Last month, you tackled your taxes and hoped to put them out of mind for a while. Unfortunately, we’re here to ruin your bliss and ask you to think about taxes again. Sorry for that.

You see, we are rapidly approaching the half way point of this year and have just seven months to implement tax strategy for 2025.

Here’s our approach for the remainder of the year for folks we work with:

1) Gather the tax return.

2) Review it. Look for oversights, and planning opportunities.

3) Have a strategy conversation.

If any changes need to be made, we coordinate with your tax professionals to get it done.

[If you are a Harding Wealth Client: Click here to request a secure link to share your 2024 tax return with us.]

Most years, that’s the playbook. But this year, there’s more going on.

There are big tax changes on the horizon, and some of those changes may affect your tax strategy. But don’t worry, we stay plugged into the details so you don’t have to .

Here’s what is going on

Many provisions of the 2017 Tax Cuts and Jobs Act (TCJA), enacted during president Trump’s first term, are going to expire on 12/31/2025.

If Congress allows these to expire, the vast majority of tax payers will feel significant tax increases. Here’s how:

Federal income tax rates will increase
Standard deduction will decrease
Child tax credit will decrease.
Qualified business income deduction will expire.
Estate and gift tax exemption amount will drop to ~$7 million (adjusted for inflation).
State and local tax deduction cap will expire. This will be a tax relief for tax payers from states like CA & NY.
Bonus depreciation will continue to be phased out.
AMT (alternative minimum tax) exemption will be lowered. subjecting more tax payers to it.

For the record, we’re not particularly worried about the above 8 items happening. The current administration is focused on extending the TCJA provisions, alongside other campaign pledges like eliminating taxes on tips, overtime pay, and Social Security benefits. Republicans want to pass a single, comprehensive “Big Beautiful” tax bill to cover these priorities.

The current proposed bill is 389 pages. That bill is under development in the House, and is going through revisions during the legislative process. Just this week we received some insights into what’s being proposed.

Here are the key changes

1) Permanent Extension of Tax Cuts and Jobs Act provisions, including:

The lowered federal income tax rate brackets
The higher standard deduction amount
The enhanced the child tax credit

Tax Strategy Angle: Roth conversions will remain attractive for many people. The far right column in the below chart shows what tax brackets would look like if they returned to pre-TCJA levels. Making permanent the lowered tax brackets and higher standard deduction gives more people an opportunity to do Roth conversions at an attractive tax rate.

If your income levels fall anywhere above the yellow arrow on this chart, you should discuss with a professional or consider yourself, a Roth conversion each year.

2) Permanently increase the Gift and Estate exemption amount to $15 million, indexed for inflation.

For families near the exemption limits, this change would provide much needed clarity for future estate planning strategies.

Tax Strategy Angle: Today, the size of the exemption rate means very few Americans are being affected by the transfer tax system.

But rules change…

The below graph does a great job highlighting how much the estate tax has changed over the past 30 years. Each color represents a new set of rules enacted by legislation or by allowing current legislation to expire.

This change would prevent the exemption amount from being halved (the yellow color) to roughly ~$7million in 2026. If this change happened, the % of total estates owing federal estate tax would jump massively.

3) SALT deduction cap adjustment - Increase to $30,000 - with a phase out.

The State and Local Tax (SALT) deduction cap is receiving some of the heaviest debate under this new bill.
The increased deduction cap would help high earners in states with high state & local income taxes: New York, California, etc.
Previous to the TCJA, all state and local taxes paid, were an itemized deduction on your federal tax return. TCJA created a $10,000 deduction cap on SALT taxes. This cap was a key revenue creator for the TCJA.

4) Qualified Business Income Deduction (QBID) would be made permanent and will be raised from 20% to 23%.

The TCJA lowered the corporate tax rate from 35% to 21%. To give an equal tax decrease to non-corporate business entities like sole proprietorships, partnerships, and S-Corps, Congress came up with the QBI deduction.
This deduction is a key tax planning element for small business owners.

5) No tax on tips, overtime pay, or Social Security benefits:

This one will be difficult to get through the revisions process. While we certainly could see Social Security benefits being exempt from taxation, it’s hard to imagine tips and overtime receiving the same treatment.

6) Restore 100% Bonus Depreciation Deduction

This would allow for a larger upfront deduction on capital expenditures, improving short-term cash flow for businesses (or real estate investors).

Will It Pass?

We don’t know, but probably not in its current form.

Passing tax bills is difficult. The Republicans slim majority means the margin to get any tax reform done is very thin.

The tax code is complex, full of knots, and gyrates back and forth.

Why is it this way? Well for one, governing is hard. Beyond that, it’s because:

Making something simple is more difficult than making something complex.
The tax code is a jumble of competing policy provisions that have shifted over time and interact with other provisions in unexpected ways.
The tax code is used by our government to incentivize certain behavior.
The tax code is used as a political tool.

What ever happens, we will be ready.

One More Thing…

Speaking of taxes, we get asked a lot if we have plans to develop a Tax Preparation branch to Harding Wealth.

While we want our clients to be happy and their lives to be simple, we also believe our clients are best served when they have a team of specialized professionals working in concert — each bringing independent expertise to the table. Eventually we may offer in-house tax preparation, but in the meantime we believe there are several important reasons why working with an independent tax advisor is often in your best interest:

Independent Advice
An outside tax advisor provides objective guidance, free from any potential conflicts that can arise when everything is under one roof.
Specialized Expertise
Tax laws are complex and constantly changing. Independent CPAs and tax attorneys often have deep experience in specific areas — such as estate planning, business structuring, or international taxation — that may not be available in a general in-house team.
Audit Representation and Legal Protection
External tax professionals can represent you in front of the IRS and, in some cases (such as tax attorneys), offer legal privilege — an important protection in sensitive situations.
Customized Fit
You’re free to choose the tax advisor who best fits your needs, preferences, and location — whether that’s someone local, highly specialized, or with a long-standing relationship with your family.
Checks and Balances
Having separate investment and tax professionals creates a natural layer of oversight, helping ensure that nothing gets missed and more opportunities are uncovered.
Collaborative Approach
We regularly coordinate with our clients’ tax professionals — sharing data, aligning on strategy, and keeping things streamlined — while each party remains focused on their area of expertise.
Regulatory Clarity and Simplicity
Keeping tax and investment services separate helps avoid potential regulatory entanglements and keeps your overall financial structure clean and transparent.

We’re happy to coordinate directly with your current tax advisor or introduce you to trusted professionals we know and respect. Our goal is always the same: helping you build and preserve wealth with clarity, confidence, and the right team around you.

That’s all for today.

Onward,

Adam Harding
CFP® | Lead @ Harding Wealth
www.hardingwealth.com

*For informational purposes only. Do not consider this to be investment, tax, or legal advice.