What the Big Beautiful Bill Really Means for Your Tax Strategy: New opportunities emerge for many Americans but strategic timing and thoughtful tax planning remain key
By: ABIGAIL MCClOSKEY, CFP®, CLU® & MARTINA PFEUFFER, CFP®, CDFA®
Early headlines about the “One Big Beautiful Bill” sparked excitement with claims of eliminating Social Security taxes and making tips and overtime tax-free. While attention-grabbing, these headlines were often misleading.
In an age of information overload, even the most financially savvy individuals can find it difficult to interpret what the bill actually means for them, their families, and their businesses.
Together with our tax planning partners, we’ve taken a deep dive into the 900+ pages of legislation to identify real opportunities for our clients. The key is understanding which provisions apply to your unique situation, and when it's the right time to take action.
Misconceptions vs. Reality
As your trusted partners, we’re here to help you cut through the noise and make sense of what this complex legislation means for your financial future. Let’s separate fact from fiction and explore why it matters to you.
Misconception: Taxes on Social Security are Eliminated
Truth: The bill introduces a temporary $6,000 deduction for seniors over age 65, effective 2025 through 2028, with phaseouts beginning at higher income levels.
Why It Matters: This deduction does not directly eliminate taxes on Social Security benefits. Instead, it lowers overall taxable income, which can indirectly reduce or eliminate the taxation of benefits.
Additional Takeaway: The $6,000 deduction is in addition to the standard deduction and applies regardless of whether you itemize.
Misconception: The SALT Deduction Increase Helps All High-Tax State Residents
Truth: The increase in the SALT cap, from $10,000 to $40,000, is temporary (effective 2025-2029) and applies only to taxpayers who itemize and have AGI under $500,000, with steep phaseouts beginning at that threshold.
Why It Matters: If you typically ignore SALT deductions due to prior limitations, this change could open up significant tax savings. It’s especially important for those with fluctuating MAGI or joint filers near or above the phaseout threshold to plan proactively.
Additional Takeaway: Be sure to work with your advisor to ensure Roth conversions are strategically aligned with the expanded SALT deduction and the new $6,000 senior deduction.
Misconception: Income Tax Rates are Now Permanent and Won’t Change
Truth: While this bill extends many provisions of the 2017 Tax Cuts and Jobs Act, such as the expanded standard deduction, lower tax brackets, and higher estate/gift exclusions, these changes are only “permanent” until another law changes them.
Why It Matters: The term “permanent” in tax law can be misleading. Any provision can be modified or repealed by future legislation. Staying agile in your planning is key.
Why Individual Situations Matter More Than Headlines
As you start to consider the implications of the new tax legislation, you may decide to make adjustments to your retirement strategy. Just remember, adjusting one part of your strategy can create ripple effects that impact other areas of your financial life.
Think of tax planning like the inner workings of a watch. Open the case, and you'll see a network of finely tuned gears, each one connected to the next. Turn one, and the others move in response.
The One Big Beautiful Bill Act has added even more gears to this already intricate system, which is why it’s more important than ever to work with professionals who understand how each component affects the whole.
How We’re Helping Clients Navigate the Confusion
The misinformation surrounding this bill has created the need for clear, professional guidance. At Affinity Wealth Management, we’ve taken immediate action to help our clients separate fact from fiction and understand how this legislation will impact their finances today, and in retirement.
This looks like personalized impact analysis and real-time tax modeling.
We’re conducting individualized assessments for each of our clients to evaluate how the new legislation may affect their financial picture. Our advanced tax planning software updates in real time and already reflects the changes introduced by this bill.
We’re now providing clients with side-by-side comparisons that illustrate their projected outcomes both before and after the legislation. This analysis often reveals insights that contradict the headlines while some clients may see meaningful tax savings, others may be surprised to find little or no change to their overall liability.
No Need to Rush Except for Energy Tax Credits
Most clients don’t need to make immediate changes in response to the new legislation with one key exception: energy-efficient tax credits.
Several of these incentives are set to expire soon, including the clean vehicle credit, which ends before year-end. If you’ve been considering solar panels, an electric vehicle, or other qualifying improvements, timing is essential for capturing these benefits.
For everything else, there’s time to plan thoughtfully and methodically.
What We’re Watching
From a professional standpoint, this legislation remains a work in progress. Tax experts across the country are interpreting certain provisions differently, and we’re already seeing conflicting guidance from CPAs in different states on the same sections of the bill.
That’s exactly why our clients rely on us. We’re staying on top of these developments partnering with national tax experts, updating our planning software in real time, and modeling scenarios tailored to your unique situation.
Moving Forward
The Big Beautiful Bill creates potential opportunities for strategic tax planning. But the opportunities are nuanced. The temporary deductions create a unique window for proactive planning and we're already working with clients to model multi-year strategies that take advantage of these temporary provisions while positioning them well for when the rules change again.
The reassurance you're seeking comes from having a clear plan that accounts for various scenarios, and not from trying to decode 900+ pages of tax legislation on your own.
If you’re not currently a client of Affinity Wealth Management but recognize that you may benefit from guidance, we welcome the opportunity to connect. Our initial Connect Meeting is a meaningful conversation centered around your life, goals, and vision for the future. Schedule your meeting here to explore how these tax changes may affect your unique circumstances, and how we can help you plan with clarity and confidence.
