Tax Talk: Key Takeaways from the "One Big Beautiful Bill"
Introduction
Hosted by David Rath & Sarah Dorsey, CPA
To Go Straight To The Video, Click Here
With major tax changes on the horizon, David and Sarah break down the proposed "One Big Beautiful Bill" and its potential impact on individuals, families, and business owners. Here’s what you need to know.
1. Individual Tax Changes: Lower Rates, Higher Exemptions
Extended Tax Cuts: The bill aims to make TCJA (2017) rates permanent, preventing a 2025 sunset that would raise the top bracket from 37% to 39.6%.
Estate Tax Relief: The federal estate/gift exemption (currently ~$30M for couples) may stay intact—avoiding a 50% cut. (Note: State limits, like NY’s, remain lower.)
Family-Friendly Credits:
Child Tax Credit stays at $2,000 ($1,000 refundable).
Charitable Deduction: $300 "backdoor" deduction for standard filers.
Key Point: Roth conversions become more strategic with locked-in lower rates.
Actual Quote:
"These lower tax brackets make [Roth conversions] beneficial now... You’re accelerating tax into a period with lower rates." —Sarah Dorsey
2. Business Focus: Shifts in Deductions & Credits
Pass-Through Entity Tax: May end for service businesses (e.g., CPAs, investment firms) but expands for manufacturers.
Key Incentives:
Section 179: Immediate expensing for equipment (up to ~$2M).
R&D Credits: Enhanced for innovation-driven industries.
Opportunity Zones: Revitalization investments retain tax perks.
Key Point: Service businesses should reassess structures to preserve deductions.
Actual Quote:
"I was surprised [the bill] targets service businesses... Planning around income thresholds will be critical." —Sarah Dorsey
3. Planning Opportunities: Act Before 2026
Roth Conversions: Accelerate while rates are low.
Estate Planning: Leverage federal exemptions (e.g., gifting) to minimize state taxes (NY has no gift tax).
Business Owners: Revisit entity structure and equipment purchases to maximize deductions.
Key Point: Proactive planning is essential—don’t wait for deadlines.
Actual Quote:
"We have four years to plan... making changes now based on what we know is pretty amazing." —David Rath
Final Takeaways
Individuals: Protect wealth with Roth conversions and gifting strategies.
Businesses: Adapt to changing pass-through rules; capitalize on R&D credits.
Stay Flexible: Final bill details may shift—consult your advisor to tailor strategies.
Next Steps: Schedule a call to discuss how these changes impact your unique situation.
