Over the July 4th weekend, President Trump signed the new tax bill into law. Here is how the new tax bill will affect taxpayers and investors
- Maintains the 2017 tax cuts, keeping income tax rates lower
- Standard deduction increases from $15,000 to $15,750 (individual) and $30,000 to $31,500 (married filing jointly) in 2025 and is indexed for inflation
- Estate and gift tax exemption up from $13.99 to $15M (single) and $27.98 to $30M (married filing jointly ) in 2026 and indexed for inflation
- State and local tax deduction (SALT) limit: Up from $10,000 to $40,000 in 2025, with 1% increases through 2029, and then it will revert to $10,000 in 2030
- Child Tax Credit raised from $2,000 to $2,200
- For those 65 and older, there will be an extra tax deduction of $6,000 to individuals with up to $75,000 in modified adjusted gross income, and $150,000 if married and filing jointly, and phases out for taxpayers who are above those thresholds
- Tax deduction of up to $10,000 of annual interest for U.S. assembled cars, and is reduced for individuals earning more than $100k and those married earning more than $200k – in reality, this benefit will likely amount to $500 or less for most
- Investment accounts for kids born between 2025 and 2028, funded $1,000 from the government
- Rescinds clean energy tax incentives for EV cars, wind, solar, and energy efficiency
- Increases the national deficit by an additional $3 - $3.4 trillion over ten years, and spending cuts don’t offset tax cuts and new budget allocations
We will be sure to work with clients and their accountants regarding the impact of the new tax legislation, but if you have any questions, please contact your advisor. CNBC
New Tariff Impacts: The 90-day negotiation period expired this week, and the administration issued new tariffs on major trading partners that will go into effect on August 1. The most economically impactful tariffs are the 25% on imports from Japan and South Korea. If all the announced tariffs go into effect, it would translate into an average effective tariff rate on U.S. imports of 17.6%. That’s up from 15.8% from the previously announced tariffs, and up from 2.4% in January before all the tariff announcements. According to the Yale Budget Lab, if the new tariffs remain in place, it will translate to a rise of 1.7% in consumer prices and cost the average household $2,300 per year. So far, the markets have shrugged off the new tariff announcements, probably in the belief that there will be further trade deals announced and the potential August 1st date will be moved back. Axios Macro
Some Potential Positive News for Investors: There is no shortage of bad news to get investors down and wanting to get out of the market (more in Investment Strategy below), but how about some potentially good investment news? Since 2022, capital expenditures (capex) of S&P 500 firms have increased at a faster pace than revenues, a reversal from the previous several years. And in 2025, it has accelerated since January and is projected to grow 9.4% faster than sales. Factors behind the increase are post-pandemic supply chain disruptions, labor shortages, inflation, and geopolitical risks, leading firms to invest heavily in AI, reshoring, and industrial/tech infrastructure. Capex investments often yield double-digit returns on invested capital, supporting sustainable growth. Despite macroeconomic headwinds of tariffs, inflation, high debt, etc., the surge in capital spending offers cause for optimism for continued economic growth. Reuters
Financial Planning/Investment Strategy Corner:
Staying Invested and Climbing the Wall of Worry: There is no shortage of news to make a bearish case for stocks with tariff uncertainty, potential inflationary pressures, large budget deficits, global conflicts, and the list goes on. Why stay invested given all the worry in the world? One of Wall Street’s well-worn tropes is that “Stocks climb a wall of worry.” Basically, this means that the stock market shows resilience despite short-term bad news and looks past all the challenges and eventually marches higher. So, if all the bad news has you down, try looking for some good news and put on your climbing shoes! 😊 Investopedia
Quick Hits:
- The best AI apps for general info, health & wellness, education, etc.: BuiltIn
- Pickle juice is now a cocktail darling: AP News
- A study has shown that lifestyle changes such as diet, exercise, and meditation can improve or stabilize brain function for those with early-stage Alzheimer’s disease: WSJ
- A Russian family lived alone in the woods for over 40 years, cut off and unaware of WWII or the moon landing: Smithsonian Magazine
- Need to up your hot dog grilling game? How about a Hawaiian or a Chorizo and Kimchi hot dog? Here are twelve creative recipes: Food & Wine
- Summer creative picnic salad ideas for healthier fare: Food & Wine
Personal Resilience: Building up your personal resilience is more than just about coping, but about thriving. You can do this by utilizing the three R’s: Refuel, reset, and reframe. To refuel, identify what replenishes your physical, emotional, mental, and spiritual reservoirs, such as sleep, socializing, exercise, nature walks, etc., and schedule them consistently. To reset, prepare for difficult moments by having an “emergency toolkit” such as deep breathing, brief breaks, or reframing to prevent stress from spiraling. And lastly, reframe by shifting your mindset by spotting what’s working, finding meaning in struggle, and refocusing on what you can control – your attitude becomes your ally. By using these steps in daily life, you not only bounce back from stress but you also build a grounded foundation for higher personal productivity and greater happiness. The Energy Project
Quote: “Nothing ever goes away until it has taught us what we need to know.” Pema Chödrön
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