The 5 Things You NEED to Know About In The One Big Beautiful Bill

Big tax changes became law and they affect everyone. We break down the five biggest areas your finances may be impacted by the "One Big Beautiful Bill." From tax brackets to student loan limits, baby savings accounts to charitable deductions, we explain what’s changing and what you can do about it. Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. ⁠NordVPN.com/MONEYGUY *A quick clarification on the Trump Account stipulations: Children born 2025-2028 are eligible for Trump Accounts, with the account itself able to be opened starting in 2026. So sorry for the confusion and thank you all for bringing this oversight to our attention! Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 0:31Speaker 01

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• 0:59Brian Preston?

  The one big beautiful bill was signed into law on July 4th of 2025. It keeps some old stuff, adds some new stuff, and we're going to be walking you through all of it today.

• 1:10Speaker 03

  Brian, I am so excited about this because we love helping folks decipher what policy changes mean for their money so that really they can focus on what matters most to them.

• 1:21Brian Preston?

  We'll break this bill down in five key areas, highlighting what's changing and in true Money Guy fashion, practical steps you can take to prepare. With that, let's jump right in.

• 1:38Speaker 03

  So there were a lot of changes in this bill, and really, some of the changes weren't so much that something changed, but that it was this realization that things weren't actually going to change the way that they were supposed to.

• 1:48Brian Preston?

  It's probably easier if we just let people see exactly. And we, let's start off with tax rates, deductions, and credits.

• 1:57Speaker 03

  So one of the very first changes, and this is probably the one that's the most impactful across the board, is that tax rates were set to go back to the pre-2017 levels. And instead of them reverting back to the pre-levels... The current levels were locked in, so tax brackets were slated to be 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. And now, under this law change, which now just locks in where they were temporarily, new tax rates are going to be 10%, 12%, 22%, 24%, 32%, 35% and then a top bracket of 37%.

• 2:35Brian Preston?

  Well, that's what, look, the thing about this is with legislation, a lot of times with tax policy, they do what's called sunsetting, whereas it means that these, these tax changes are temporary. What this tax bill did is it basically locked in the temporary and turned it into as permanent as things can be in Washington, meaning that until somebody votes and comes up with a new bill, this is the tax rates. And for most of you, what this means is, is that starting next year, it was go revert back to where it was. Your taxes were probably going to go up 3% to 4%. This now locks it in, so you just don't have the change and it makes it permanent for the future.

• 3:12Speaker 03

  And there were some other of those temporary changes they made permanent. Again, one of the ones that's probably going to be the most impactful to most Americans was the standard deduction. It made permanent at these new elevated levels with even adding a little temporary boost from 2025 to 2028. There's going to be an extra $1,000 for single filers or head of household, an extra $2,000 for joint filers. So the standard deduction is going to be $15,750 for single filers and $31,500 for married filing jointly.

• 3:45Brian Preston?

  And this is one for simplicity is better here. And the fact that if you think about, I've been doing taxes since the 90s and the whole decision, do you take the standard deduction or do you itemize? We've now gotten to a place because of where the standard deduction is. 90% of people are taking the standard deduction. So this would have been a big change. I know it's got a temporary boost in there, but now at least does lock in that standard deduction where it's basically twice of what it was pre-tax laws in 2016 and before.

• 4:16Speaker 03

  And then another thing that is going to change as it relates to standard deduction is there is Going to be an additional deduction for seniors. There's going to be a temporary $6,000 additional deduction for those that are 65 and older. But this one does have some phase out limits. If your adjusted gross income is over $75,000 as an individual or $150,000 married filing jointly, you're going to begin phasing out of this additional $6,000 deduction.

• 4:42Brian Preston?

  And by the way, it's 6,000 for an individual's 12,000 for a couple. But no, it's important to know. So if you're a married couple, 65 plus, this is going to, in the temporary, it's not permanent, but it is going to provide some relief there.

• 4:55Speaker 03

  Another change that we saw in the tax legislation was to the child tax credit. Right now, the child tax credit was $2,000 per qualifying child. That got locked in and it's actually going to increase to $2,200 starting in 2026. This credit itself is composed of a $1,500 refundable portion, which means even if you do not pay tax into the system, up to $1,400 of that credit can be refunded to you. And there's going to be a $500 credit for other dependents, which are still going to be subject, both of these, to eligibility requirements as well as income phase outlets.

• 5:30Brian Preston?

  This is once again, another one of those things where it's much to do about nothing because this made it permanent. But a lot of people, especially for people in the messy middle, if the child tax credit reverted back to where it was, you were going to see a pretty big change in your taxes. But because this is now just codifying or making it permanent, we get to keep, a lot of you in the messy middle will get to keep that child tax credit.

• 5:52Speaker 03

  And then one of the things that you and I talked about, Brian, we saw, there is going to be an adjustment to charitable contributions. You know, normally charitable contributions are an itemized deduction on your tax return, but there is a little sweetener for those who are charitably minded, that there's now going to be an above the line, front page deduction for charitable contributions.

• 6:09Brian Preston?

  Yeah, and this is, look, I get it. Charity is not something, if you look at the average American, that if you look at the stats, people aren't as generous as you, as you would like to think. But I know if you, if you look at our ground rules and you look at what I've written in Millionaire Mission, we find that generosity is very rewarding. It's one of our ground rules. And I like the fact that now at least, whether you itemize or you just take the standard deduction, this is making it above the line. So $1,000 for individuals, 2,000 for couples will be deductible when you give to charity.

• 6:44Brian Preston?

  That's from a generosity standpoint, I think that's a good thing.

• 6:49Speaker 03

  So those are some of the tax rate changes, the deduction changes. The question that people really have is, okay, well, who does this impact? Or how does this actually impact us? And well, as it relates to those changes, it pretty much hits everyone. Every tax filer in this country will be affected, just simply in the fact that rates were locked in instead of reverting back to the old rates. So we're no longer going to see tax rates return to those pre TCJA Tax Cuts and Jobs Act levels.

• 7:17Brian Preston?

  From a financial planner's perspective, we were already having to think about things we were going to have to do for clients to adjust for the income tax changes, estate tax changes, standard deductions. It was going to be a lot of planning. This just meant that now the status quo stayed, which from a planning perspective, makes things a little bit easier.

• 7:37Speaker 03

  And then for messy middle households, and that's those that have examples somewhere between, or income somewhere between like $50,000 to $150,000. The permanent lower rates on the tax rates, coupled with the higher standard deduction, could result in tax savings on average somewhere around $500 to $2,000 per year. Again, depending on your unique situation. And obviously, there are some additional tax savings as well for those who get the child tax care credit boost.

• 8:08Brian Preston?

  Yeah, and I will say the one that probably the biggest wins is the seniors and retirees, because no surprise there, they vote. And so the political class typically does write a lot of policies that benefit the retirees. And you see seniors with these, these big tax savings with, they didn't make social security tax free. We'll talk about that more in a minute. But they definitely did throw a nod towards senior citizens by, you know, giving them that 6,000 for individuals, 12,000 sweetener for retirees.

• 8:41Speaker 03

  So then the question was, okay, well, what do you need to do about it? Well, make sure when you go to file your taxes that you're taking full advantage of all applicable deductions and credits that you qualify for. There are some things that are changing in the tax code, and so. Just as with most things in the financial world, the more prepared you can be, the better records you can keep, the better likelihood you have of making sure you're taking advantage of whatever tax opportunities may present themselves, but also avoiding any tax pitfalls that may have come because of this legislation.

• 9:12Brian Preston?

  Hey, pay attention and review phase outs too, because you've heard every one of these, or I shouldn't say everyone, but the majority of these things do have phase outs based upon your income. So as you make more money, you do need to pay attention to these things, whether it's the credits, whether it's the deductions. Pay attention to where your income is and how that interacts with these updates.

• 9:31Speaker 03

  And then this last one, this may be a little controversial for financial mutants, but anytime there are significant and major tax changes, it may not be crazy to think about hiring a tax professional, at least, and even if it's not for like every year moving forward, at least for the first year to understand, okay, what are the things that changed? How are those things going to impact my personal tax return? And how do I make everything as completed the way that it's supposed to be? Again, first year of policy changes are always a little unique and a little hairy, getting used to the new policy. So a tax preparer, tax professional may be a solid addition to your financial life moving forward.

• 10:09Brian Preston?

  All right, Bo, let's transition into actual policy changes. What is it? What's the saying? Lions, bears, oh my, you know, what's the?

• 10:17Speaker 03

  Lions, tigers and bears.

• 10:19Brian Preston?

  There it is. Well, now instead we have tips overtime and salt. Oh my.

• 10:23Speaker 03

  Is that, that was good.

• 10:26Brian Preston?

  Stick to the notes, Brian.

• 10:28Speaker 03

  He's gonna take this, he's gonna take this on the road. So what changed? Well, one of the things that changed is there's now a new deduction for $25,000 in qualified tip income from federal income taxes for those who are paid or compensated through tips. Now, these tips are still going to be reported for payroll taxes, and you'll get a refund when you file. And this is subject to certain income phase outs, but for those who are compensated this way, this will be a little bit of a tax reprieve if you fall into that category.

• 10:57Brian Preston?

  And those phase outs are pretty high. $150,000 for single individuals, $300,000 if you're filing a joint tax return. So, you know, you remember? Remember when, when politics was being talked in campaign trail, it was taxes are no longer, tips are going to be no longer be taxed. This is the nod towards that. It's not completely, they're not taxed. They just basically came up with a deduction that up to $25,000 would be, you know, come down to not being taxable.

• 11:23Speaker 03

  And it is important to note that this is a temporary thing. This is going to last from year 2025 to 2028. And in that same temporary vein, there's also going to be a new deduction, same time period, 2025 to 2028 for federal income tax on overtime pay up to 12,500 for singles or 25,000 for joint filers. And again, the same phase outs apply for the overtime pay as it does for the tip deduction.

• 11:50Brian Preston?

  Yeah, it's back to, these are temporary things. They're really kind of going back to things that were said during the campaign and they, they made a nod towards making 25,000 of each of these things deductible if you met certain criteria.

• 12:04Speaker 03

  Now, one of the things I feel like, at least in my world, I felt I got the most press, that was the most talked about, that had the most attention on it was what was going to happen for itemized deductors with their state and local income taxes. How was that going to be effective? And there was indeed a change for those who are itemizers and pay state and local income taxes.

• 12:22Brian Preston?

  Well, look, we've been around for a while. So you can remember when the original tax bill was passed in 2017. If you lived in a high tax state, this was rough because you went from being able to deduct all of your state income taxes to where now it was capped at $10,000. And you quickly, if you paid property taxes, that was included. If you paid state taxes, that was included. $10,000 just didn't go that far. So this has tried to, to try to correct that to a degree by raising that, that, that cap on taxes to $40,000 if your adjusted gross income is under $500,000.

• 13:01Speaker 03

  Yeah. And we're going to talk about in a moment, who this affects and how you ought to be thinking about it. Before we do that, there were some pieces of confusion, both in the tax bill and then in the days following the tax bill that we want to make sure. That we clear up because there were sort of two things that got a whole lot of press right after it was signed into law and one was, one of them was, okay, what's going to be happening with social security? And then another one was some information went out that, oh, maybe Roth IRAs and backdoor Roth IRAs were going to be impacted.

• 13:31Brian Preston?

  Well, this is why we always have to be careful when you cover stuff prematurely. Remember this bill was signed into law on July 4th, where on July 3rd, the Social Security Administration sent out an email suggesting that federal income taxes on social security benefits would be eliminated.

• 13:46Speaker 03

  And if you get this email from the Social Security Administration, you're thinking, oh, this must be legit and accurate and right.

• 13:52Brian Preston?

  Well, now, once the legislation was signed into law on July 4th, it became apparent that, look, there is a nod towards seniors with the 6,000 for individuals, 12,000 for couples. So that will wipe out a lot of taxability in social security, but social security is still taxable. So we would put this out to clear up confusion. This was a false statement or a premature statement that needed to be clarified. And then the second one, I remember we were, I went out there and as soon as the legislation passed, I was like, let's go see what other content creators are doing. And look, I know we're all out there trying to get the data in front of the public as fast as possible because there's a curiosity and you're trying to get the information. But unfortunately, some of the preliminary stuff was just straight up wrong.

• 14:36Brian Preston?

  Because, and this is a big one, because when I saw it, I was like, what? Because I was like, is that in there? I immediately started doing my own research. So Roth and backdoor Roth changes, these things have been on the bubble with some of the proposed legislation in the last few years where if you're not aware, Roth IRA contributions have an income threshold, but there is a pretty easy threshold because of Roth conversions not having income caps on them, that if you have the right account structure, you can make a non-deductible contribution to a traditional IRA and then convert it into a Roth IRA. So that essentially gets around the income thresholds with Roth IRAs. And then there's even, I won't even go into it, but

• 15:19Brian Preston?

  there's what's called a mega backdoor Roth conversion strategy. If your retirement plan is structured the right. Way with after-tax contributions. Well, a lot of content that was being created said that this legislation was doing away with backdoor Ross with mega backdoor Ross. And we just want to go ahead and clarify for you guys. We looked into it.

• 15:38Speaker 03

  It's not in there.

• 15:39Brian Preston?

  This is not a true statement. There have been legislation proposals that have targeted these things, but this legislation, it did not happen. So you can still do your Roth backdoor conversions and you will be okay.

• 15:54Speaker 03

  And so when we think about these policy changes, the question was, okay, well, who does this impact and how does it impact? And well, obviously it's going to impact anyone who's part who part of their compensation is paid through tips if they fall into the income thresholds, there will be an additional deduction there. It's going to impact overtime workers, those who qualify for the overtime, they're going to get a deduction. And then if you're a taxpayer that lives in a high tax state, whether that be high property taxes or high income taxes, this is likely going to affect you because more of those taxes will now be deductible on your return than they were previously assuming you fall within the appropriate income threshold.

• 16:33Brian Preston?

  And now let's talk about what you need to do. Look, if you have any tip income, this is probably the biggest, if we're trying to clarify, because remember it was tip income's just not going to be taxable. No.

• 16:43Speaker 03

  That's not right.

• 16:44Brian Preston?

  They just put a deduction on it. So this is why it's on you now to track this because as Bo has already covered, this still going to be subject to payroll tax or self-employment taxes, whatever, however you file your taxes. But it's also going to be on you now to make sure that you can meticulously report this accurately on your tax return.

• 17:03Speaker 03

  And then if you are an overtime worker, you want to make sure you check your FLSA exemption status and tax applicability. Is this something that I qualify for? Do I fall into this group of workers? Is this a deduction that I can take advantage of?

• 17:18Brian Preston?

  And I think, you know, earlier I said that only 10% of people now itemize, 90% take the standard deduction. I do think raising that salt limit from 10,000 to 40,000, you will have more people who live in high tax states probably now itemizing because you're going to need to analyze, hey, I need to compare what the standard deduction is versus itemizing. You're going to see more people fall into that category. So see if you're one of them.

• 17:43Speaker 00

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 18:13Speaker 04

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• 18:42Speaker 03

  All right, Brian, there were, in addition to the policy changes and the rate changes, there were some other changes inside the legislation that kind of affect the way that we look at future financial planning. As we're planning on making decisions in the future, there are some things in here that affect that. And one of those things where they slightly, to a small degree, changed the rules for 529 plans.

• 19:02Brian Preston?

  Yeah, I mean, 529s. Can we say these things, they just get so much love? Because when they first came on the scene, they were just for college savings. But over the years, we've added trade schools. We've added where you can, if you have extra money, you can turn it into Roth contributions. Well, now, you know, and a few years ago, they made it to where you could do K through 12 contributions or payments for private school. Up to $10,000. Well, this, the legislation changed it to where now you can expand that to $20,000.

• 19:33Speaker 03

  So that's going to be for folks that are using 529s for primary education. It's going to be a pretty big benefit, or at least a pretty big deal. It's worth assessing. That's one thing that's going to affect children that you are saving for, for college or for primary education. But there was another change in the legislation that's going to affect kids and it's going to affect them at an even younger age. And these are the Trump accounts, which are a new custodial savings accounts for any US citizen or resident children that are born between January 1st, 2026 and December 31st, 2028. Essentially, if your child is born inside of that window, there's a special account that's going to be open and they're going to be eligible and able to take advantage of.

• 20:16Brian Preston?

  So the way this is going to work is the government, just during this, this limited window, January 1st of 2026 through December 31st of 2028, they're going to put a thousand dollars into these accounts. Now, it's a little gray on how it's going to be invested, but all preliminary indication is these are going to be low cost index funds. I'm waiting to get clarification as more details come out. But it is very interesting that the government's going to put a thousand dollars at birth and then you're going to be able to allow to make annual after tax contributions up to $5,000.

• 20:48Speaker 03

  These accounts are there, but there are some restrictions in terms of when and how they can ultimately be used.

• 20:54Brian Preston?

  But it's still for us, it was fun to say, because we've been talking about this for years and we've even had elementary, we've had school teachers who have used this as a teachable exercise. If you go to moneyguy.com/resources, we have the wealth multiplier. And we've been telling people, they're always shocked that for a baby, you don't have to put much money to turn them into a future millionaire. And I thought it was for illustrative purposes, education wise. It's crazy. And this is the power of compounding growth, that a thousand dollars has the opportunity to potentially become $650,000 at retirement. If you think about that from what you're contributing versus what the market value is at retirement, you're only contributing 0.2%.

• 21:36Speaker 03

  It's wild.

• 21:37Brian Preston?

  Of the value. The other 99.8% is growth. That is the power of compounding growth. Now you can go to money guy.com slash resources and I want you to look at our our wealth multiplier because we have every age on here from zero all the way up to 65. So you can see what the potential is for your army of dollar bills.

• 21:58Speaker 03

  Or if you if you are someone who's going to have a child in this window and you're going to get the $1,000 account, do you realize for that brand new newborn, if you just put an additional $544 in there at birth, government seeds it with a thousand, you do 544, that account, again, assuming that it's invested in low cost index funds, that account in and of itself by itself can turn that newborn into a millionaire by retirement. It does have the ability to be pretty impactful. And so the question becomes, okay, well, who does this hit? It hits any family that's expecting a newborn between January 1st, 2026 and December 31st of 2028. So if that was part of your natural plan anyways, there's

• 22:42Speaker 03

  a good chance that you may have the ability to open up one of these accounts and benefit from these dollars being in there. Or if you're a family that's using 529 assets to pay for K through 12, then these tax law changes are going to be something that you could potentially use and could potentially take advantage of if that's part of your financial plan.

• 23:00Brian Preston?

  I thought it was funny. We had a between the live stream and when we recorded this episode, we had actually a client of the firms, you know, their money guy people as well come in, do a studio tour and they're my age. And they're like, I asked my wife, should we have another kid because of this whole January 2026 to December 31st of 2028? I mean, it's a thousand dollars, but it's still, you know, it's interesting to see how this plays out.

• 23:24Speaker 03

  So the question, okay, what do I need to do about it? If you're eligible, if it's applicable to you, just make sure you're paying attention to the news, paying attention to the headlines, know the rules around the Trump accounts, how to make sure you get your setup, how to make sure you're able to monitor and track it. There's a lot of information we do not know about them right now. But when they are set up, or even if you're not counting on the Trump account, you want to do this on your own, if you can do something like automating contributions, whether it be to a Trump account, or whether it just be to an account for the benefit of your child through some other custodial mechanism. If you can do that in automated, it's amazing how much that wealth can build over the long term, assuming that you're in the right place in the financial order of operations to begin to do that.

• 24:08Brian Preston?

  Well, and then if you think about 529s, the changes we talked about, I want to encourage everybody to take a very active role with how you're going to use these accounts because you do need to be very proactive because, look, I got a senior in college right now. So I have been in the trenches. I know how this works and you do feel like as soon as your child enters college, or actually it could be even K through 12, but as soon as you have school aged children, you're on the clock to maximize the tax free growth opportunity. Because realize you make the contributions in these accounts. A lot of times you, certain states allow tax deductions. They grow tax deferred, but if you use them for qualified expenses, they can be withdrawn completely tax free, but it's on you to be proactive with making sure you maximize that opportunity.

• 24:51Brian Preston?

  So if you're sending your kids to private school, K through 12, integrate that into your plan for college, integrate that into all the expenses you're going to be paying and just make sure that you're coming out on the other side, not with an account with a bunch of money that doesn't get utilized, that you're actually maximizing that tax free opportunity.

• 25:09Speaker 03

  So obviously 529s is one way to pay for school, but now let's talk about the other end of the spectrum, those who had to take some other recourse to pay for their education. Cause again, there was a lot of fervor and a lot of media attention around student loans. And so we want to walk you through what was in this bill, what changed as it relates to student loans. And here's the big thing, effective July 1st, 2026, there are now going to be borrowing caps on the amount of debt that you can incur for student loans. So for unsubsidized graduate loans, they're going to be capped at $20,500 per year or $100,000 over the lifetime. For professional degrees, so that's like medical school or law school,

• 25:54Speaker 03

  it's going to be capped at $50,000 per year or $200,000 per lifetime. And the overall federal loan lifetime limit for a student, maximum amount they can borrow is going to be $257,000. So they're trying to

• 26:09Speaker 03

  Limit and input some restrictions so that student loan debts for any individual cannot blow up into the hundreds and hundreds of thousands of dollars.

• 26:17Brian Preston?

  And they even, they even capped the parents plus, you know, $20,000 a year per student, $65,000 lifetime, definitely some boundaries. This is going to create, it'll be interesting to see the ripple effects. What does this do to the cost of education? What does this do for students who are out there trying to figure out how they're going to fund education? This is some pretty big changes. So, Bo, there were some additional changes that went even beyond this.

• 26:43Speaker 03

  Yeah, so this is for folks in the future that are going to borrow, but they also made some changes for folks that have already borrowed and now are in the repayment process. There were a number of changes to the repayment plans. The SAVE plan, the PAY plan, the REPAY plan, and the ICR plans are all eliminated as methods by which you can pay back your student loans. Any new borrower, and that's anyone who borrows after July 1st of 2026, is now limited to really three repayment options. There are, there's the standard option, which has a 10-year fixed repayment window. There is the RAP or Repayment Assistance Plan, which varies anywhere from 1% to 10% of income. There's going to be a $10 minimum

• 27:27Speaker 03

  per month payment you must make, and that's going to be amortized over 30 years. And then there are still income-based repayment plans where it's based on the amount of discretionary income that you have, depends on what your student loan payments will be. So if you happen to be on one of these payment plans that's going away, the SAVE, the PAY, the REPAY, or the ICR plans, you have to switch to a new payment plan by July 1st, 2028, or you're going to be automatically defaulted to the Repayment Assistance Plan.

• 27:58Brian Preston?

  I mean, look, guys, this is something to pay attention to. I mean, because this is a big change in this. I mean, I don't know if the press is covering this enough, but I just want you to be proactive because there's a big difference between, here we are in the second half of 2025, you've got until July 1st of 2028 to figure out your game plan to kind of update your repayment. Plan. So this will be interesting.

• 28:21Speaker 03

  Well, what's going to happen is because a lot of these payment plans have changed from a cash flow perspective, there's a lot of folks that they're going to be hit with a pretty big adjustment. If you look at this chart, what this shows is what you can expect your payment to increase by on average, depending on what type of or depending on the size of your debt. And so you can see for a number of folks, the required payment that you're going to have to be on if you're going from the save plan to the RAP plan is pretty significant. So you want to make sure that you're at least aware of this and that 2028 date does not sneak up on you because there's likely some planning you'll need to be doing between now and 2028.

• 29:01Brian Preston?

  So let's talk about what to do about all this because we Bo just kind of gave you the the big part. If you are one of those eliminated plans, don't sleep on the top. I don't want you to procrastinate and wait because these are going to be from a cash flow perspective, this could be very big for you. So you need to go ahead and right now, start planning how you're going to be prepared for that change that will kick in in 2028. And then for those who are future students, look with these new thresholds, I think what the intent was to try to put some boundaries up on what education costs. But I we've we've been telling you for years, you know, there's a reason one of our guidelines, we always try to give you our own guidelines is we don't want you taking on

• 29:41Brian Preston?

  more student loan than what your first year salary is coming out of school. And that's why I think a lot of times you have to get creative. Whereas if you are, there's nothing wrong with going to community college, you know, your first two years, there's nothing wrong with trying to make sure you're maximizing scholarships and grants. I always tell people, look, I think when I was a student, not knowing how systems worked, I took the SAT one time. Now, being a successful family, having kids and knowing how the system works, I had my daughter take the ACT multiple times because I didn't realize what a secret decoder ring for scholarships it was if we just could get her ACT score up over a threshold. Don't sleep on these things. I think sometimes when you don't

• 30:26Brian Preston?

  come from money, you just don't know how to be proactive in how you're going to pay for your education. So maximize those scholarships, maximize the grants. And then, like I said, don't there's nothing wrong. I know state of Tennessee. Has this great program that pays for the first two years if you go to community college in the state of Tennessee. There's nothing wrong. Bo, we know a lot of people that go to community college and then transfer to the, to the big universities for their junior and senior year.

• 30:52Speaker 03

  Yep.

• 30:52Brian Preston?

  Does their, does their diplomas look any different?

• 30:55Speaker 03

  Not any. The diploma doesn't say how many years were there. It just tells what stage that you actually walked across. So make sure you're taking that into consideration. And then if you are someone who does have student loans and you're currently repaying, you ought to do the work of figuring out, do I need to accelerate my payments on the high interest loans to begin building up for when rates or for when my payments might increase in 2028. But we want to make sure that you're doing that under the, under the authority and under the guidance of the Financial Order of Operations. If you don't have your free copy, go to moneyguide.com/resources. What you ought to be thinking about is based on where my student loans are, does this qualify as high interest? Does this qualify as low

• 31:40Speaker 03

  interest? And when I have to reset in 2028, will I still be able to afford the payments? Or do I need to be making decisions right now to help me begin thwarting off those potential hikes in my payments?

• 31:51Brian Preston?

  So kind of we walked through the big things. I want to close out with what we like to call the honorable mentions. These are other big changes, but they, they just, they're very specialized. So we didn't want to spend too much time. So we'll hit these pretty quickly. The first is the estate tax. So if you are, you know, they've locked in now where it's 15 million an individual, 30 million as a couple. That's a pretty big deal, pretty big to make it especially permanent. The other thing that's going for, if you're a high income person and you're charitably minded, there's now going to be a half a percent AGI floor on itemized charitable deductions. This doesn't impact most people because like I said, you don't even itemize. And then also they've now allowed this above the line deduction for charity for up to 2,000 for married couples. But if you are

• 32:36Brian Preston?

  a high income person that itemizes and gives a lot of money in charity, you will now have a half percent AGI floor.

• 32:43Speaker 03

  Another thing that's changing that we have not seen is there's going to be a temporary deduction. For auto loan interest. Again, this lasts from 2025 to 2028. You're able to deduct up to $10,000 of interest on loans for new US assembled vehicles. But this does phase out at certain income levels. If you have over 100,000 AGI as a single person or $200,000 as a joint filer, you cannot deduct the auto loan interest. But if you are below those thresholds and it's a US manufactured automobile, automobile interest on a car note will now be deductible, at least for the next three.

• 33:19Brian Preston?

  Hey, as being just cold water in the room is, um, this doesn't get you out of 238. And remember, we, we want you, we don't want you driving around in your wealth. We actually want you building wealth in the background. It's better to be rich than to look rich. And then I'll keep going. Bonus accelerated depreciation. This is something for, for business owners, real estate investors, others. They're essentially allowing, um, investor class to take accelerated depreciation in the year of acquisition.

• 33:48Speaker 03

  And then the last change, the last honorable mention is the qualified business interest deduction was something that was introduced a number of years ago. It's now been made permanent, the 20% deduction that applies to pass through entities like S Corps, LLCs and so forth is now going to be permanent. So if you are someone who's part of the hustle economy, side gig economy, if you have some other type of income coming in, there's a good chance that you might qualify for the QBI deduction. So you want to make sure that you understand what those industries are. And is this a potential tax benefit that you could receive on your tax return?

• 34:22Brian Preston?

  And there's even more. Like there's a qualified small business exclusion. Here's the big thing I would tell you is that, as I've shared many, many times before, is your desire should be to keep your financial life as simple as possible. But success naturally breeds complexity. So as you can see with these other changes, once you start having more and more success and you have more assets, you have other things going on, this is going to naturally get complicated. And yes, we, we kind of went through these other changes very fast. But don't, don't think we haven't read into these things. We could help you. If you have never experienced and don't know, what does bonus depreciation mean? For me, what is QBI and how does that intersect with my businesses? We would encourage you, don't feel like you're in this alone. We'd love for you to become a client.

• 35:07Brian Preston?

  This is the type of stuff, we are head cat herders for the complexity of our clients. If you get into a successful situation and you're trying to figure out, how do I maximize all these opportunities? We're going to leave the porch light on and make it happen. Now, look, if you're watching this and you're like, I'm not quite there. What's the, how do I maximize all the free stuff? I want you to go to moneyguy.com/resources. Please take advantage of all of our free stuff. You can do this absolutely for years. So to see the proof is in the pudding of how successful you become. But for those of you who've been around for a while and your cup is filled up and now it spills over with all this complexity. We'd love for you to reach out. I'm your host, Brian Preston, Mr. Bo Hanson, Money Guy team, out.

• 35:48Speaker 03

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.

• 36:21Speaker 05

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