One Big Beautiful Bill
Key Takeaways:
1. SALT Deduction Increase: From $10,000 to $40,000 (indexed for inflation through 2029) — but phased out at certain income levels.
2. Tax Brackets from the 2017 Tax Cuts and Jobs Act are now permanent for individuals and businesses
3. “No Tax on Tips” – not exactly
4. “No Tax on Overtime” – not exactly
5. Social Security Tax Deduction for those 65 and older — up to $12,000 for couples.
6. Estate Tax Exemption now at $15M per person / $30M per couple
What is not so great:
1. Cuts to Medicaid and food stamps may be coming — but details remain unclear.
2. Adds $3.5 trillion to the national debt over 10 years.
One Big Beautiful Bill – Links
Catch all our Mullooly Asset videos here
Subscribe to the Mullooly Asset YouTube Channel
Watch this episode (“One Big Beautiful Bill – Highlights”) on our YouTube Channel
One Big Beautiful Bill – timestamps
00:11 SALT now $40,000
00:42 SALT is per tax return
01:13 SALT phase-out levels
01:42 TCJA tax brackets now permanent
02:06 Corporate tax rates
02:44 Estate taxes
03:14 “No tax on overtime”
03:48 “No tax on tips”
04:42 “No tax on social security”
05:41 Social security deduction phase-out levels
06:22 Other items & comments
One Big Beautiful Bill – Transcript
One big beautiful bill is now tax law. It’s now the law of the land.
We want to try and summarize some of the relevant points for our clients in just a couple of minutes.
The first thing that we want to mention is that the state and local tax deduction… the SALT deduction… goes from $10,000 up to $40,000.
This “sounds good,” but may not be so hot.
That $40,000 threshold, is through 2029. So it’s not permanent in any sense of the meaning. It’s only for the next couple of years. It is indexed for inflation. So if we get inflation, this number will (could) go a little higher in each of these years.
The next point is that $40,000 salt deduction cap is the cap per tax return, not per person.
It makes no difference if you’re a single filer, or if you are married filing jointly. This is a little unusual.
It’s per tax return. Now the one caveat to that is if you’re married and you’re filing separately, each of you would get a $20,000 state and local tax deduction for that.
Here’s where things kind of come off the rails:
The $40,000 SALT deduction gets phased out if your modified adjusted gross income is $500,000 or more.
And so if you’re a high income earner, this may not really even work for you. Because it starts to get phased out at 500,000. By $600,000 of modified adjusted gross income, it is gone. You cannot use it.
What happens is it reverts back to the $10,000 cap.
The other thing we wanted to mention is that, you know, a lot of people forget what the tax brackets looked like in 2016. The old tax law in 2017, the Tax Cuts and Jobs Act, made new income tax brackets. But they were only going to be temporary and set to expire in 2025.
They are now permanent – well, as “permanent” as permanent can be when it comes to tax law.
As long as we’re talking about the old tax brackets, another point I think a lot of people have missed – or completely forgotten – is that prior to 2017, the top tax rates for businesses, for corporations was 35%.
The 2017 Act lowered tax rates for many corporations, for many businesses, from 35% to 21%.
That’s gigantic. But they were set to expire in 2025.
They are now permanent.
Again, as permanent as Washington makes things these days.
The estate tax exemption is another point we wanted to talk about. It’s now $15 million for individuals, which means that a married couple can now exclude up to $30 million from being subject to estate taxes.
So for a lot of people, you’re not going to have to worry about paying estate taxes. But it doesn’t mean you can skip out on planning your estate. There is always work to be done when it comes to that.
There’s no tax on overtime, up to $25,000.
That’s if you are married, filing jointly.
If you are a single filer, you can exclude up to $12,500 of income earned in overtime.
There are no details yet, so it’s hard to say what kind of impact this is going to have. I can guess that human resource departments all over the United States are doing “the scramble,” because this is all retroactive to January of this year.
Let’s talk about “no tax on tips.”
There’s no tax on tips for individuals up to $25,000 per person, per year.
And up to $50,000 if you are married filing jointly.
Again, (we have) very little details at the time of this recording. It’s making companies that have to do payroll like this a lot harder. Again, because, like the overtime issue, it’s retroactive to January.
Now I want to be clear about something.
What, what we have discovered is that you’re still going to be taxed on tips. But if a portion of your income is earned in tips, you are eligible for some kind of special deduction for up to $25,000.
Again, no details. We don’t prepare tax returns. We wanted to just pass this along.
Alright, let’s talk about “no tax on social security.” That’s not entirely accurate.
We’re going to walk through some of this right now.
It’s for folks who are 65 years of age and older. So if you filed last year at 62, and you’re not 65, but you’re collecting social security, this may not apply to you.
If you’re 65 and older, you get an additional $6,000 per person – as a deduction on your taxes.
It’s not that social security is tax exempt, it’s that you get this additional deduction.
So if you’re married, filing jointly, you get a deduction of $12,000 per year.
Again, you have to be 65 and over. It’s only for the tax years 2025, 2026, 2027, and 2028, only for four years.
Congress has to decide if they want to extend something like this after 2028.
Now, with single filers, If you have modified adjusted gross income of $75,000 or more, this deduction starts to shrink.
Once you reach $175,000 in modified adjusted gross income, you don’t get the deduction anymore. You make too much money.
Same thing with married filing jointly: this deduction starts to phase out at modified adjusted gross income levels of $150,000.
The deduction goes away entirely if your modified adjusted gross income is $250,000 or more.
A few other quick items that we’ll mention: tax credits for electric vehicles is being phased out.
The tax child tax credit is being raised from $2,000 to $2,200.
There’s a lot more. We have not even scratched the surface on what this means for businesses and business owners.
There’s a lot more to this bill that we can’t cover in a short video.
I mean, the bill itself, the tax law, is now 900 pages in length.
There are going to be cuts to Medicaid and to food stamps.
We don’t have any of the details yet, so we’re not going to comment, pro or con, on this.
Just remember that with Medicaid it’s run at the state level. And so the federal government sends money to the state on a regular basis. It’s up to the states, the individual states, to decide how that money gets doled out.
The other thing that we’ll add is that this tax bill does add three and a half trillion dollars to the debt over the next 10 years. So I don’t think it’s a win in that regard, at all.
They still have a huge mountain of debt that they’ve got to tackle, and deficits every year.
More will be coming out on the one big beautiful bill over the next couple of weeks, but we wanted to get this out to you immediately.
Thanks for watching “one big beautiful bill.”
