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As part of our commitment to keeping clients informed and prepared, we’ve reviewed the proposed “One Big Beautiful Bill Act” (H.R. 1), a sweeping piece of legislation with wide-ranging implications for families, business owners, and investors. While the bill is still under debate and subject to change, the version currently under review contains several provisions that could meaningfully impact your wealth, taxes, and financial strategies.
Below is a high-level summary of the most relevant takeaways, curated for the families and business owners we serve.
1. Wealth Transfer and Estate Planning Opportunities
Increased Estate and Gift Tax Exemption
One of the most impactful changes is the increase in the federal estate and gift tax exemption from $5 million to $15 million per individual (adjusted for inflation beginning in 2025). For high-net-worth families, this presents a significant opportunity to transfer wealth more efficiently and tax-free, potentially altering long-term estate strategies.
“Trump Accounts” – A New Wealth-Building Vehicle
This legislation introduces a new type of trust called “Trump Accounts.” While the name is colorful, the concept is serious: these accounts allow tax-free growth on contributions (up to $5,000 annually) and offer favorable tax treatment for qualified distributions—such as for higher education, first-time home purchases, or small business formation. Non-qualified withdrawals may be taxed at ordinary income rates and incur penalties if the recipient is under 30. Additionally, a one-time $1,000 credit per qualifying child can be deposited into these accounts, encouraging early wealth accumulation and targeted financial support for the next generation.
More Flexibility with 529 Accounts
529 accounts are also enhanced under the bill. The definition of “qualified expenses” now includes a broader range of K–12 education costs, homeschool expenditures, and career-related credentialing—expanding the utility of these tax-advantaged accounts for families prioritizing alternative education or vocational training paths.
2. Business and Investment Tax Strategy Enhancements
Business Expensing and Deductions
Business owners will find much to like in the extended and enhanced provisions:
- 100% Bonus Depreciation extended through 2029, allowing immediate deductions for eligible capital investments.
- Full expensing of domestic R&D expenditures returns for 2025–2029, benefiting innovation-driven companies.
- Section 179 Expensing sees its limits increased to $2.5 million, with the phase-out threshold rising to $4 million.
- Business Interest Deductions are improved with favorable depreciation add-backs.
- 100% Deduction for Certain Business Meals returns for qualified employee and public-facing events.
These measures could reduce taxable income and improve cash flow for many privately held businesses.
Reduced Reporting Burdens
For individuals with side businesses or digital income streams, the 1099-K threshold jumps to $20,000 and 200 transactions—removing the compliance headache for many. Similarly, the 1099-NEC/MISC threshold increases from $600 to $2,000, easing reporting for contractors and small business vendors.
SALT Deduction Adjustments
The State and Local Tax (SALT) deduction limit is modified with updated caps and floors (e.g., $40,400 for single filers). Importantly, SALT paid through partnerships or S-corps will be counted toward the individual limit, potentially changing the attractiveness of certain pass-through strategies in high-tax states.
3. Healthcare Savings Expansion
Health Savings Accounts (HSAs) Get a Boost
The bill significantly enhances HSA flexibility:
- Medicare Part A enrollees can now contribute to HSAs.
- Contribution limits increase by $4,300 (individual) and $8,550 (family), phased out at higher income levels.
- Eligible expenses expand to include fitness, exercise programs, and direct primary care services.
- Funds from FSAs and HRAs can now be more easily rolled into HSAs.
These changes open the door to more strategic tax-advantaged savings for healthcare costs—especially for retirees or those in transition.
4. Other Notable Financial Impacts
Vehicle Fees for EVs and Hybrids
Electric and hybrid vehicle owners should expect new annual registration fees ($250 for EVs and $100 for hybrids), aimed at offsetting their lower contribution to gas taxes used for infrastructure funding.
Clean Energy Credit Cutbacks
Many clean energy tax credits—particularly for vehicles and energy-efficient construction—are being phased out or subjected to stricter rules, including exclusions for facilities linked to foreign entities. This could dampen some clean energy investment returns, especially those relying on international supply chains.
Next Steps: Planning Ahead
While some of these proposals may change before final passage, now is the time to start evaluating their potential impact. At Intelligent Investing, we stand ready to:
- Coordinate with your estate attorney to assess gifting opportunities under the proposed exemption increase.
- Review your current business tax strategy in light of new deduction limits and expense opportunities.
- Explore Trump Accounts or enhanced 529s as tools for multigenerational wealth planning.
- Maximize your HSA strategy if you’re eligible for the new contribution rules.
- Adjust investment or vehicle plans given the shift in clean energy credits and EV fees.
Our role is to stay ahead of the financial curve so you can remain focused on what matters most—your legacy, family, and time. If you’d like a personalized analysis or have specific questions about how the “One Big Beautiful Bill Act” could impact your financial strategy, we invite you to reach out.
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