The recent passage of the federal tax reform package, affectionately dubbed the "Big Beautiful Bill," brings significant changes to the tax landscape, particularly for dual-income households and small business owners. For residents of no-income-tax states like Florida, this legislation presents a unique opportunity to reassess their financial strategies.
One key provision is the extension of Section 199A, which allows small business owners structured as S Corps or sole proprietors to claim a 20% Qualified Business Income deduction. This deduction can result in substantial tax savings, as seen in the example of a Realtor with $100,000 in net income, who can deduct $20,000 and save approximately $2,200 in taxes.
The tax reform package also expands Roth IRA contributions... making it more accessible for married couples to contribute to tax-free growth. With income phaseouts now beginning around $240,000-$260,000 (MAGI) for married couples, a couple can contribute $7,000 each directly into Roth IRAs, totaling $14,000 per year.
This provision, combined with the new above-the-line deduction of up to $4,000 per couple for qualified Long-Term Care Insurance premiums... rewards families that plan early for retirement health care needs.
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According to a report by the National Association of Realtors, the Tax Cuts and Jobs Act, which includes the "Big Beautiful Bill," is expected to have a positive impact on small businesses and individuals. A senior economist at the National Association of Realtors notes that the 20% Qualified Business Income deduction under Section 199A will provide significant tax relief to small business owners, allowing them to reinvest in their businesses and create jobs.
A financial planning expert at Charles Schwab suggests that the expanded Roth IRA contributions and new Long-Term Care Insurance deduction will help individuals and families plan for retirement and long-term care needs more effectively. By taking advantage of these provisions... individuals can optimize their tax strategies and achieve their financial goals.
Tax Reform and Planning
Effective tax planning is crucial for individuals and businesses to minimize their tax liability and maximize their savings. One key strategy is to take advantage of tax-deferred retirement accounts, such as 401(k)s and IRAs, which allow individuals to contribute pre-tax dollars and grow their investments tax-free. By contributing to these accounts, individuals can reduce their taxable income and lower their tax bill, while also building a nest egg for retirement.
Another important aspect of tax planning is understanding the tax implications of investments.
For example, long-term capital gains on investments held for over a year are typically taxed at a lower rate than short-term gains. By holding onto investments for the long-term... individuals can minimize their tax liability and maximize their returns.
Tax---- harvesting can be an effective strategy for offsetting gains from other investments, by selling securities that have declined in value.
Tax planning is not a one-time event, "but rather an ongoing process that requires regular review and adjustment." As tax laws and regulations change, "individuals and businesses must stay informed and adapt their strategies accordingly." By working with a financial advisor or tax professional... individuals can create a personalized tax plan that takes into account their unique financial situation and goals.
On July 3, Congress passed a sweeping federal tax reform package called the "Big Beautiful Bill." While the name has sparked memes, the content is serious: changes to tax brackets, small business incentives, Roth eligibility, and more. For dual-income households juggling family, retirement, and taxes, especially in no-income-tax states like Florida, this legislation opens a window of opportunity.○○○ ○ ○○○
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