Welcome to Something More with Chris Boyd.
Chris Boyd is a certified financial planner practitioner
and senior vice president and financial advisor at
Wealth Enhancement Group, one of the nation's largest
registered investment advisors.
We call it Something More because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay Christopher Boyd.
Thank you for joining us for another Something
More with Chris Boyd.
I'm Chris Boyd, certified financial planner practitioner.
I'm here with Jeff Perry, JD.
He is also an advisory representative with Wealth
Enhancement Group and our team is the AMR
team.
And glad to be with you.
Today, we wanted to talk about the one
big, beautiful bill, OBB, it's a law now.
So yeah, OBB, how many B's is that?
Three.
Lots to unpack in this, but it has
passed through the legislative process is now law.
And Jeff, let me ask you to begin
with one of the things I wanted to
investigate is, does all this take effect for
the 2025 tax year?
It does.
Sometimes they go retroactive, but it's, yeah, and
sometimes they start, you know, at a future
date or, you know, that kind of thing.
So that's, well, given the timing in the
year kind of makes sense, it's we're roughly
halfway.
So that is so that changes for a
lot of things.
I assume that they wouldn't because this, although
the bill is effective when he signs it,
it's actually for the October 1st budget.
So I kind of thought it was going
to be effective and, and, and the tax
cut and jobs act expires on 1231.
So I guess I thought it would have
made sense to start it effective then.
But for all the, for all the good
things, I guess people get it this year
as well.
Well, let's highlight, we can, I don't know
where you want to begin, but that's our
mission for this episode is to give you
an overview of the kind of things covered
in the one big beautiful bill act.
And you know, in the coming weeks, we're
going to, I think, want to talk about
this in more depth, put together perhaps a
webinar for clientele.
And when, when we do that, we'll make
it known so that our listeners can enjoy
the benefit from that too.
To get started though, Jeff, where should we
begin?
This wasn't an easy bill to pass.
No, and politically it's a significant achievement for
president Trump and the Republican leadership.
I mean, this was, this is the signature
legislation that the president talked about in the
campaign and you know, the early part of
his first hundred days.
And you know, he hasn't achieved everything certainly
that he wanted to, he's still struggling with
tariffs and you know, there's still two wars
kind of going on.
One definitely and one probably, but so he
hasn't, you know, he can't take a victory
lap across the entire spectrum, but on this
piece of legislation, it's a victory for him.
And it was not without angst.
It was not without the dealing, you know,
the close call in the Senate, right.
He did the vice president to be the
tiebreaker.
Well, we needed to buy the Senator from
Alaska and give her all her Alaskan type
exemptions and you know, this and that and
have the vice president step in.
So it was not a sure thing for
a while, but you know, at the end
of the day and you know, if you're
looking at a, just from this, from a
Trump-ish perspective, he had to do this
now because as you get closer to the
next election, although he's not up for reelection
obviously, but House members, Senate members who are
up for reelection, they get more sensitive to
their particular vote.
Yeah.
I mean, if this was next year, you
got the midterm elections looming and it becomes
harder because then it's more top of mind
and whatever the voting, it becomes the election
issue.
Whereas now there's a year away or so
before you've got the, what's top of mind,
who knows what it'll be a year from
now.
Right.
You know, and then if you're dealing with
it after the midterm election, it might have
a totally different composition of the Congress.
Well, that's very possible.
I mean, as you mentioned, the vice president
had to step into the, for the Senate
and the House is just, as you saw
how close that was with just a three
vote difference, I think.
So yes, this could now, or maybe never,
and he, you know, I don't think we're
going to talk about kind of the big
items in there that the president's agenda got,
you know, he'd get more money for immigration,
he'd get more money for border control, he'd
get more money for the military and the
Golden Dome idea or get that rolling.
So he got some of the big agenda
items funded and then there's a lot of,
you know, depending on your perspective.
You and I were talking about before the
show, the whole notion of the debt ceiling.
Right.
So that's a negative to me.
And I think most conservatives, I'm not going
to say the word Republican anymore.
I'm still a Republican, so don't, that's not
breaking news.
But the Republican Party in control now, I
don't particularly agree with much of their fiscal
stances, many of their fiscal stances.
So this adds $5 trillion to the deficit
over the next 10 years.
And this particular budget bill is 500 to
600 billion more than it was last year.
So this is not a fiscally, in my
opinion, fiscally conservative bill.
There's good things in it, you know, good
things that I like.
But overall, they didn't, the president and his
team, they did not achieve the level of
cuts that I think the American people expected.
As an investor, I look at the issue
of the debt ceiling off the table as
something that provides greater continuity.
There's less angst or anxiety for will the
government make good on its obligations.
So it pushes that off.
I don't dispute your point that we have
a problem long term that we've got this
growing debt.
This bill, this act will probably exacerbate that
problem with the likelihood that we're going to
have increasing debts beyond what we do last
year, $1.8 trillion deficit, something along those
lines.
This doesn't improve on that in any way.
It continues those problems.
You can maybe hope some tariff impact will
help to mute some of that.
But we're talking a fraction of that deficit
that the tariffs may help to offset, not
sufficient to offset the overspending.
And then this extends that challenge.
There's varying numbers.
I think I've seen from $3 to $5
trillion over the next 10 years of additional
spending coming out of this debt.
But ultimately, this isn't the sole issue.
The problem existed before this bill, and the
problem isn't getting any better because of this
bill.
It's still a problem.
We'll have to come back to address at
some point in time.
Well, if the Trump administration is serious about
that, like actually dealing with it, there is
a process to deal with it outside of
the budget.
It's called a reconciliation where they can go
line item by line item.
It's tedious work, and it's not getting things,
which most congressmen are trying to do, right?
They're trying to get things for their district
or for their special interest or things that
they perceive as good for their districts and
the American people, but it's reducing the spending.
So they could go through that process.
It's hard, especially with a very slim majority,
because when you're eliminating things from line items,
you're making someone unhappy.
And I joked about the senator from Alaska,
but a significant number of legislators, that's how
they perceive their job is- Protect their
pork, so to speak.
Right, and there's a hundreds of years debate
about what are you supposed to do?
Are you supposed to do what's good for
your district or good for the country?
Hopefully somewhere those two things can be reconciled,
but it's a tough process.
But there is a process, so we'll see.
But the bill passed in 870 pages of
lots of stuff, and much of it is
- Think everybody got to read it before
they voted on it?
I think they had the opportunity to read
it.
I don't know if they read it.
I guess the headline news is that, for
us anyway, and for most of our clients
and listeners, is the tax cuts of the
tax cut and job DAG are permanently-
Extended.
The tax rates are the same.
So- So that's a good thing, just
to review.
With the Tax Cut and Jobs Act, the
signature legislation of the original Trump administration, the
first Trump administration, in that legislative effort, the
tax rates got lower, but the brackets, how
much income you have before you go into
the next rate, got higher.
So for most people, tax rates went down.
In addition to that, the standard deduction was
dramatically increased from the way it worked before,
and we went from an environment where most
people- Well, it wasn't uncommon.
It was very common for people to do
itemized deductions, whereas under the Tax Cut and
Jobs Act, and now furthered with the One
Big Beautiful Bill, most people will choose to
use a standard deduction as the way to
deal with this, rather than itemized deductions, because
they'll actually probably see a better result when
it comes to their tax- Yeah, I'm
one of those people.
We went from itemized to standard deduction.
Do you recall what the numbers were for
the standard deduction for either an individual or
a couple?
It's up to, I think it's $31,500
now for joint, and half of that for
a standard deduction for an individual for 2025.
Nice.
That's a pretty substantial starting point before you'd
have to have any tax burden.
Another thing that may change the itemized part
of it, meaning some people may now go
back to itemized, is in the first President
Trump tax bill, there was something called SALT,
which reduced the amount of state and local
taxes, usually property taxes is the big one
for people, that they were able to deduct.
If you limit that to 10, and your
standard deduction is 30 round numbers, you got
to get a lot of other deductions to
get back to even.
Republicans from blue states with typically high property
taxes fought hard and successfully to not eliminate
the SALT cap, but to put it at
$40,000.
If you have an individual who has deductions,
and especially SALT deductions, that are significant, they
get above that $30,000, they may go
just with property taxes.
You get a couple of homes in blue
states that have high property taxes, and many
of these folks have more than one home,
they'll be back in the itemization team pretty
quickly.
Now you said $30,000, I'd seen somewhere
about $40,000 temporarily.
No, it's $40,000.
If I said $30,000, I misspoke.
So that's a lot.
Much bigger than the $10,000 that it
had been, right?
That's right.
The House originally put the $40,000 in,
the Senate took it out.
But had to pass it with it.
And so that was part of the horse
trading, so to speak.
Yeah.
I think there was also something about the
child tax credit.
Do you know what those details were?
But that went up as well.
Yeah, it went from $1,200 to $2
,200, a significant credit.
So it's a credit, not a deduction.
I always like to point that out because
it's actually like cash.
Not everyone understands the difference, but a credit
is an actual removal of tax.
It offsets tax, whereas a deduction offsets income.
So essentially, if you said, oh, I had
a $10,000 deduction, but I had $50
,000 of income.
Oh, it's like I had $40,000 of
income, right?
Right.
And then what's that tax?
Yeah, you have to take the deduction times
your tax rate.
Whereas if you said, oh, I have this
much tax and the credit offsets tax, it's
more powerful is the bottom line.
We like credits more than deductions generally.
Yeah, yeah, it's preferable.
And so there was some criticism by the
left about that this bill would just help
the wealthy.
There's many examples in here that showed that
that's not accurate at all.
And this child tax credit is one of
them.
Another one is the exemption of tips from
income.
Yeah, the president campaigned on this idea of
tips and overtime.
I have to say, when he was campaigning,
I said, no way to the TV.
I did not see that coming either.
I honestly agree with you, Jeff.
I thought it was a lot of rhetoric.
And I've pictured my high school campaigns for
people running for office.
We're going to have longer recess.
We're going to have- Free pizza every
day.
Pizza every day, candy machines in the cafeteria.
You know what I mean?
It was kind of one of those.
But I actually got it through.
Now, I don't know if that is permanent
or I think some of that- It
is not.
Both the tips, the exclusion on the first
$25,000 of tip income, and that does
have a limit of $150,000 of income.
So if you're a high earner and you
happen to get tips, probably not.
But if you happen to be in that
category, it starts to be eliminated at $150
,000.
So the first $25,000 of tips is
not included in taxable income.
And three years, it ends in 2028.
And the same is for the no tax
on overtime.
And that is limited to $12,500.
And it's also started to be eliminated at
$150,000.
So those are things that, just to put
it out there, that benefit the not rich,
generally.
Generally.
I would say that's true, yeah.
Another thing in that category is the $6
,000 deduction for seniors 65 and older.
And that's affected- Yeah.
So let's talk about that for a second.
The president campaigned on the idea of having
social security not subject to tax, essentially.
And that was something that proved difficult to
actually implement.
So this was sort of their alternative way
to offer something close to that, essentially.
Wasn't that the gist of it?
I think so.
I think that's right.
And so how does this work?
It's phased out by the more you make,
right?
So if there's an element of...
Certain people will get this $6,000 deduction
to help offset taxes on their social security.
That's right.
But if you make over certain amounts, you
might lose that, essentially.
And that's why I put it in this
category of things not for the rich, right?
Yeah.
I don't have in front of me anything
about where those details are right now.
Do you have that?
Or is that something- I don't have
the income limit.
Yeah, we'll get into the granular stuff in
a future seminar webinar that we'll do.
We'll be able to detail that.
Before we shift into...
I don't know where we're going next, whether
we're going to 529s and those things.
But two other things that impact people of
modest income is car loan interest now.
If you take a loan on a new
car that is assembled in the United States.
I guess we're not ready to say made
in the United States.
Yeah.
Okay.
Assembled in the United States.
A new car, not a used car.
That's correct.
So it's designed to encourage people to buy
American assembled cars.
Because, hey, we have a lot of Toyotas
made in the United States.
It's assembled in the United States.
Anyway, car loan interest, which used to be
deductible a while ago, is now deductible, again,
up to $10,000, meaning $10,000 of
interest payments.
Well, with interest rates rising, that could be
helpful, right?
It's an incentive to buy a new car
assembled in the United States and take a
loan.
I mean, most people have to take a
loan.
Most people of modest means do take loans
for cars.
Yeah.
So again, to your point, more likely to
help some of those people who are not
the rich.
That's right.
But this definitely does have some features that
do help people with wealth.
For sure.
People of means.
We could talk about the estate tax threshold
being maybe changed.
Not really changed, but just extended, I guess,
made permanent.
Slightly higher, but not hugely different, right?
It went up to $15 million, I believe.
$15 million.
It was pretty darn close.
$13.
I think it was $13.
The piece that I liked when I was
reviewing that section, what I liked about it,
and I always like about this because it
prevents or it eliminates the need to adjust
it later.
It's adjusted for inflation.
Yeah.
Thank goodness.
Right.
It takes that issue out of the way.
Yep.
All right.
So in any case, you want to sound
like you want to talk about some other
stuff, like 529 plans or some other things.
What was it you wanted to focus on?
Well, I always like talking about college education
and saving for kids.
So I thought of you when I read
this section.
For 529s, you can now use the money
to become a certified financial planner.
There you go.
And CPA, right?
And CPA, yep.
Oh, and I think other post-secondary certifications
broadly.
The summary that I read had those two
as examples.
But there's lots of times you're done with
the college and you don't really- You
have some money left over, huh?
Right.
And maybe you don't need another degree, but
a certain certification like a CFP or a
CPA.
I mean, they're endless in different professions.
I'm not going to try to- Very
good.
Yeah, so that makes it a little more
helpful.
Is it only for the obtaining of those
designations?
Or was it for like if I have
CE costs, can I use it for-
I think it's to obtain the credentials.
To obtain the credentials.
Yeah, I don't think you can keep your
CEs going for the next 30 years.
Okay, oh well.
And the Trump account, which I thought when
I saw that, I said, no way.
And actually, I'm against this.
I'm philosophically against just giving.
We started off the segment by talking about
how much debt we had.
So let's give every child born $1,000.
I mean, it's like saying in your household,
we got big credit card bills.
We're late on our car payment, but we're
going to a wedding.
Let's give them $1,000.
You know, it's just, it's great.
I mean- It's nice, but it may
be not the most responsible.
Would you elaborate on what a Trump account
is?
So it's a tax preferred, they're calling it
savings for children, with an initial $1,000
federal subsidy for every child born in these
three years again.
25, 26, well, 25 through 28.
I guess that's four years.
So does it require something of the family
to create the account, to add money for
it to be also provided by the government?
Not add money, no.
The $1,000 is a gift, and it
has to be, and this is left to
promulgate regulations and policies by the treasury.
It's not specific in the bill, but there
will be approved institutions.
You know, the commentary is it will probably
be- Like a 529 plan or something.
Right, it will be banks, brokerage, mutual funds.
And it has to be in, the bill
says the diversified index fund of equities.
So $1,000 initially, the parents can put
in up to $5,000 each year.
The $1,000 is the one time-
Annually.
And this money is tax deferred while it's
in there.
What happens when I take the money out?
And is there a limit as to when
I can take that money out?
So second question first, I tried to find
out, but the details, I wasn't able to
find out.
So, you know, many, we know this-
I'm sure it's intended to be for long
-term, you know, maybe, you know, college or
something like that, but long-term use.
I don't know the answer to that.
But if it is available soon, we know,
sadly, that many people will take it out
as soon as it's available.
Sure, sure.
Taken out, we just know that.
Anything that's given to you, you tend to
not treat it with the same value.
And, you know, people who need the money,
need the money.
Yeah, yeah.
Yeah, so there's all types of commentary, you
know, and we like to do this too.
If you leave that $1,000 there for
60 years, you know, it'd be $340,000
at typical stock market performance.
And so the idea is for college or
for, you know, the beginning of a retirement
account someday.
So let's see, let's see the regulations and
how it all works.
But for some, it will be a wonderful
gift.
And for some, it'll be a temporary three
-day cruise to the Bahamas, I guess.
Yeah, yeah.
All right, well, here's the AI quick copilot
response.
At age 18, up to half the account's
value can be withdrawn for approved purposes, such
as higher education, job training, starting small business
or purchase of a first home.
Withdrawals for non-qualified expenses will be taxed
as ordinary income and may incur penalties.
At age 25, the full balance can be
accessed for qualified purposes.
Non-qualified withdrawals will be taxed as ordinary
income and may incur penalties.
At age 31, the account terminates and all
funds will be fully accessible for any purpose
taxed as capital gains.
Okay, well, it's a preferred tax.
That's why they use the word preferred, I
guess, preferred tax treatment, because typically capital gains
are less than income taxes.
Yeah, so that's funny.
If you wait till the end, it's capital
gains.
I got to say a real side note,
a tangent.
You are becoming Mr. AI.
I'm enjoying the use of copilot in our
work environment, chat GPT, and maybe outside.
I've got to catch up.
And when I was looking for the answer,
I was just looking the normal way, Googling,
and I should have just asked copilot.
There you go.
Although, side note, copilot is not copilot, but
some of the AI is having issues.
I don't know.
Well, it's not always accurate to your point.
Yeah, I don't know if you saw the
story from this week, but X had a
major meltdown on their AI, where it started
making anti-Semitic comments.
Oh, geez.
And it did it all night.
Well, I don't know about you, but I
tend to be very polite to my AI,
just in case when they take over the
world, they might say, well, that guy was
always polite.
Please and thank you.
Are you assuming AI is going to write
your obituary someday?
What's the Terminator kind of thing?
Yeah.
All right.
Back to the one big, beautiful bill.
These are just a few of the things,
but maybe we should run over some other
big, broad categories.
There were some impact on Medicaid benefits.
That was widely talked about.
The mandate for work or volunteer or education.
80 hours a month, not 80 hours a
week.
80 hours a month, six-month redetermination.
So, those are a couple of things.
SNAP, the food stamps program, was previously called
food stamps.
Some reductions there, state cost sharing increases, I
guess.
Is that something?
And it forces the states to work on
the fraud issue.
If a state has more than a 6
% fraud rate, the amount that they have
to contribute goes up.
Except Alaska, by the way.
Except Alaska.
That was part of the deal.
All right.
What about energy?
There were some changes in some of the
incentives that had been previously legislated when it
comes to things like solar and the like.
For the most part, the way I read
it is they're evaporating right before your eyes.
The Clean Vehicle Credit, which was a significant
reason that people purchased electric vehicles, is now
expiring.
They moved up the date.
It expires September 30th now.
And also the credits, if you will, for
people doing home improvements and doing all those
things.
More efficient considerations, not as helpful as it
was.
They were expiring in 2032, I think, and
now they're expiring at the end of the
year.
Is that the kind of thing?
I wonder if there'll be a surge and
stuff before all that gets expired fully.
That's a good point.
I would expect that it would be.
Yeah.
And I'm curious, has that also been an
issue when it comes to automobiles?
I think some of the incentives that were
there for electric vehicles got affected by this
as well.
Yeah.
They moved up the date September 30th of
this year.
September 30th of this year.
Two months.
On another topic, though, defense, border, ICE funding,
they all had some impact.
You touched on some of this, I think,
already.
But that was something like $150 billion added
for defense-related expenses.
And the border, a big topic for the
Trump administration.
More money to finish the wall.
More money for those purposes to secure the
border.
And for personnel, right?
Absolutely, yeah.
Yeah.
What else?
I have a topic of...
It looks like we hit on some of
these things, the debt we talked about a
little bit.
I think for businesses, there's a tremendous benefit
of being able to depreciate.
Oh, depreciate right away.
Right.
Write it off.
I mean, it's not even really like depreciation.
Yeah, it's 100%, wasn't it?
It is 100%, which is very encouraging for
people to buy a new dump truck or
whatever it is.
I saw a special on CNBC on this
topic, but it was solely focused on jets.
Because you could buy, according to the story,
which is accurate, I think, you could buy
a $10 million jet this year, where you
would have to depreciate it previously over like
20 years.
I don't know if I could, but one
might.
Someone could.
Someone could, yeah.
Someone could.
I'm just kind of happy.
So there is things in this bill.
That might be for the wealthy.
There are things in this bill.
And the accelerated depreciation or the instant depreciation
of capital expenses related to your business is
certainly a big benefit for companies who are
making those purchases.
I think the big point, ultimately, is that
there's a lot in this.
We're going to be doing more review of
the details so that we can share with
our clientele and our listeners some of the
strategies that will come out of this.
Some of the decision-making that might be
altered.
The way we think about planning some tax
strategy.
Naturally, these are important developments.
When you have a major piece of tax
legislation, it can cause you to have to
step back and reassess some of your plans
as it relates to your financial planning.
It can create opportunities to maybe accelerate some
of the things you might have as plans.
And it can cause you to maybe just
sort of think twice about, you know, what
should I be doing?
What shouldn't I be doing?
How do I implement some of the benefits
around these tax changes?
And certainly something we'll be talking more about
as the details become more elaborated upon.
We can then assess and help guide our
clientele with, how does this play into strategy?
For sure.
Every time the federal government passes a new
or changes to the tax bill, it just
makes the profession of CPAs more secure.
That's right.
So much for a simplified tax code.
Yeah, it never seems to really get fully
simplified.
That being said, you know, I think there
are some things that, you know, when it
comes to income under a certain level with,
you get a bigger standard deduction, you got
certain things that can be really advantageous, right?
So it's good to see some aspects of
this.
I think from a simplicity point of view,
will really be pleasantly received, you know, that
kind of thing.
The higher tax brackets, the lower rates, the
standard deduction are all things that were good
benefits out of the original tax cut and
jobs act.
And it's nice to see that extended.
I think that's a virtue for most filers.
For me, the biggest benefit is it's encouraging
and incentivizing people to work, whether it be,
you know, the tax rates is a big
part of that, or whether it be, if
you're on government subsidized healthcare, you have to
do something productive with your life, or whether
it be, if you want to work overtime,
you know, the thing with working overtime is,
oh, half of it goes to taxes.
Now, not so much.
And, you know, it gives our servers and
other people who have, generate money from their
tips, gives them a break and encourages them
to work and maybe drive some more people
into the profession.
So I think it's got a lot of
good policy in it.
I just hope the debt part of it
doesn't crush us in the end.
Yeah, that's a good point.
I think that's something that, you know, as
a reality, I think you commented or maybe
Brian in a prior episode said, you know,
permanent for now until future legislation.
I think that's the reality, the way we've
got to think about this.
This is permanent, but the trajectory with the
debt is going to likely create future tax
legislation again, that will, you know, try to
address that issue that will likely continue to
be in need of attention over time.
And let us not forget Social Security, Medicare,
which reforms and funding for those programs who
are struggling and have a timeframe.
Yeah, less than 10 years on those.
Not addressed at all.
Not addressed at all in this piece of
legislation, which is fine.
But perhaps that will be on the president's
agenda in the near future, hopefully.
I would expect that it will be a
topic of political discourse for the next five
years.
You know, like, what do we got?
It's something like eight years.
Nine years, eight or nine years.
Yeah.
So, you know, we've got two presidential cycles.
We've got lots of congressional.
We're going to be talking about this a
lot over the next 10 years to get
these things done.
I hope you're wrong.
I hope we have some political courage and
find a way to solve the problem before
it's a crisis, but to be determined.
What do you think's likely?
My thoughts or your wish?
Many of my wishes don't turn into reality.
Yeah, we'll see.
We can both hope for your optimism, you
know.
I'll try to make it.
All right.
Thank you for listening.
If we can be a resource to you
and thinking about your strategy and your financial
planning, particularly when it comes to integrating not
only the portfolio and the financial plan, but,
you know, how tax issues impact the economy.
You let us be a resource.
Reach out to us.
And until next time, everybody keeps striving for
something more.
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