 per child.
There's a phase out for highincome earners 400K married,
200k or more single where youstart phasing out and that
credit gets less and less asyour income goes up.
But if you're under those,you'll get the full credit,
(06:05):
$2,200 per child, and this isgoing into effect right now.
But what was going to happen isnext year, in 2026, the current
child tax credit is $2,000.
That was going to get cut inhalf to $1,000 in 2026.
But this will be $2,200 perchild and this is also something
(06:26):
being made permanent Now.
In the House bill they weregoing to do $2,500 child tax
credit per child, but that wasonly going to be for three years
and then it was going to godown to 2000.
So this 2200 per child underthe Senate bill frankly is
better overall.
For any of you with kids orthinking about having kids, this
is a huge benefit because thisis a tax credit.
(06:46):
It's not a deduction thatreduces your taxable income.
Right?
Let's say you make a hundredgrand a year and you get that
$32,000 standard deductionbecause you're married.
You're only taxes.
If you make $68,000, then youdetermine what your tax bracket
is and all their deductions, andmaybe you owe $2,000 in tax at
the end of the day.
Well, if you have the child taxcredit of 2,200 bucks, that's
(07:07):
going to wipe out all of yourfederal tax and you actually
would get a refund.
So the child tax credit isabout the tax you pay.
It's a huge benefit for any ofyou that have children or
thinking about having kids andagain, that $2,200 amount is
being made permanent.
Okay, next one on the individuallevel was the state and local
tax deduction.
This one was massive.
This one is one that wasdebated in the House and it
(07:31):
could cause some issues here, asthe House is going to have to
pass the Senate bill here we'regoing to talk about next steps
here.
In a second, under the Senatebill, they said the state and
local tax deduction is going tobe $40,000.
That is the max cap that youcan take as a deduction for
state and local tax.
You paid and that is for fiveyears.
You will get that for fiveyears, starting in 2020,
(07:52):
starting in 2030, excuse me,that is going to go back down to
$10,000.
The current deduction amountyou can take for state and local
tax is $10,000.
Now this is a new thing thatcame about with tax reform back
again nine years ago is, theysaid it was actually before this
law nine years ago you couldtake an unlimited amount of
state and local tax deduction.
(08:12):
For example, let's say you make$200,000 a year, you live in
the state of California.
You pay $20,000 in state incometax to the state of California.
Well, under the federal tax law, what you traditionally could
have done before tax policy nineyears ago is you would say hey,
I paid $20,000 in state tax,federal government, I didn't
(08:33):
make $200,000.
20 grand of it went to thestate of California.
I made 180.
Tax me as if I made 180.
And that makes sense, right?
You don't actually get to keepthat money.
So how can the federalgovernment tax you on money you
never got to keep?
You got to send to anothergovernment.
So that was how the law was.
There was no cap on how muchstate and local tax you can take
.
Well, in 2017, last version oftax reform, they said we'll only
(08:56):
let you take up to a $10,000deduction for your state and
local tax.
Well, a lot of higher incometaxpayers, particularly those
and even upper middle incometaxpayers, particularly those in
high tax states, got kind ofscrewed on this because they're
like why now I make again?
Let's say you're in California200K a year, paying 20K in tax.
Under the law right now, youonly get to take a $10,000
(09:18):
deduction, but you didn't get tokeep that.
So you're paying tax on 190,but you really only made 180.
So this is what the state andlocal tax deduction is.
This is why there's so muchdisagreement on it is those that
have to pay it feel veryfrustrated because they're
paying tax on money they had tosend to another government
agency.
Those that don't have to pay itdon't freaking care about it,
(09:38):
or those in no state tax, likeincome tax states like Texas and
Florida, particularly thesenators from there.
They don't care about this.
They're like that's some otherstate's problem and residents
and citizens of those states.
So this one has become political.
In the House bill it was goingto be this $40,000 cap on the
deduction, which is raising itfrom 10, what it is now.
(10:01):
So this is an improvement fromwhat it is now, but in the house
bill they were going to make itpermanent.
In the Senate bill they're likeuh, in 2030, it's going back
down to 10.
And that is actually whatpassed.
So we will see what happens.
The house has got to revote onthis bill.
This could be a contentiousissue.
There's a number of houseDemocrats or, excuse me, house
Republicans, who said they willnot support it because of this.
(10:23):
So we're going to see there'sgoing to be a lot of whipping
and there's going to be a lot ofthe Republican party's going to
have to come together in thehouse.
We'll talk about that here in asec.
But again, $40,000 state andlocal tax deduction through 2029
.
And then in 2030, it's goingback down to the $10,000 cap.
All right, the senior deductionOkay.
(10:43):
Remember Trump was out theresaying no tax on social security
.
Well, he didn't deliver on that.
But he did come up withsomething, which is the $6,000
deduction that seniors get.
Those that are 65 or older getthe $6,000 additional deduction
on top of the standard deduction, on top of the existing senior
deduction that's already there,that they already get.
They're going to get another$6,000 on top of that.
(11:06):
Now, this is only availablethrough 25, through 2028.
So that's, I guess, four taxyears there and there's income
phase-outs for those making$75,000 or more a year or those
150K or more a year married.
Now, if you are a marriedcouple, you would each be able
to take that $6,000 deduction ifyou are both over the age of 65
.
So there was something giventhere to seniors.
(11:27):
There was no tax on socialsecurity but, frankly, those
that are 65 or older areeligible for social security.
It is something that they weregiven an additional deduction
and they will get tax savingsbecause of that additional
deduction.
All right, other stuff promisedon the campaign trail.
What's in the final bill?
No tax on tips.
Again, this is the Senate bill25 K deduction, um on tips here.
(11:49):
Um, up to 150 K single, 300 Kmarried.
You start phasing out If youmake more than that.
This is, again, something thatis only available for 25 to 28.
So you get four years where youget to take that, but it goes
into effect for 2025.
So any of you making tips intax your 25, you'll be able to
deduct up to $25,000 of yourtips.
Now, an important note on thisrule is tips must be voluntary.
(12:12):
Okay, I'm already getting thequestions from business owners.
Should I just change my pricingand say this is a tip, so I've
taken in the income?
No, the tip must be voluntary.
It must be the type of work orline of business where you're
with an employee or anindependent contractor where
it's customary to be tipped inthat industry.
So you can't get creative withthis and start saying my income
is tips.
(12:33):
That's not gonna work.
No-transcript maximum deduction25K.
But again does have some phaseouts for high income earners.
Okay, no tax on overtime 12,500single, 25,000 married, where
you get a deduct and have incomeexempt from overtime pay.
(12:56):
So or excuse me from tax if itis overtime.
This again has high incomephase outs for making more than
150K single, 300 K a year ormore married.
Um, and it is only availablefor tax years 2025.
So if we're going to affect forthis tax year and through 2028.
Okay, so those are some of thestuff that Trump talked about on
the campaign trail, many otherRepublicans as well.
(13:18):
That is what was delivered, um,which is pretty good.
I think those, those are, uh,pretty good deductions.
And again, they're notsomething for high income
earners.
Okay, this is not a wealthything.
I hear so much news and buzzout there.
This is, you know, ripping offthe middle class and this is
something for the wealthy.
Wealthy people pay a lot of tax.
They're going to benefit fromthis policy, but a lot of these
(13:39):
things phase out.
You don't get them If you're ahigh income earner.
A lot of these provisions wejust talked about from the child
tax, credit, state and localtax deduction, the senior
deduction, the no tax on tips,the no tax on overtime those all
phase out for high incomeearners, okay.
So I'm a little skeptical onsome of that commentary.
Yes, the high income earnersare going to save on this too,
(13:59):
and they do pay more tax, soeffectively, they will save more
individually than someonemaking less money.
But a lot of these benefitsdon't even apply to them.
Just going to be the rates,frankly, that would be applying
to the higher income earners.
That's about it.
But we already have those ratesright now.
You would otherwise be imposinga tax on the higher income
earners.
Okay, don't want to getpolitical.
I think I just waved into that,all right.
(14:20):
Last thing on the individuallevel.
This really applies to estates.
So we've been going from incometax let's talk about estate tax
.
When you die, there's an estatetax.
The federal governmentbasically takes half of your
assets above the exemptionamount.
So there's a certain amountthat you get to pass on to the
next generation, your kids, yourloved ones after you pass away.
That is not subject to estatetax at the federal level.
(14:41):
That was set to expire and getcut in half again starting in
2026.
But this was made permanent 15million for single individuals,
30 million for a married couplewhere they can double up on it.
That is permanent.
If you have that size of anestate let's say you're a
married couple 30 million orless estate, nothing will be
subject to a state tax.
You can pass that business,that family property, the family
(15:03):
farm, whatever it may be, orwhatever assets they are down to
the kids without having to sellthem, and your heirs can
inherit that with no tax.
Anything over that will bestill subject to estate tax.
So the super wealthy are stillgoing to be subject to that
estate tax, of course, which inthat tax, is almost 50% that it
would be subject to.
But this was made permanent aswell.
This estate tax for the last 20years, frankly, has been
(15:25):
bouncing around for five-yearrenewals, four years, 10 years,
and people trying to plan theirestates for the next 10, 20, 30
years have really struggled withwhere the hell is the exemption
going to be.
Well, they did us a favor here.
They made it permanent $15million, which you can double up
if you're married, up to $30million, and that is permanent.
All right, let's get over to thesmall business savings here.
(15:46):
These are awesome and there'ssome really good ones in here
that I was happy to see thatstayed through in the final bill
.
The first one is QBI qualifiedbusiness income.
If you're a small businessowner and you're making 200K a
year, let's say, you get to takea 20% deduction on your income.
So, for example, in the 200K ofincome there, you get a $40,000
deduction on your income.
So, for example, in the 200K ofincome there, you get a $40,000
(16:08):
deduction on your income.
So your only tax is if you made$160,000.
That is the current law rightnow.
This is the small business QBIdeduction and whether you're an
LLC, an S corporation, you canuse this and take it.
And we've seen a lot of ourclients in my law firm, kko
Slurs where, by the way, we dotax planning all the time for
clients across the country smallbusiness owners but we've seen
(16:29):
this used quite a bit.
This is one of the most popular, most well-used, putting more
money back in small businessowners' pockets than any other
deduction out there.
So I'm pleased to see that itwas made permanent in the bill
and it is at the 20% Now.
The House bill that came outearlier was at 23%.
Okay, I wish that the Senatewould have got in on the 23%,
(16:51):
but they they came out of thegate and stuck to it 20% for the
QBI deduction, but they made itpermanent.
Again.
This was set to expire and goaway next year, so huge win
there for small business owners.
Next one for small businessowners 199A, also known as bonus
depreciation.
This is a provision that says,hey, if you want to go buy some
new equipment in your businessor you want to buy a vehicle in
(17:13):
your business, we'll let youexpense the whole cost of that
in year one.
Traditionally, when you buyequipment or other assets in
your business, you have toexpense it over time.
So, for example, if you boughta piece of equipment that lasts
for five years, that was ahundred thousand dollars.
The IRS would say, even thoughyou paid a hundred grand for it,
now we only let you expense20,000 this year, and then you
(17:36):
do 20,000 next year and the nextyear until over the next five
years you've expensed out thewhole a hundred thousand dollars
.
Well, for someone trying togrow and scale a business add
equipment inventory, trying togrow with employees that's tough
to do, right?
Because you're spending thatmoney and you're not getting the
tax deduction back.
So under bonus depreciation, itallows you to take a hundred
(17:57):
percent write-off on certainqualifying.
This could be equipment andqualifying vehicles and that is
also made permanent in the codeand is in effect for 2025.
So, um, this was set to go awaynext year.
By the way, it was going downto basically, you can only take
a max depreciation of 20% underthis bonus depreciation rule for
this year.
Right now it's a max of 40%,but we're going back to a
(18:20):
hundred percent starting in 2025.
And this one is being madepermanent in the tax code as
well.
This is used by a lot of smallbusiness owners to help them
grow.
It allows them to expense thesethings more easily as they're
growing and scaling the business.
This grow it allows them toexpense these things more easily
as they're growing and scalingthe business.
This could also apply to realestate investors.
You're doing a cost segregationor other things.
The bonus depreciation could behelping you as well.
(18:43):
All right, last but not least,on the provisions here and then
I want to get into the processhere what to expect, and then
talk about some things here for25, tax year 2025 and 2026.
You should be doing andthinking about Opportunity zones
.
Opportunity zones were thisthing that came about again in
the last form of tax policy.
That said, hey, you can sellany asset for a gain a business,
stock, real estate and as longas you reinvest that money into
(19:04):
a qualifying opportunity zone,it could be a real estate
project or a business in thatqualifying opportunity zone.
You pay no tax and, in fact,there's additional tax relief if
you sell and make money out ofthat asset as well.
So a lot of great taxefficiency and tax incentives
for opportunity zones.
Those are back in the bill andbeing revitalized.
(19:25):
It was a very successfulprogram for economic development
and bringing back certain areasthat faced blight and had other
issues.
So that's back in the bill andback in the tax code, I should
say, and it was also madepermanent in the bill.
All right, now here's wherewe're going next.
What's happening next is thisbill is going to the House.
Speaker Johnson in the House,their House is going to go vote
(19:45):
on this.
We'll see how quickly this goes.
The Senate seems to think, oh,they're going to be done with
this in a day or two.
The House themselves is like wegot some people pissed off over
here on some of the changes andthere's a lot of issues here in
this bill.
There's stuff in this bill Ididn't talk about.
There's spending cuts here.
There's deficit stuff happeningin the bill.
I know that's an issue andimportant to many people here.
(20:06):
I'm just here telling you wherethe tax savings are in the bill
and that also affectsindividuals and small business
owners.
By the way, big business, theyalready got their cake nine
years ago.
All right, the top corporatetax rate for large companies
went from 35 down to 21 percentand that was made permanent nine
years ago.
All of the individual taxbreaks and small business tax
(20:27):
breaks are set to expire thisyear, and so this bill is about
reinventing and making permanent, I should say, those individual
breaks and the small businesstax breaks, because corporate
America already got the taxbreaks made permanent nine years
ago.
So that's a positive thingabout the bill and one of the
things I like about it.
I know there's other reasons tohate on this from a deficit and
(20:48):
some of the spending cuts andcertain government programs you
might care about and that areimportant to many people.
So I'm not discounting that.
But what's going to happen nextis the House needs to vote on
this.
Their goal is to have PresidentTrump sign this by the 4th of
July.
I mentioned at the top of thisthat President Trump has said
he's not sure if it's actuallygoing to happen by the 4th, but
I would expect this to bewrapped up within the next week.
(21:09):
Now a lot of this stuff mattersto you in tax year 2025.
Many of these provisions, fromchild tax credits to no tax on
tips, overtime, the seniordeduction a lot of this stuff is
going into effect bonusdepreciation right now in tax
year 2025.
So this is going to affect yourtax planning.
One thing I want to make sureeverybody understands is no
(21:30):
matter what the tax is, you needto be engaged in your tax
planning.
The most engaged clients thatwe have as a lawyer at KQS
Lawyers are the ones that savethe most.
They care the most about it.
We spend so much time workingand making money.
Let's make sure we keep as muchof it as possible and are
implementing the rightstrategies to save us on our tax
return and a lot of times thatjust takes an analysis of what's
(21:53):
going on.
So in my law firm, kqs Lawyers,we do a comprehensive tax and
business consult for our clients.
It only costs a couple thousanddollars.
We look at your prior year taxreturn, we diagram out your
business and asset protectionstructure, we look at the tax
inefficiencies you may havewhere you're overpaying, and we
look at opportunities for you tosave, no matter what's going on
with tax legislation.
So whether you're using us or aCPA or other tax lawyer, please
(22:15):
get engaged on this.
If you care about how muchtaxes you're paying.
The best way to be proactiveabout that and to pay less is to
take action and go get somecompetent advice on ways you can
save, because you can use thetax code in your favor or it can
be used against you.
So just make sure you'reinformed on that, and our law
from KKOSource would be happy tohelp.
Now, please make sure you'resubscribed to the channel.
(22:35):
I'm going to be giving youupdates.
We're going to see what happenswith the house.
It's likely they are to passthis.
They already passed a very,very similar version of this
bill before it went to theSenate, but because there are
some differences here, it's gotto jump back to the house.
Speaker Johnson's conferencepassed.
There's a lot of chatter goingon right now in Congress over
whether that's going to happen,and I'll be letting you, of
course, know once PresidentTrump signs it into law.
(22:57):
Also, on my channel, I'm alwaystalking about ways to save on
taxes, protect your assets,build wealth using self-directed
retirement accounts.
Please make sure you'resubscribed.
I'll see you next time.
Welcome everyone to the Main Street Business Podcast
.
This is Matt Sorensen.
In today's special episode, I'mgoing over the big, beautiful
bill.
This is President Trump'slandmark legislation that was
just signed into law on July 4th.
Now in today's special episode,I go over the final bill, which
was the Senate bill that later,a day or two later, passed in
the House and was just signedinto law by President Trump on
(00:23):
July 4th.
There's a lot of tax breaks inhere for individuals and small
business owners.
I detail what is in and what'sout in this final legislation,
please enjoy.
The Senate just passed the taxlegislation.
This is the big, beautiful billwe've been talking about.
It's been all over the news,but it is now passed the Senate.
(00:43):
It is already past the House.
It'll be awaiting Trump'ssignature.
Now in today's video, I'm goingto break down what's in the bill
.
I'm specifically focused on thetax deductions.
There's a lot of other issuesand things happening in the bill
, not what I'm doing in today'svideo.
I'm going to talk about the taxbenefits and the tax perks in
the bill for you as anindividual or as a small
business owner.
Next, I'm going to go over theprocess and what to expect next.
(01:06):
There's a couple steps that aregoing to be necessary along the
way.
There could be some derailmentshere.
Likely this thing is going tosell through, but there are some
issues that still need to beresolved.
And then I'm going to go overwhat goes into effect in 2025.
There are a number ofprovisions that go into effect
in 2025, and there's otherprovisions that go into effect
in 2026.
So it's important you knowwhat's going to matter on this
(01:27):
year's tax return versus what'sgoing to be mattering in the
future.
Now I want to go over a coupleof important notes at the
beginning here.
First, there was tax reformnine years ago.
What happened tax reform nineyears ago is there are a number
of provisions that are set toexpire.
For example, lower individualrates, doubling of the standard
deduction, qbi, small businessdeduction those things are all
(01:49):
going away.
This is the last year of thosebig tax breaks that came about
nine years ago.
However, this legislation isextending many of those,
improving some of them, reducingothers and adding things in All
right, so we're going to begoing over all of that.
Now.
The key thing you need to knowhere is there was a prior house
(02:10):
bill.
It's very similar to this billthat just passed the Senate.
But this bill that passed theSenate has had a number of
changes just in the last fewdays alone.
It passed this morning 51 to 50.
Okay, the vice president, jdVance, had to vote on this bill
for it to pass the Senate, butit was passed and this is now
going to be signed by PresidentTrump.
Now I'm going to go over somethings that still need to happen
(02:32):
.
President Trump said he wantsto sign this by the 4th of July,
and even today he just said I'mnot sure I'll be able to sign
it by the 4th of July becausethere's still some procedural
things and a vote that needs tohappen in the house as well.
All right, let's break throughthe provisions that are going to
go over and save you money asan individual first and I want
to talk about any of you who aresmall business owners or real
(02:53):
estate investors.
There's a number of provisionsthat are super beneficial to you
as well.
But let's hit the individualones, because those apply to
everybody, and this is theSenate bill.
What you've heard about thehouse bill, by the way, doesn't
matter.
The Senate bill is going tocontrol.
This.
Thing's going to go right backto the House where they're going
to have to vote on this.
So the Senate bill is what'sgoing to be critical here.
All right.
First, individual rates.
(03:13):
Individual rates are going downfor everybody 2% to 3%.
I don't care if you're lowincome, middle income, high
income, tax bracket, your ratebracket.
Your rate is going to be two to3% less because of this bill.
Now, this provision is in effectin 2026.
We already have the lower ratesstill for 2025 that are going
to expire.
Everyone's bumping up.
Next year, for example, let'ssay you're in a 12% tax bracket
(03:37):
right now.
Next year, you're going to bein a 15% tax bracket.
Your bracket's going up 3%.
You make a hundred grand a yearand you're in that bracket.
That's going to cost you $3,000.
Okay.
So what's happening, though, isthey're maintaining the lower
rates, so you're going to getthat in 2026, moving forward.
Now the highest rate 39.6% thatused to be the old high rate was
(03:57):
reduced to 37.
37 will stay the highestbracket and the highest rate in
the federal tax code.
Now there was talk aboutPresident Trump saying he was
willing to negotiate up to a39.6% rate for those making 2
million or more.
That never happened.
The highest bracket is stillsitting now at 37% and that's
what passed the Senate.
Now this is permanent and thisis a critical point on these tax
(04:21):
provisions.
Most of these are permanent.
Some of them are only good forthree to four years.
I'll be mentioning which iswhich share as we go through
them.
But the rate reduction 37% maxrate, everyone else getting two
to 3%, no matter what bracketyou're in, that is permanent.
It won't expire again.
All right.
Next let's talk about thestandard deduction.
This is the second mostimportant one that impacts every
(04:42):
individual tax filer.
The standard deduction issomething you take on your tax
turn where you say, hey, I'm notitemizing all of my deductions,
I'm not taking charitabledeductions, I'm not taking
mortgage interest, I'm nottaking state and local tax
deduction.
These are all higher incometaxpayer deductions typically,
or at least middle upper incometax deductions I'm not taking
those, I just want to take thestandard deduction.
(05:03):
Income tax deductions I'm nottaking those, I just want to
take the standard deduction.
Just give me a regulardeduction so I don't have to
track all that.
Well, that is mostly somethingthat middle income, lower income
filers take as the standarddeduction.
Under the standard deductionright now, the Senate bill is
$32,000 for married, $16,000single.
This starts in 2026.
If that is not if this was notpassed, though, by the way, this
(05:23):
would be half that Okay.
So that would be 16,000 marriedand, you know, an 8,000 single
in 2026 without this passing.
So this is again one of thosethings that's set to expire in
tax year 2026, but the doublingof the standard deduction was
maintained and again madepermanent under the Senate's
bill.
All right, child tax credit.
(05:44):
This is one that variedsignificantly from the House
bill that passed about a monthago.
Under the child tax credit,what the Senate did is they said
, $2,200 per child.
There's a phase out for highincome earners 400K married,
200k or more single where youstart phasing out and that
credit gets less and less asyour income goes up.
But if you're under those,you'll get the full credit,
(06:05):
$2,200 per child, and this isgoing into effect right now.
But what was going to happen isnext year, in 2026, the current
child tax credit is $2,000.
That was going to get cut inhalf to $1,000 in 2026.
But this will be $2,200 perchild and this is also something
(06:26):
being made permanent Now.
In the House bill they weregoing to do $2,500 child tax
credit per child, but that wasonly going to be for three years
and then it was going to godown to 2000.
So this 2200 per child underthe Senate bill frankly is
better overall.
For any of you with kids orthinking about having kids, this
is a huge benefit because thisis a tax credit.
(06:46):
It's not a deduction thatreduces your taxable income.
Right?
Let's say you make a hundredgrand a year and you get that
$32,000 standard deductionbecause you're married.
You're only taxes.
If you make $68,000, then youdetermine what your tax bracket
is and all their deductions, andmaybe you owe $2,000 in tax at
the end of the day.
Well, if you have the child taxcredit of 2,200 bucks, that's
(07:07):
going to wipe out all of yourfederal tax and you actually
would get a refund.
So the child tax credit isabout the tax you pay.
It's a huge benefit for any ofyou that have children or
thinking about having kids andagain, that $2,200 amount is
being made permanent.
Okay, next one on the individuallevel was the state and local
tax deduction.
This one was massive.
This one is one that wasdebated in the House and it
(07:31):
could cause some issues here, asthe House is going to have to
pass the Senate bill here we'regoing to talk about next steps
here.
In a second, under the Senatebill, they said the state and
local tax deduction is going tobe $40,000.
That is the max cap that youcan take as a deduction for
state and local tax.
You paid and that is for fiveyears.
You will get that for fiveyears, starting in 2020,
(07:52):
starting in 2030, excuse me,that is going to go back down to
$10,000.
The current deduction amountyou can take for state and local
tax is $10,000.
Now this is a new thing thatcame about with tax reform back
again nine years ago is, theysaid it was actually before this
law nine years ago you couldtake an unlimited amount of
state and local tax deduction.
(08:12):
For example, let's say you make$200,000 a year, you live in
the state of California.
You pay $20,000 in state incometax to the state of California.
Well, under the federal tax law, what you traditionally could
have done before tax policy nineyears ago is you would say hey,
I paid $20,000 in state tax,federal government, I didn't
(08:33):
make $200,000.
20 grand of it went to thestate of California.
I made 180.
Tax me as if I made 180.
And that makes sense, right?
You don't actually get to keepthat money.
So how can the federalgovernment tax you on money you
never got to keep?
You got to send to anothergovernment.
So that was how the law was.
There was no cap on how muchstate and local tax you can take
.
Well, in 2017, last version oftax reform, they said we'll only
(08:56):
let you take up to a $10,000deduction for your state and
local tax.
Well, a lot of higher incometaxpayers, particularly those
and even upper middle incometaxpayers, particularly those in
high tax states, got kind ofscrewed on this because they're
like why now I make again?
Let's say you're in California200K a year, paying 20K in tax.
Under the law right now, youonly get to take a $10,000
(09:18):
deduction, but you didn't get tokeep that.
So you're paying tax on 190,but you really only made 180.
So this is what the state andlocal tax deduction is.
This is why there's so muchdisagreement on it is those that
have to pay it feel veryfrustrated because they're
paying tax on money they had tosend to another government
agency.
Those that don't have to pay itdon't freaking care about it,
(09:38):
or those in no state tax, likeincome tax states like Texas and
Florida, particularly thesenators from there.
They don't care about this.
They're like that's some otherstate's problem and residents
and citizens of those states.
So this one has become political.
In the House bill it was goingto be this $40,000 cap on the
deduction, which is raising itfrom 10, what it is now.
(10:01):
So this is an improvement fromwhat it is now, but in the house
bill they were going to make itpermanent.
In the Senate bill they're likeuh, in 2030, it's going back
down to 10.
And that is actually whatpassed.
So we will see what happens.
The house has got to revote onthis bill.
This could be a contentiousissue.
There's a number of houseDemocrats or, excuse me, house
Republicans, who said they willnot support it because of this.
(10:23):
So we're going to see there'sgoing to be a lot of whipping
and there's going to be a lot ofthe Republican party's going to
have to come together in thehouse.
We'll talk about that here in asec.
But again, $40,000 state andlocal tax deduction through 2029
.
And then in 2030, it's goingback down to the $10,000 cap.
All right, the senior deductionOkay.
(10:43):
Remember Trump was out theresaying no tax on social security
.
Well, he didn't deliver on that.
But he did come up withsomething, which is the $6,000
deduction that seniors get.
Those that are 65 or older getthe $6,000 additional deduction
on top of the standard deduction, on top of the existing senior
deduction that's already there,that they already get.
They're going to get another$6,000 on top of that.
(11:06):
Now, this is only availablethrough 25, through 2028.
So that's, I guess, four taxyears there and there's income
phase-outs for those making$75,000 or more a year or those
150K or more a year married.
Now, if you are a marriedcouple, you would each be able
to take that $6,000 deduction ifyou are both over the age of 65
.
So there was something giventhere to seniors.
(11:27):
There was no tax on socialsecurity but, frankly, those
that are 65 or older areeligible for social security.
It is something that they weregiven an additional deduction
and they will get tax savingsbecause of that additional
deduction.
All right, other stuff promisedon the campaign trail.
What's in the final bill?
No tax on tips.
Again, this is the Senate bill25 K deduction, um on tips here.
(11:49):
Um, up to 150 K single, 300 Kmarried.
You start phasing out If youmake more than that.
This is, again, something thatis only available for 25 to 28.
So you get four years where youget to take that, but it goes
into effect for 2025.
So any of you making tips intax your 25, you'll be able to
deduct up to $25,000 of yourtips.
Now, an important note on thisrule is tips must be voluntary.
(12:12):
Okay, I'm already getting thequestions from business owners.
Should I just change my pricingand say this is a tip, so I've
taken in the income?
No, the tip must be voluntary.
It must be the type of work orline of business where you're
with an employee or anindependent contractor where
it's customary to be tipped inthat industry.
So you can't get creative withthis and start saying my income
is tips.
(12:33):
That's not gonna work.
No-transcript maximum deduction25K.
But again does have some phaseouts for high income earners.
Okay, no tax on overtime 12,500single, 25,000 married, where
you get a deduct and have incomeexempt from overtime pay.
(12:56):
So or excuse me from tax if itis overtime.
This again has high incomephase outs for making more than
150K single, 300 K a year ormore married.
Um, and it is only availablefor tax years 2025.
So if we're going to affect forthis tax year and through 2028.
Okay, so those are some of thestuff that Trump talked about on
the campaign trail, many otherRepublicans as well.
(13:18):
That is what was delivered, um,which is pretty good.
I think those, those are, uh,pretty good deductions.
And again, they're notsomething for high income
earners.
Okay, this is not a wealthything.
I hear so much news and buzzout there.
This is, you know, ripping offthe middle class and this is
something for the wealthy.
Wealthy people pay a lot of tax.
They're going to benefit fromthis policy, but a lot of these
(13:39):
things phase out.
You don't get them If you're ahigh income earner.
A lot of these provisions wejust talked about from the child
tax, credit, state and localtax deduction, the senior
deduction, the no tax on tips,the no tax on overtime those all
phase out for high incomeearners, okay.
So I'm a little skeptical onsome of that commentary.
Yes, the high income earnersare going to save on this too,
(13:59):
and they do pay more tax, soeffectively, they will save more
individually than someonemaking less money.
But a lot of these benefitsdon't even apply to them.
Just going to be the rates,frankly, that would be applying
to the higher income earners.
That's about it.
But we already have those ratesright now.
You would otherwise be imposinga tax on the higher income
earners.
Okay, don't want to getpolitical.
I think I just waved into that,all right.
(14:20):
Last thing on the individuallevel.
This really applies to estates.
So we've been going from incometax let's talk about estate tax
.
When you die, there's an estatetax.
The federal governmentbasically takes half of your
assets above the exemptionamount.
So there's a certain amountthat you get to pass on to the
next generation, your kids, yourloved ones after you pass away.
That is not subject to estatetax at the federal level.
(14:41):
That was set to expire and getcut in half again starting in
2026.
But this was made permanent 15million for single individuals,
30 million for a married couplewhere they can double up on it.
That is permanent.
If you have that size of anestate let's say you're a
married couple 30 million orless estate, nothing will be
subject to a state tax.
You can pass that business,that family property, the family
(15:03):
farm, whatever it may be, orwhatever assets they are down to
the kids without having to sellthem, and your heirs can
inherit that with no tax.
Anything over that will bestill subject to estate tax.
So the super wealthy are stillgoing to be subject to that
estate tax, of course, which inthat tax, is almost 50% that it
would be subject to.
But this was made permanent aswell.
This estate tax for the last 20years, frankly, has been
(15:25):
bouncing around for five-yearrenewals, four years, 10 years,
and people trying to plan theirestates for the next 10, 20, 30
years have really struggled withwhere the hell is the exemption
going to be.
Well, they did us a favor here.
They made it permanent $15million, which you can double up
if you're married, up to $30million, and that is permanent.
All right, let's get over to thesmall business savings here.
(15:46):
These are awesome and there'ssome really good ones in here
that I was happy to see thatstayed through in the final bill
.
The first one is QBI qualifiedbusiness income.
If you're a small businessowner and you're making 200K a
year, let's say, you get to takea 20% deduction on your income.
So, for example, in the 200K ofincome there, you get a $40,000
deduction on your income.
So, for example, in the 200K ofincome there, you get a $40,000
(16:08):
deduction on your income.
So your only tax is if you made$160,000.
That is the current law rightnow.
This is the small business QBIdeduction and whether you're an
LLC, an S corporation, you canuse this and take it.
And we've seen a lot of ourclients in my law firm, kko
Slurs where, by the way, we dotax planning all the time for
clients across the country smallbusiness owners but we've seen
(16:29):
this used quite a bit.
This is one of the most popular, most well-used, putting more
money back in small businessowners' pockets than any other
deduction out there.
So I'm pleased to see that itwas made permanent in the bill
and it is at the 20% Now.
The House bill that came outearlier was at 23%.
Okay, I wish that the Senatewould have got in on the 23%,
(16:51):
but they they came out of thegate and stuck to it 20% for the
QBI deduction, but they made itpermanent.
Again.
This was set to expire and goaway next year, so huge win
there for small business owners.
Next one for small businessowners 199A, also known as bonus
depreciation.
This is a provision that says,hey, if you want to go buy some
new equipment in your businessor you want to buy a vehicle in
(17:13):
your business, we'll let youexpense the whole cost of that
in year one.
Traditionally, when you buyequipment or other assets in
your business, you have toexpense it over time.
So, for example, if you boughta piece of equipment that lasts
for five years, that was ahundred thousand dollars.
The IRS would say, even thoughyou paid a hundred grand for it,
now we only let you expense20,000 this year, and then you
(17:36):
do 20,000 next year and the nextyear until over the next five
years you've expensed out thewhole a hundred thousand dollars
.
Well, for someone trying togrow and scale a business add
equipment inventory, trying togrow with employees that's tough
to do, right?
Because you're spending thatmoney and you're not getting the
tax deduction back.
So under bonus depreciation, itallows you to take a hundred
(17:57):
percent write-off on certainqualifying.
This could be equipment andqualifying vehicles and that is
also made permanent in the codeand is in effect for 2025.
So, um, this was set to go awaynext year.
By the way, it was going downto basically, you can only take
a max depreciation of 20% underthis bonus depreciation rule for
this year.
Right now it's a max of 40%,but we're going back to a
(18:20):
hundred percent starting in 2025.
And this one is being madepermanent in the tax code as
well.
This is used by a lot of smallbusiness owners to help them
grow.
It allows them to expense thesethings more easily as they're
growing and scaling the business.
This grow it allows them toexpense these things more easily
as they're growing and scalingthe business.
This could also apply to realestate investors.
You're doing a cost segregationor other things.
The bonus depreciation could behelping you as well.
(18:43):
All right, last but not least,on the provisions here and then
I want to get into the processhere what to expect, and then
talk about some things here for25, tax year 2025 and 2026.
You should be doing andthinking about Opportunity zones
.
Opportunity zones were thisthing that came about again in
the last form of tax policy.
That said, hey, you can sellany asset for a gain a business,
stock, real estate and as longas you reinvest that money into
(19:04):
a qualifying opportunity zone,it could be a real estate
project or a business in thatqualifying opportunity zone.
You pay no tax and, in fact,there's additional tax relief if
you sell and make money out ofthat asset as well.
So a lot of great taxefficiency and tax incentives
for opportunity zones.
Those are back in the bill andbeing revitalized.
(19:25):
It was a very successfulprogram for economic development
and bringing back certain areasthat faced blight and had other
issues.
So that's back in the bill andback in the tax code, I should
say, and it was also madepermanent in the bill.
All right, now here's wherewe're going next.
What's happening next is thisbill is going to the House.
Speaker Johnson in the House,their House is going to go vote
(19:45):
on this.
We'll see how quickly this goes.
The Senate seems to think, oh,they're going to be done with
this in a day or two.
The House themselves is like wegot some people pissed off over
here on some of the changes andthere's a lot of issues here in
this bill.
There's stuff in this bill Ididn't talk about.
There's spending cuts here.
There's deficit stuff happeningin the bill.
I know that's an issue andimportant to many people here.
(20:06):
I'm just here telling you wherethe tax savings are in the bill
and that also affectsindividuals and small business
owners.
By the way, big business, theyalready got their cake nine
years ago.
All right, the top corporatetax rate for large companies
went from 35 down to 21 percentand that was made permanent nine
years ago.
All of the individual taxbreaks and small business tax
(20:27):
breaks are set to expire thisyear, and so this bill is about
reinventing and making permanent, I should say, those individual
breaks and the small businesstax breaks, because corporate
America already got the taxbreaks made permanent nine years
ago.
So that's a positive thingabout the bill and one of the
things I like about it.
I know there's other reasons tohate on this from a deficit and
(20:48):
some of the spending cuts andcertain government programs you
might care about and that areimportant to many people.
So I'm not discounting that.
But what's going to happen nextis the House needs to vote on
this.
Their goal is to have PresidentTrump sign this by the 4th of
July.
I mentioned at the top of thisthat President Trump has said
he's not sure if it's actuallygoing to happen by the 4th, but
I would expect this to bewrapped up within the next week.
(21:09):
Now a lot of this stuff mattersto you in tax year 2025.
Many of these provisions, fromchild tax credits to no tax on
tips, overtime, the seniordeduction a lot of this stuff is
going into effect bonusdepreciation right now in tax
year 2025.
So this is going to affect yourtax planning.
One thing I want to make sureeverybody understands is no
(21:30):
matter what the tax is, you needto be engaged in your tax
planning.
The most engaged clients thatwe have as a lawyer at KQS
Lawyers are the ones that savethe most.
They care the most about it.
We spend so much time workingand making money.
Let's make sure we keep as muchof it as possible and are
implementing the rightstrategies to save us on our tax
return and a lot of times thatjust takes an analysis of what's
(21:53):
going on.
So in my law firm, kqs Lawyers,we do a comprehensive tax and
business consult for our clients.
It only costs a couple thousanddollars.
We look at your prior year taxreturn, we diagram out your
business and asset protectionstructure, we look at the tax
inefficiencies you may havewhere you're overpaying, and we
look at opportunities for you tosave, no matter what's going on
with tax legislation.
So whether you're using us or aCPA or other tax lawyer, please
(22:15):
get engaged on this.
If you care about how muchtaxes you're paying.
The best way to be proactiveabout that and to pay less is to
take action and go get somecompetent advice on ways you can
save, because you can use thetax code in your favor or it can
be used against you.
So just make sure you'reinformed on that, and our law
from KKOSource would be happy tohelp.
Now, please make sure you'resubscribed to the channel.
(22:35):
I'm going to be giving youupdates.
We're going to see what happenswith the house.
It's likely they are to passthis.
They already passed a very,very similar version of this
bill before it went to theSenate, but because there are
some differences here, it's gotto jump back to the house.
Speaker Johnson's conferencepassed.
There's a lot of chatter goingon right now in Congress over
whether that's going to happen,and I'll be letting you, of
course, know once PresidentTrump signs it into law.
(22:57):
Also, on my channel, I'm alwaystalking about ways to save on
taxes, protect your assets,build wealth using self-directed
retirement accounts.
Please make sure you'resubscribed.
I'll see you next time.
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.