The Tax Bill That Could Put Thousands Back in Your Pocket...

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...(Or Cost Us Trillions)

President Trump wants this tax bill passed by July 4th, and it's already cleared the House. Now it's sitting in the Senate, and the changes could directly impact your wallet—both now and for generations to come.

Let's dive in and break down exactly what this means for YOU and your family's financial future.

Lower Tax Rates Made Permanent in Bill

The first big deal here is that the lower tax rates are going to be made permanent if this passes. So what that means is the current tax brackets—if you've been in my office, I've explained to you how brackets fill up at 10%, 12%, and 22%—those are becoming permanent instead of expiring at the end of 2025.

The impact for each of us is that without this bill, our taxes probably would go up in 2026. So this prevents that increase from happening.

Higher Standard Deduction: More Money in Your Pocket

Next is the proposed higher standard deduction. Quick interpretation here: deductions are basically numbers of dollars that you can take off your taxes. So the current standard deduction for married couples is $30,000, and the proposed amount is $32,000.

The impact for most families is roughly going to be $400 to $500 less in your tax bill than if it doesn't pass.

Enhanced Child Tax Credit

Now remember, we always want tax credits instead of tax deductions whenever we can. Tax deductions only save you 30 cents on the dollar, whereas tax credits save you 100% dollar for dollar.

For each child, current law says that we get basically a tax credit of $2,000 per child. The proposed will be $2,200 per child adjusted for inflation—that's the key part. So for a family that has two kids, that's going to put $400 extra in your pockets every single year if it passes.

What About Those With Gray Hair?

If you're somebody who's over 65, what's new as far as what's being proposed is an additional $6,000 deduction for taxpayers 65 and older, which phases out for incomes over $75,000. So if you're taking RMDs and you have income over $75,000, this would not apply to you. But if you qualify, that could save you between $1,200 and $1,800 in tax savings every year.

No Tax on Tips and Overtime

Two other things that are interesting about this bill, if it passes: there will no longer be tax on tips, which will really affect restaurant servers, bartenders, hairdressers, et cetera, as well as anybody who earns overtime. Hourly workers who get regular overtime—there will apparently be no tax on those wages.

The Auto Loan Interest Surprise

Now, what I think is interesting that's proposed here is there will be no tax on auto loan interest. So if this passes and you bought a US-made car, anyone financing a new car in America would be allowed to deduct the interest that you pay for your auto loans for qualifying vehicles.

The Controversial SALT Deductions

This next one is where all the controversy is. It's about the state and local tax deductions, otherwise known as SALT. This primarily impacts people, or so the Senate says, that live in really high tax states like New York and California. We live in Washington, and I would argue that we have pretty high property taxes.

However, the reality check is for most families that make under $200,000 and take the standard deduction, the SALT deduction isn't going to impact you. But what I want you to get is that if you live in a high-income state and you want to itemize, you might benefit from higher SALT caps. So what's proposed is that we increase the cap so that people who pay really expensive state and local taxes can deduct more of that.

Not sure if that's going to get through the Senate before July 4th, but it's really the thing that they're talking about today.

The Economic Impact: More Money vs. More Debt

There are some interesting business tax changes, which I'm going to talk about in a different episode. But let's dive into how this affects regular everyday people, right?

The idea here is that there will be some economic impact. In other words, if there's more money in people's pockets, that could—air quotes—could boost economic activity. However, this bill, if it's passed, we've all heard is going to increase our deficit in the trillions, which will affect government services and of course, future taxes, not just during our lifetime, but during our children and grandchildren's lifetime.

What This Means for YOUR Family

Let me break down the real numbers for you. If this bill passes, it's going to avoid a $2,000 tax increase in 2026. That higher standard deduction will increase your savings by $500, and the enhanced child credit will actually add $400 to your pocket. So it would save an annual benefit of about $3,000 for a family of four.

Now, what if you're a couple with no kids and around $180,000 of taxable income? The tax rate permanency avoids that $1,800 tax increase and the higher standard deduction would give you $500 more in your pocket.

The Bottom Line

It's going to be interesting to see how this plays out over the week, and of course, I'll keep you posted. We get to weigh this as we watch our senators duke this out—the money in our pocket now against the impact of the deficit. I'm not sure anybody's thinking about that, but those are the considerations on the table.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Additionally, its hypothetical illustrations are intended to form a basis for further discussions with your legal, accounting, and financial advisors.