Webinar Replay

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1. Big Picture: The “One Big Beautiful Bill” (OBBBA) and the 1040

• The new tax law, OBBBA (H.R. 1, Public Law 119-21), brings major changes for 2025 onward.
• Key updates include: higher standard deductions, expanded SALT deduction caps, changes to charitable giving rules, and new below-the-line deductions.
  Fact check: https://www.congress.gov/bill/119th-congress/house-bill/1
• The IRS released a draft of the 2025 Form 1040 showing new checkboxes and expanded disclosures (e.g., digital assets, senior deductions).
  Fact check: https://www.irs.gov/pub/irs-dft/f1040--dft.pdf

2. Core Planning Areas Advisors Must Watch

a. Filing Status & Demographics

• Head of Household survived repeal attempts, though IRS continues to flag fraud concerns.
• Qualifying Surviving Spouse status can extend joint brackets one year after a spouse’s death—ideal time to consider Roth conversions.
• New checkbox for non-resident alien spouses electing U.S. residency treatment—important for cross-border planning.

b. Standard Deduction & Senior Deduction

• Standard deduction for 2025: $15,750 single / $31,500 joint.
• New “senior deduction” adds $6,000 (single) or $12,000 (joint) if both spouses are 65+, subject to income phaseouts.
  Fact check: https://www.taxpolicycenter.org/briefing-book/what-standard-deduction

c. SALT & Itemized Deductions

• SALT cap raised from $10,000 to $40,000 ($20,000 if MFS).
• Charitable contributions face a new 0.5% AGI floor starting in 2026—donors should consider frontloading contributions in 2025.
  Fact check: https://www.irs.gov/newsroom/irs-reminder-cap-on-state-and-local-tax-deductions

d. Retirement Accounts & RMDs

• Form 8606 remains critical for tracking IRA basis.
• Roth conversion planning is now trickier due to OBBBA phaseouts that interact with deductions and credits.
• Qualified Charitable Distributions (QCDs) remain powerful—limit raised to $108,000 in 2025.
  Fact check: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

e. Health Savings Accounts (HSAs)

• Triple-tax advantage remains a cornerstone planning tool.
• New once-in-a-lifetime IRA-to-HSA rollover offers tax-free funding flexibility.
  Fact check: https://www.irs.gov/publications/p969

3. Business Owners & Equity Compensation

• Qualified Business Income (QBI) deduction: 20% deduction extended, valuable for flow-through entities.
• QSBS (Section 1202) exclusion expanded from $10M → $15M, with tiered exclusions (50% after 3 years, 75% after 4 years, 100% after 5 years).
  Fact check: https://www.law.cornell.edu/uscode/text/26/1202
• Incentive Stock Options (ISOs) and 83(b) elections remain critical; IRS now has a dedicated form for elections.
  Fact check: https://www.irs.gov/forms-pubs/about-form-83b

4. New Credits & Deductions

• Clean Vehicle Credit ($7,500 new / $4,000 used) and Commercial EV Credit (up to $40,000 for >14,000 lb vehicles) expire Sept 30, 2025.
  Fact check: https://www.irs.gov/credits-deductions/clean-vehicle-credit
• Energy credits for solar, home improvements, and efficiency upgrades expire Dec 31, 2025.
  Fact check: https://www.energy.gov/save/energy-tax-credits
• New below-the-line deductions (Schedule 1A, 2026):
  • No tax on tips (up to $25,000).
  • No tax on overtime (up to $25,000 MFJ).
  • Deduction for car loan interest (up to $10,000).
  • Partial charitable deduction for non-itemizers ($1,000 single / $2,000 joint).

5. Foreign Assets & Compliance

• Digital asset question remains above dependents on the 1040—IRS priority.
• Schedule B requires disclosure of foreign accounts, even for small balances; penalties for non-reporting are steep.
  Fact check: https://www.fincen.gov/report-foreign-bank-and-financial-accounts

6. Action Items for Advisors

1. Review client 1040s annually for planning clues: addresses (housing needs), dependents (education planning), wages vs. passive income (savings behavior).
2. Harvest capital gains strategically—0% bracket available up to ~$90,000 taxable income (MFJ).
   Fact check: https://www.irs.gov/taxtopics/tc409
3. Use donor-advised funds in 2025 to avoid the 0.5% AGI haircut starting 2026.
4. Confirm beneficiary designations—they override wills and trusts.
5. Educate clients on QBI, QSBS, and Roth strategies in light of OBBBA phaseouts.
6. Leverage HSAs and mega backdoor Roths for high-income savers.