Breaking Down the "Big, Beautiful Bill": Your 2025 Tax Planning Guide

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Big, Beautiful Breakdown: Big Beautiful Bill Tax Takeaways – Joe Oliveira Tax Director  

The tax landscape is shifting dramatically with the signing of the "Big, Beautiful Bill" this July 4th, and understanding these changes now could save you thousands in the coming years. Join tax expert Joe Oliveira as he cuts through the headlines and misconceptions to reveal what this legislation actually means for your wallet.

Much has been made about "no tax on tips" and "no tax on overtime," but Joe explains the reality: starting in 2025, service workers can deduct up to $25,000 in tip income, while overtime workers can claim deductions up to $12,500 (single) or $25,000 (joint). These above-the-line deductions don't require itemizing and help lower your AGI, potentially unlocking other tax benefits.

The conversation explores the dramatic increase in the SALT cap from $10,000 to $40,000, empowering taxpayers in high-tax states to deduct significantly more of their state income and property taxes. Families will benefit from an enhanced Child Tax Credit ($2,200 in 2025), while all taxpayers can look forward to a new charitable giving deduction available without itemizing. There's even a surprising new deduction for auto loan interest up to $10,000 annually, though Joe cautions this comes with specific requirements, including U.S. assembly of the vehicle.

Business owners have reason to celebrate with the Section 179 deduction increasing to $2.5 million, the return of 100% bonus depreciation, and the restoration of immediate R&D expense deductions. Investors receive particularly favorable treatment for Qualified Small Business Stock, with potential 100% tax-free gains for holdings of five years or more.

With green energy credits expiring after 2025 and electric vehicle incentives ending this September, now is the time for strategic tax planning. Contact Joe and the MP CPAs team at 413-739-1800 to develop your personalized strategy that transforms these tax changes into lasting financial advantages. Remember – in the world of taxes, being proactive beats being reactive every time.

To learn more about MP CPAs visit:
https://thempgroupcpa.com/
MP CPAs
413-739-1800

Episode Transcript

Speaker 1 (00:01):
Welcome to the Knowing what Counts podcast, the
place where expert guidancemeets smart financial decisions.
Whether you're a high net worthindividual or a thriving
business, the experts at MPCPAsare here to help you protect and
optimize your wealth.
Let's get started, becausesuccess begins with Knowing what

(00:22):
Counts.
Because success begins withknowing what counts.

Speaker 2 (00:26):
The latest federal tax legislation has landed in
its complex, packed andpotentially game-changing.
Joe walks us through the big,beautiful bill and highlights
what business owners andindividual taxpayers need to
watch for.
Welcome back everyone.

(00:46):
I'm Sofia Yvette, co-host andproducer, back in the studio
today with Joe Oliveira,director of MPCPAs.
Joe, how's it going today?

Speaker 3 (00:56):
Going great.

Speaker 2 (00:57):
Great.
Now, before we get started, whydon't you introduce yourself to
our audience?

Speaker 3 (01:04):
All right, well, my name is Joe Oliveira.
I am a tax director here atMPCPAs.
I've been a CPA for over 20years and I've been with MPCPAs
for over 10 years.
I work with a lot of smallbusinesses, high net worth
individuals and families, and Iwork with them in the areas of
income tax and estate planning,and families and I work with

(01:26):
them in the areas of income taxand estate planning.

Speaker 2 (01:33):
Now the big, beautiful bill was signed on
July 4th and there was a lot oftalk leading up to the bill
about no tax on tips and no taxon overtime.
What should people know aboutthis?

Speaker 3 (01:40):
Well, it's not really a no tax on overtime and tips.
It's going to be a bigdeduction for these individuals
that they'll be able to take ontheir tax return going forward
in 2025.
Qualified tip income is usuallyyour restaurant servers, your
valets.
They will be able to deduct$25,000 per year.

(02:02):
Deduct $25,000 per year andsimilar to overtime income.
The max deduction there, though, will be $12,500 for a single
person and $2,500 for a marriedfiling joint return, but both
provisions share similar aspects, like both of these will start
in 2025 and run through 2028.
Both deductions begin to phaseout once your AGI exceeds

(02:22):
$150,000 300 $300,000 for yourmarried filing joint.
A person doesn't need toitemize for this, so you don't
need to be filing extra forms.
It goes right on your taxreturn and this is what we call
an above-the-line deduction, andthis helps keep everybody's AGI
down so they can claim othercredits.

Speaker 2 (02:41):
Wow, Now there seems to be a lot of debate on
changing the SALT cap deduction.
What is the SALT deduction andwhat changes should people be
aware of?

Speaker 3 (02:51):
Well, salt stands for state and local taxes, and this
is usually what people takewhat we call itemized deductions
, what we take on Schedule A.
These are what we call yourstate income tax withholdings,
your state tax payments madeduring the year, real estate
taxes, property taxes and, insome cases, sales tax.
These taxes are, like I said, apart of your itemized
deductions, and, starting in2025, this SALT deduction was

(03:15):
raised to $40,000 for taxpayers.
The SALT deduction, though, isgoing to be limited, and it's
going to be.
That limitation is up to$500,000.
And once you get over thatnumber, it starts to get reduced
for 30% for every dollar overthat 500.
But, good news, it doesn't goto zero, it just flatlines right

(03:36):
to $10,000.

Speaker 2 (03:38):
Now there was some talk on different tax credits.
What is the difference betweena deduction and a credit and
what are the changes in creditsthat people benefit from?

Speaker 3 (03:51):
Well, a deduction is a reduction to get your taxable
income.
So if you have $100,000 incharity, it doesn't reduce your
taxes by $100,000.
It just reduces your incomethat's going to be taxed by
$100,000, where a credit is adollar for credit towards your
taxes.
So if you get $100 of a taxcredit, you reduce your taxes by
$100.

(04:11):
Some credits to keep an eye outfor is the child tax credit was
increased to $2,200 for 2025.
And the child independent taxcredits will also increase to
35% for qualifying expenses.
So again, tax credits will alsoincrease to 35% for qualifying
expenses.

Speaker 2 (04:27):
So again, those are credits that are going to reduce
your taxes, dollar for dollar.
Wow, now what are some otherbig changes?

Speaker 3 (04:33):
that will impact individuals.
Starting with 2026, individualswill be able to deduct $1,000,
$2,000, if you're married ofcash contribution.
Now I said cash.
That's important to remember,so you can't go to Goodwill and
claim this deduction but again,you don't need to itemize for
these.
So therefore, if you have astandard deduction, this is
going to be on top of that, socharity won't be lost.

(04:55):
Also, starting in 2025, autoloan interest is going to be
deductible.
You can deduct up to $10,000per year, but it does come with
some limitations.
It starts to phase out onceyour income exceeds $100,000,
$200,000 if you're married.
The car has got to be a brandnew purchase and the final
assembly of that car has to bein the US.

(05:15):
Also, something to keep an eyeout a lot of rebuilds in this
area.
So a lot of green energycredits are going to be
terminated after 2025.
So get them all in now, beforethe year ends.
For example, a lot of peopleput new windows and doors in.
You got to get them in beforethe end of the year.
And if you like solar panelsand geothermal units, those are

(05:35):
going to be done by the end ofthe year.
Also, green energy cars youhave to buy those before the end
of September, because that$7,500 credit is going to go
once a year.
Let's see October rolls around.

Speaker 2 (05:49):
Now, what types of changes can business owners
expect to see?

Speaker 3 (05:54):
There's some big ones here, starting first and
foremost, in 2025, the Section179 deduction, which allows
business owners to deductequipment right off the bat,
increases at $2.5 million.
It's a big number, but thathelps business owners purchase
property and equipment anddeduct it right now to help keep
their income down.
Also, they put bonusdepreciation back in at 100%,

(06:19):
which is just like the 179deduction.
You get an expense.
Your equipment purchase isright off the bat, starting
again for any equipment purchaseafter January 19th.
A lot of research companieshave been having to capitalize
their research and developmentexpenses in the past, but
starting in 2025, they don'thave to do that anymore.
But now, with small businessesthose are, businesses that are

(06:42):
under $31 million in sales theycan go back and amend returns to
take all the R&D expenses thatthey had to capitalize.
But they can start taking upeither a monthly return and take
it in the past or take it overa year or two going forward.

Speaker 2 (06:58):
Now, are there any changes an investor might
benefit from?

Speaker 3 (07:01):
Quite a few.
Actually, we've done a podcaston this type of business called
a qualified small business stock.
Go back and listen to that.
This type of stock, this typeof stock, actually gets quite a
good treatment.
If you sell the stock, a lot ofthe gain could be excluded.
But starting after January,july 4th, if you hold the stock

(07:22):
for three years, the gain is 50%excluded.
You hold it for four years 70,that gain is 75% excluded.
You hold it for five, it's 100%excluded and that gain
exclusion is up to $15 millionper issuer.
So you have a $15 million gainfor a stock you held for five
years.
This qualified small businessstock.
It's 100% tax-free.

Speaker 2 (07:43):
What planning opportunities should people be
thinking about, both on theindividual side and business
side, keeping all of these greatthings in mind?

Speaker 3 (07:51):
With the SALT cap going up to $40,000, going from
$10,000 to $40,000, there's alot of room to go there.
So if you have property taxesand you got the funds, prepay
those before the end of the year.
If you got state taxes to pay,prepay those again by the end of
the year.
You got to keep your incomelevels in mind when you do that.
But again, in the past we usedto say pass them.
You know, push off to next year.

(08:11):
Now we're saying bring themback into the current year.
For business owners, you know,with all these 100% bonus and
Section 179, buy your equipmentnow, you can expense it 100%.
So that way you can reallyreduce your income and really,
you know, get your business on agood foot.
And same with R&D, you know,start accelerating those
expenses now so that way you candeduct them 100%.

Speaker 2 (08:35):
What advice would you give someone wondering what
they should do now that the billis signed into law?

Speaker 3 (08:41):
Well, you know, as I've been saying, there's so
many changes.
So the best thing to do isactually contact your advisor
and just get a conversationstarted and say, hey, I got all
this going and nothing's toosmall to talk about, because you
have kids credits, you havetaxes, there's deductions, so
nothing's too small to talkabout.
And let's just be proactiveversus reactive at the end of

(09:03):
the year, because you can'tchange much in December but you
can change a whole lot in Julyand August.
So, again, if you want to callan advisor, feel free to call me
and we can talk about thetriple B law.
You can call me at 413-739-1800and just ask for Joe O.

Speaker 2 (09:20):
Wow.
Well, thank you, Joe, forsharing that with me and the
listeners today and filling usin all about the big, beautiful
bill tax takeaways.
We'll catch you next time.
Have a great rest of your day.

Speaker 3 (09:35):
Take care.

Speaker 1 (09:36):
Thanks for listening to the Knowing what Counts
podcast.
Ready to optimize your wealthand protect your future, visit
thempgroupscpacom or call413-739-1800 to connect with our
team of experts.
Remember, success is aboutknowing what counts.