Making Cents: Financial planning for ‘big, beautiful bill’ passed by Congress

SO AS CONGRESS WEIGHS THE BIG BEAUTIFUL BILL AHEAD OF THE PRESIDENT’S DEADLINE, YOU MIGHT BE WONDERING, HOW COULD THIS AFFECT MY FINANCES? WELL, JOINING US TO BREAK IT ALL DOWN ON WHO COULD WIN AND WHO COULD LOSE, FINANCIAL ADVISOR AND VICE PRESIDENT CATHERINE MCCALL. THANK YOU SO MUCH. HAPPY TO BE HERE. WELL, WE ALWAYS LOVE TO HAVE YOU, BUT OKAY, I’M GOING TO HAVE TO READ OFF OF THIS IPAD BECAUSE THESE ARE PRETTY SPECIFIC, SOME OF THESE QUESTIONS. SO WE HAVE COVERED THE EXTENSIVE SPENDING CUTS TO SOCIAL WELFARE PROGRAMS, MEDICAID, INCREASED MILITARY SPENDING AND THE SIGNIFICANT TAX CUTS FOR HIGHER EARNERS. BUT CAN YOU TELL US A LITTLE BIT MORE ABOUT HOW THIS MIGHT IMPACT ORDINARY AMERICANS? YEAH. SO SETTING ASIDE ALL THOSE SOCIAL PROGRAMS, THE $3 TRILLION OF ADDITIONAL SPENDING, YOU’RE GOING TO SEE ONE BIG CAMPAIGN PROMISE FROM PRESIDENT TRUMP HOPEFULLY COME TO FULFILLMENT. IF THIS DOES PASS. HE WAS TRYING TO GET NO TAX ON SOCIAL SECURITY. THAT WAS THE GOAL. THE WAY THAT HE’S TRYING TO GO ABOUT THAT IS BY MAKING A TAX DEDUCTION FOR SENIOR CITIZENS. SO ANYBODY OVER THE AGE OF 65 OF UP TO $6,000 OF ADDITIONAL TAX DEDUCTION, THAT’S THE SENATE VERSION 4000. IF WE’RE LOOKING AT THE CONGRESS VERSION, IT’S GOING TO BE INTERESTING TO SEE WHICH VERSION OF THIS PASSES. THIS IS A TEMPORARY DEDUCTION. IT’S JUST THROUGH 2028. SO IT WOULD JUST BE THREE TAX YEARS 26 2728 THAT THAT WOULD GO IN EFFECT BASICALLY AN ADDITIONAL TAX DEDUCTION DOES PHASE OUT AT CERTAIN INCOMES. SO THE INITIAL CAP IS AT $75,000 FOR AN INDIVIDUAL OR $150 FOR A JOINT MARRIED FILING JOINTLY. COUPLE IT ABSOLUTELY DISAPPEARS AT $250,000 FOR A MARRIED FILING JOINTLY COUPLE OR 175 FOR AN INDIVIDUAL. SO AGAIN IT’LL IT’LL BE INTERESTING TO SEE WHICH VERSION GETS PASSED RIGHT, ESPECIALLY BECAUSE IT’S GOING TO STILL HAVE TO GET TO THE PRESIDENT’S DESK. HE’S GOING TO HAVE TO. ABSOLUTELY. SO WHAT HOUSEHOLDS COULD BENEFIT THE MOST FROM THIS BILL IF IT PASSES? YEAH. SO STUDIES ARE SHOWING THAT THE TOP 20% OF INCOME EARNERS ARE RECEIVING 60% OF THE BENEFITS OF THIS BILL. SO REALLY ANY HOUSEHOLD OVER ABOUT 215, $217,000 WORTH OF INCOME IS ON AVERAGE, GOING TO GET A $12,000 TAX BREAK, WHICH IS GREAT. THE OTHER ASPECT FOR FOLKS HERE IN CALIFORNIA IS THE STATE AND LOCAL TAX DEDUCTION WOULD BE COMING BACK TO US HERE IN CALIFORNIA. SO UP TO $40,000 OF TAXABLE CALIFORNIA STATE INCOME TAXES WOULD BE DEDUCTIBLE HERE ON YOUR FEDERAL RETURN. AGAIN, WHICH IS SOMETHING WE HAD BACK IN 2017 THAT WENT AWAY. AND THAT WOULD BE COMING BACK. SO THAT WOULD BE A BENEFIT TO HIGHER EARNERS HERE IN CALIFORNIA. OKAY. WHAT ELSE MIGHT YOU BE MONITORING IN THIS BILL, ESPECIALLY WHEN IT COMES TO OUR FINANCES. YEP. SO A COUPLE OTHER PIECES THAT WOULD BE CAMPAIGN PROMISES FROM THE PRESIDENT WOULD BE THE TAXES ON TIPS AND OVERTIME. SO I BELIEVE IT WAS $25,000 ON TIPS WOULD BE A DEDUCTIBLE CAP. AND THAT WASN’T THERE BEFORE. AND THEN OVERTIME, $12,500 WORTH OF INCOME IS DEDUCTIBLE. THIS IS ALSO A TEMPORARY THING. NOT NOT A PERMANENT TAX LAW. JUST FOR A COUPLE OF YEARS OKAY. WE DON’T WANT TO END ON A NEGATIVE NOTE, BUT HERE WE ARE. YEAH. BUT I MEAN SOMETIMES, YOU KNOW, THERE’S WINNERS IN IN THESE TYPES OF BILLS. AND SOMETIMES PEOPLE MIGHT HAVE SOMETHING TO LOSE. SO WHO MIGHT BE LOOKING DOWN THE BARREL SO TO SPEAK. YEAH. I MEAN, LOWER INCOME EARNERS ARE GETTING ABSOLUTELY NOT AS MUCH BENEFIT FROM FROM THIS BILL ON AVERAGE. THEY’RE ACTUALLY GOING TO CAUSE MORE WHETHER THEY’RE GETTING MORE SPENDING OR HIGHER TAXES, SLIGHTLY OR JUST LESS OF A BENEFIT. IT’S ONLY ABOUT A 1% TAX BENEFIT. BUT IF YOU CONSIDER THAT FOOD STAMPS ARE GOING TO BE REDUCED, WHICH WOULD LIKELY AFFECT THEIR ABILITY TO HAVE MEALS, OR ALSO THINGS LIKE MEDICAID AND THE ADDITIONAL COST OF MEDICAL PREMIUMS FOR THOSE WHO ARE PAYING OUT OF POCKET FOR THOSE EXPENSES. I THINK ONE IS ESTIMATING ABOUT $26,000. IF WE SET ALL OF THAT ASIDE, WE’VE GOT A THREE PLUS TRILLION DOLLAR ADDITIONS TO THE NATIONAL DEBT, WHICH IS ABOUT $36 TRILLION SO FAR. AND GROWING EACH DAY. THAT’S GOING TO REALLY AFFECT YOUR CHILDREN, MY CHILDREN, OUR GRANDCHILDREN DOWN THE LINE. THAT’S WHO I WOULD ARGUE THAT THIS IS GOING TO AFFECT LONG TERM. AND AGAIN, A LOT OF THIS IS STILL FLUID, JUST DEPENDING ON WHAT ACTUALLY GETS SIGNED. THAT’S RIGHT. HOWEVER, I HAVE TO IMAGINE IF ANYBODY HAS ANY QUESTIONS ONCE THE BILL IS PASSED, GO AHEAD AND TALK TO YOUR FINANCIAL ADVISOR.