The 2025 New Tax Bill Explained

Mike Pine: Welcome to the Hidden Money podcast. Quick summary of what's in this new tax bill. Today is May 13^th. Kevin and I spent all night reviewing this bill word for word, summarizing it. We've sent a summary out to our clients. Check out our website or at www.revotaxpayer.com We're going to have a download link so you can see our summary of every provision in this bill.

Our intention right now, is to offer you a quick summary, and as little bit of time as possible, on the key salient points we think you are interested in. Good morning, Kevin.

Kevin Schneider: Good morning. I'm on my second cup of coffee. I don't know what number you're on, but it feels like I'm back in college, cramming for an exam, but…

Mike Pine: Absolutely!

Kevin Schneider: It's fun. It is fun stuff. And you know even before we went on air right now, Mike and I are still combing through this thing trying to dissect it, and trying to get clarity on some items.

So, caveat up, off on the front-end here- we have looked at this for many, many hours, but this hasn't even been live for 24 hours, yet. So, we did the best we could, and we have a really good head start on what this bill entails, what the impacts are, and the likelihood of this going through, but we may not have every detail down to a science, yet. That's going to be later

So, give us a few more days to, kind of, catch up, read this thing a little more thorough. Even, we're reading articles this morning, like Newsweek has published something today that is false. So, even the news out lets in wrong. So, the news outlets out there aren't even carrying and covering this thing 100% accurately, so we are going straight to the horse's mouth. We're going right to the bill literature. We're not going to news articles. We're actually going to the actual bill.

And so, if you've ever tried to read a tax bill, or any sort of legal document, it is, legally, of the highest order. I mean, it is very hard and difficult to read, but that's why we're doing this podcast here, so you don't have to do that.

Mike Pine: We've done it. Let me add one more caveat, or just what is this bill? So, what happened yesterday? The House Ways and Means Committee finally, finally released their in quote-unquote “big, beautiful bill” and it is a big bill. There are some beautiful parts. There are some not so beautiful parts. We're going to get into that. But understand this is not the final law, and it's not going to be the final law.

Right now, it is introduced to the House. If the House doesn't mark it up, but they're going to have a chance to amend it and mark it up before they do their final vote on it to approve it as a total house. There's going to be some changes during that. Hopefully, not too many. It's probably going to be a very partisan bill, and you'll probably just have Republicans passing it, maybe a couple Democrats. You might have a Republican or two drop out, but they have been negotiating behind closed doors, the Republicans. Probably not bipartisanly, though.

So, hopefully, most Republicans already have gotten what they need in it, but it's going to change. Let's say the House passes this as is. It's still not what's going to be the law because once the House passes it, then they got to reconcile with the Senate, and the Senate has to vote on a bill, and the House and the Senate have to agree to the exact same bill. Once this gets to the Senate in the reconciliation process is where, I suspect, we're going to see the biggest changes. Hopefully, not many.

Even though there's a lot of imperfect parts, and even some parts I plain simply don't like- we don't like it here at RevoTax- but take it as a whole, understand the need to pass it through reconciliation. Let me just add something on that.

So, reconciliation is a process that Congress can use so that the Senate can't filibuster this. It will only require 50% plus one. 50 plus one votes, or 50 votes plus the VP. They can pass it and there's no chance to filibuster it. But there are rules to get through reconciliation.

A big rule is they cannot increase the debt over a certain amount over the next 10 years. So, that's the parts that I don't like in the bill. They have revenue enhancers, a lot of tax cuts, a lot of good revenue enhancers, but some ones I simply don't like, and I don't think are good for our country. But when you take it as a whole, I do think this bill is beautiful for America, beautiful for our economy. What's in this bill, Kevin?

Kevin Schneider: Okay. Where do we start? A 400-page bill. We're not going to go through every line item here. I think Mike and I have, kind of, condensed this bill to what's going to give about 90% coverage to the general audience out there.

There will be a future podcast where we go into detail of more, kind of, weird aspects of this bill. But for today, we're going to hit it hard, hit it fast, and hit it at a high level. So, to start off, they're extending the tax bracket reductions. So, if this bill doesn't go through, our current Tax Cuts Job Act tax brackets are going to expire at the end of this tax year.

So, in 2026, you could be seeing nearly 40% tax rate at the top. So, this is coming back to where we're going to put our, cap our highest tax bracket at 37%. That millionaire tax that was, kind of, floating around the past couple weeks- if you make over a million dollars, you're going to get hit with additional percentage or two point. That is not in this bill. Not in here. So, the millionaires, kind of, skated by, so far. Now, like Mike said, it's got to go through every process, and it could leak its way back. But under current bill, we don’t have that.

Mike Pine: And there are a few revenue enhancers in this bill that only hits the richest people, or in in quote-unquote, air quote, on the “richest people”. We'll get into a couple of those now. But the rich will be paying, in some ways, a little bit more tax, at least on marginal tax rate, but overall, if they follow good tax strategy this year, they can pay much less.

Kevin Schneider: Oh, yeah. Oh, yeah. And we'll get to that later because if the rich- like what the IRS considers ‘rich’ could be $400,000. In this economy, and the inflation we felt, if you're making $400,000, you might be.. I mean, that's a really good take-home pay, right? You might be thinking, “I don't feel rich.” Well, the IRS classifies you as ‘rich’ and they're going to weed you out of a bunch of these deductions and credits.

So, we'll get into the importance of tax planning because you could tax plan and get your tax bracket under that $400,000 threshold, and be eligible for even more deductions and credits. So yeah, that's number one, extending the tax bracket reductions.

Number two is we're going to enhance the standard deduction again. We're going to adjust it for inflation. At the end of this current period of the Tax Cuts Job Act which is the end of ’25, the standard deduction would go back to what it was, which is cut in half.

And so, what the standard deduction is, is every taxpayer gets to either take itemized or standard deduction. You get to pick the two. Itemized deductions are your property tax, your sales tax, your state tax. It's your charitable giving. It's your medical expenses. It's your mortgage interest. You add those items up and if they're higher than the standard deduction, you take the itemize.

If you do not give a lot to charity, maybe you already own your home outright, and you don't have a lot of mortgage interest, you might be taking the standard deduction. Well, this bill is going to keep your standard deduction at that very high level. Depending on if you're married or single, it would be, there would be a difference there, but it is going to be a tremendous thing for the standard deductors out there to keep that bump up.

Also, estate exemptions are going to be upped. So, if you're single, your estate exemption is now $15 million, and if you're married, that would be $30 million. So, this is very big. Maybe not for estate attorneys, but for us individuals who do not have a net worth of over $15 million or $30 million, when you die, you're not going to get hit with death tax, which is super high tax rate. Really high.

Mike Pine: Let me just add something on that. So, right now, if you die, you can say you can have up to about $12 million per person. You can combine that with your spouse for twice that. At the end of this year that would go back down to $5 million or change, somewhere close to that, if we don't extend this or pass this rule. Jumping it to $15 million is a big deal.

And this bill, the current bill, is asking to make it permanent, so we don't have to do this every few years like we've been doing for the last two decades. It would be permanent. I'm just going to throw my two cents in here. Let me give my opinion, Kevin. This, I think, is fair. I see too many of our clients that would have, like, family-owned ranches, been in the family for three or four generations.

If this does not happen, when the matriarch or patriarch dies, suddenly, that family can't keep the ranch, or they can't keep all of it. They're going to have to sell parts of it to pay the estate tax. That is not fair. Or if you have a family-owned business- my brother-in-law has a fourth-generation family-owned business. His great-grandfather started, or I think his grandfather started it, and he's leaving it, part of it to his kids and his brother's kids. They've been doing this for nearly a hundred years.

Why should they have to sell the business and not be able to pass it down their generation? Their family has made that. That is.. it's fair. They should have… I'm definitely a proponent for this. I would say Revo Tax is a proponent of this part of the bill.

Kevin Schneider: 100% 100%. Yeah. So, that's kind of just kicking off. So, also we have the QBI deduction. If you're not familiar with the QBI deduction, it was introduced in Trump's Tax Cuts Job Act, about 2017. This QBI deduction is a 20% deduction on your net income as a business owner, subject to some other stipulations.

But let's say you're just a self-employed individual, and you make a $100,000 net take-home, being self-employed. Well, you get a 20% deduction off the top of your net income. Just no cash outflow, no nothing. It is a deduction on your net income, so long as you have some domestic wages, twice your deduction in domestic wages, paid. So, they want to incentivize you hiring people- and not contractors- this is employees. And so, if you have some wage expense on your P&L, and you have some net income, you've been taking this QBI deduction at 20%. Well, they're upping it to 23%. And they're going to be a little bit more flexible on these specified service trade or business requirements, and allow more people to actually qualify, and they're going to phase it out a dollar for-dollar limit over these phase-out limits.

If you're what's considered a specified trade or business, which is accountants, lawyers, doctors, some service industry, where, basically, you are… your knowledge and your personal skills are bringing in the revenue. You're not making widgets. You're not selling a product. It is you are the product. Your brain is the product, essentially. Then, you're subject to what's some limitations on this QBI deduction. So, there's ways to get around that, too. There's ways to be aggressive with that.

We do that all the time with our clients- doctor clients who take QBI deduction on a portion of the revenue because they sell drugs, they do speaking engagements, or whatever it is. We are able to harvest additional QBI benefits off of them. But we're going up to 23%.

Mike Pine: And maybe 30% for some manufacturers, domestic manufacturers here in the country, and that's a big deal. And let me just add the one, the reason for this deduction, why it was needed, and why it's a good thing for our economy, is- right now, small businesses without this QBI deduction, they actually pay a higher effective tax than the big corporations.

That's not fair. Let the small businesses compete and have an even playing field with the big companies. That was the intent of this QBI deduction to get smaller businesses at tax parity with the big businesses and big corporations. Doesn't do it all the way. It's still not completely at parity, but it helps. I like this bill.

Kevin Schneider: Yeah. And it incentivizes hiring employees. It's really good for the economy, really good for small business.

So, here's another big one. Trump has been screaming this at us probably since October of last year- “There's no tax on tips.” And we're like, “What does that mean?” “No tax on overtime.” “Oh, what does that mean?” So, in the big scheme of things, there's going to be some definitions and parameters set on this. You cannot game the system and commit fraud by tipping your employees, or paying all your employees overtime so that they're not taxed.

There's going to be guard rails on this. We're going to get into what those guardrails are in a future podcast. We don't want to get into too much of the details here, but there are going to be no tax on tips and overtime pay. Huge.

Mike Pine: This is what news we got wrong that Kevin noticed this morning. They got it wrong. They said there was a $10,000 cap. We don't see that anywhere in this bill. Again, the caveat is we've been reading this for 15 hours now. We were up super-late. We could be missing something, but we reviewed the bill twice on the overtime stuff. We don't see that limitation on it.

Just to know, and when we first heard Trump say this, Kevin and I were excited. We're like, man, we're going to put all the employees of Revo as hourly-pay employees. They're going to get most of their paying overtime and most of their paying tips. They've already cut the guard rails out and prevented that from happening in the way the bill's written.

Also, it's only applicable to people making under a reasonable amount of salary according to Congress. It's indexed to a different part of the tax code. Right now, I think it's about $156,000. If you're an overtime- employee earning overtime, or earning tips and you make more than that- well, the amount that you make more than that, you don't get to deduct them.

But if you're a normal, average restaurant worker, a construction worker, making under $150,000, your overtime, now, is going to be tax-free for a while. Same thing with your tips. I think this is fair. This is good. It's not going to hit our client base that well, but for the economy, for the people working hard and trying to get by, and the huge inflation everyone's experienced, and the drop in their, in real wages over the last four years, this is helping them out.

They deserve the help. They need the help. We ought to do that. It's good for the economy to help them. Let's do this. Help a brother out and pass this bill.

Kevin Schneider: Yes. Now, I don't know about the logistics because my mind always goes to detail stuff. So, I don't know if your payroll company's going to actually withhold on that or not, saying, "Hey, here's your overtime pay we're paying you for this pay period. We're not going to even remit withholding." Or do they remit withholding, and then you take the deduction on your tax return, and then get refunded? I guess there's a couple ways to dice this up.

Once this bill passes, hopefully there's more, some procedures, and some kind of marching orders. That's typically how this would work is if they pass a law, the IRS and Treasury Department has to interpret this, they might give some practical, they try their best to be practical with giving some… not even English… but try to give the professionals and taxpayers some guidance on, “Yeah, I see this big bill. How do I implement this?”

And that's what the Treasury Department and IRS try to do. Sometimes, there's even differences in the law, their procedures, too. So…

Mike Pine: Oh, a lot of times. We offer some analysis and summary on those items, as well as how it's going to be rolled out, and how it's going to be promulgated through the Treasury Department in our 25-page summary, that is available now on our website, as well as Hidden Money- www.revotaxpayeradvocacy.com and www.hiddenmoney.com.

Check it out and you can read more. But we're going to move it along now. Drum roll, please, Kevin. Next item. Are we excited about this? What's happening with this bill and bonus depreciation?

Kevin Schneider: Well, 100% bonus depreciation until 2030. How about that? The biggest problem of being a tax planner with tax law the way it was, we saw we had good eating for like three, four years. We're like 100%, 80% bonus depreciation, and then Oh, 60%! Oh God, 40%! Oh no, 20%! Oh no, Zero!

It was not stressful, but it made tax planning a lot more complicated because you just had to squeeze more out, and there's just not much juice in bonus depreciation under current law. Well, this just refills everything.

Mike Pine: Yeah. It's put the brakes on our economy and economic development. Three years ago when we had 100% bonus, man, and the whole five years we had 100% bonus. We saw so many new clients. so many new investors going in building new housing, building new plants, expanding their business, and all of that has started to dry out.

It started drying out… well, it didn't dry out much when it hit 80% in ‘23, right? But when it went to 60%, we saw the capital expenditures of our client base probably cut in half. And then, when it dropped to 40% this year, it is, there's no incentive. We need affordable housing. We need business to invest and to grow. That's what our economy needs. That's the lifeblood of our economy. This brings it back, baby.

Kevin Schneider: Yeah. And I mean, there are incentives to improving your property, and to making qualified improvements to a rental property, or to your buying equipment for your business, right? There you're doing that to hopefully increase your rental income, to increase your manufacturing, lessen downtime on equipment. There is some intangible there, but there is, always been, a good tax kicker to jumpstart ROI. And that's exactly what this does.

If you go buy, and it doesn't matter if it's with debt or with cash, it doesn't matter. And that's the beauty of bonus depreciation, is you can go leverage assets with debt, not be out any cash. You know, you'll pay the cash out over time, but as long as you have rights and ownership of that equipment, and it's in service, you get a full 100% write-off, even though you're not paying 100% of that piece of equipment or asset. It's absolutely tremendous. Absolutely. Yeah.

So, here's something to add to this. Here is something I have never ever, ever, ever seen, and never even had on my radar, but here, you could, if you take a step back, and look at what this administration is doing, you're going to see a common theme of domestic manufacturing. Domestic manufacturing is getting huge bumps. So, what Mike already hinted at is the QBI 30% for manufacturers could be 30% for manufacturers.

Now, manufacturers, and there's definition of what a manufacturer is. They're very clear in this bill. They actually define it. 100% bonus depreciation on any United States manufacturer on 39-year property. So, 39-year property is- it is the factory, that is your office building, that is anything large- large structural component which usually is depreciated over 39 years.

The IRS is going to allow a 100% write off on 39-year property. So, you could go buy a multi-billion dollar factory and get a multi-billion dollar tax deduction in one year.

Mike Pine: This is so beautiful. Not only does it bring good tax cuts to businesses that need it, but the most important part is- I mean, granted, Kevin and I like tax cuts, right? But the most important part is we need to bring this manufacturing that we have offshored over the last 20 years, we need to bring it back for our national security, for the jobs, for the people who have been left behind the last 20 years over the globalization process. This is a big step moving forward. A big step. I love it.

Kevin Schneider: Yep. All right. New “MAGA” accounts for kids under 18.

Mike Pine: Can I? Let me just say- I know we need to speed up- I love it, but why do they have to call it “MAGA” accounts, man? Half of the country almost half of the country grinds their teeth when they hear “MAGA”. These are our brothers, our sisters, our neighbors, our fellow countrymen. Don't be so in your face, but that's how things roll currently in DC. I don't love that part, but I love the new “MAGA” accounts.

Kevin Schneider: It doesn't stand for Make America. What does it stand for?

Mike Pine: ‘Money Accounts for Growth and Advancement’. So, the “MAGA” accounts are for kids under the age of 18. Most of these provisions are only available for next four or five years, according to this bill. I love it. This is offering the opportunity to start your kid off once they turn 18 with a little bit of money to get started in life. It allows you to put money into it. Doesn't count against your gift exclusion each year. It allows it to be grown for people who can't afford to put money and fund this for their kids, which is most of the American public.

The government will give your kid a thousand dollars in their account, and set it up right now. Grows tax-free. It says you can use this for primary school, secondary school, obviously college. You can use the money, the qualified distributions also, for buying your first time home. There's going to be other things, like, you have a big medical problem, you'll be able to use it. You'll get to grow it tax-free.

And then, there's different years. Once your kids is 18, they get some of it. Once they're 25, they get some more of it- I think up to half of it. Once they're 30, they can take the rest of it. And they're taxed at long-term capital gains tax rates, if they're doing a qualified distribution. They don't take a qualified distribution, they pay ordinary tax rates on it, but it still grows tax-free.

I love this. This will help our economy. Let's give people the ability to pay their own way to grow their own financial freedom, not depend on the government to be able to make a meager living. I love this bill.

Kevin Schneider: Yeah. And it's good because, also, there's more planning aspects. If you're self-employed, pay your children out of the business, so long as there's a reasonable expectation that they're working. Pay your kids out of your business. You get a tax deduction there, then create a “MAGA” account, then they're growing that tax-free.

Mike Pine: Heck yeah. Sexy stuff here, man.

Kevin Schneider: Yeah. So, we're going to put timestamps in this video. If you want to just jump to a certain section, because we wanted to do this for 20 minutes, I'll go 30. I don't care. This is great. And then, you can just jump around to what you want. But next up, opportunity zones rolling out with a second round of qualifying properties.

Mike Pine: Version 2.0.

Kevin Schneider: Yep. Version 2.0. If you're not familiar with opportunity zones, there's a lot of literature online. We can explain that as well. We're not going to do it here, but there's tremendous tax benefits, and deferring your capital gains that you're earning on other assets- you could defer those capital gains into real estate, and have those gains fully eliminated after 10 years if you invest into what they qualify as ‘opportunity zones’.

These are typically distressed communities that need a little revitalization, and they need investment and capital put into the community to make it better.

Mike Pine: That's the big benefit of it from a non-tax standpoint. There are communities all over the country, and here in this new version 2.0, you know, they're really pushing rural opportunity zones. The places around the country in middle Tennessee, and all in Iowa, the people that have been left behind, they are incentivizing people to start business. It's not just real estate. It's any business in qualified opportunity zone that's below, or closer to the poverty level.

It works with states. Governors get to designate these, just like they did last time. It's going to help bring up everyone's quality of life that's been hurt and it allows the people that can afford it to do some tax savings.

Kevin Schneider: Yeah, absolutely. And you'll be shocked to know that there is a lot of good quality properties in these opportunity zones. They don't think these are dilapidated project housing. There are some actual good neighborhoods, and investment opportunities and you could eliminate capital gains, if you invest in these areas, and so, do so by all the rules.

So that's a cool one too. Mike, I'm going to tee you up on this one because it's a bad one. It's a negative. So, I want you to be the bad cop. I'll be the good cop. But tell us about these clean energy credits, and, kind of, what they're thinking here, and what's going out.

Mike Pine: Yeah, let me offer just a quick caveat. We don't like this. But again, in order to pass this bill through the reconciliation process, they got to have some revenue enhancers, meaning increase taxes or decrease credits they were previously offering.

They basically eliminate all the clean energy credits that came out in the Inflation Reduction Act a few years ago. Most of them, are going to go ahead and be eliminated at some point around 2031, 2030, some 2032, ‘33. They make them, almost all of them to a T, expire as of the end of 2025. So, I'm sorry, I'm going to get a little political here, Kevin. Forgive me. I don't mean to offend you, but this hurts Elon Musk big time.

He was very helpful in getting Trump elected, and he's been demonized about- just everyone in the news media, a lot of the news media has been saying, “This guy's only in there for his own fortune.” Well, I'll tell you what- without the clean energy credits available to buy a Tesla and buy electric vehicles, Tesla would have had a hard time getting started and becoming what it is today. He used it, but it was available to all of the electric vehicles.

I like electric vehicles. One day, I want an electric vehicle. There's not going to be credits for it anymore. If you want solar- I'm glad I got my solar panels two years ago, and didn't get the tax benefit for it- if you want solar panels, if you want an electric vehicle, if you want to make use of any of these energy credits that have been available, if this bill passes the way it is, they will expire December 31st, 2025.

Get your solar panels now. Buy your Tesla now, or your Lightning from Ford. Those are pretty cool, too. They're going down in order to help pay for these other tax cuts that I think will spur the economy better. It's a reasonable compromise. I don't love it, but it's a reasonable compromise.

Kevin Schneider: That is a reasonable one. Now, Elon will benefit off building manufacturing in here, but he's already built the, what is it? Giga plants, or whatever crazy names he comes up with. He's already put those in service. So, the manufacturer tax breaks are going to be for new properties built after 2020- some specified date in 2025. So, unless he rebuilds some new factory, or something, he could benefit off that. But what's been built? No.

So yeah, that's a good point, Mike. You know, from a political standpoint, it's hard to talk tax without getting some political insight. It's just impossible, because you also… it's wisdom too. You got to step back and look at what's going on. We can't just stick our head in the sand and be like, "Okay, what's coming out? You know, what tax laws coming out? What's happening?” Like, you need to know what's going on.

Mike Pine: Yeah. Over and over again, Kevin, you'll hear some hidden money. In almost all of our client consultations, we tell you, “Don't let your tax tail wag your business dog.” Or your investment dog, or your financial planning dog. Don't let your tax tail wag it.

In this case, we don't love some of these things. It's going to hurt some of us from a tax standpoint, but is it better for the nation and the future? Is it going to help grow our nation and make us great again, instead of the declining nation that we all seem to, kind of, accept was going to happen over the last decade? I think it goes a great step. So, not great for tax. Great for the country? Probably.

Kevin Schneider: Next up, the SALT cap. So, this is your local state property taxes, sales tax, income tax. Would you itemize your deduction like we talked about earlier? You get to calculate and tab up all the taxes you paid and deduct that against your federal tax liability if you itemize. Well, they put a cap on how much taxes you could pay or deduct. They capped.. I wish they capped on how much we could pay. They capped on how much we could deduct of $10,000.

So, let's say you lived in California, New York, or heck, even in Texas here. We don't have state income tax, but my property tax sure is above $10,000. So, let's say you pay in California $30,000 of state tax, and then, you own property, and you pay $10,000 there. So, you're at $40,000 taxes paid, that should be deductible on your federal tax return prior to 2017.

Well, 2017- put in that $10,000 SALT cap, and those missed deductions don't carry forward. You don't get to keep them. They just go into the abyss never to be seen again. You don't get any benefits. Sorry. Try again.

This SALT cap is going to be raised from $10,000 to $30,000, so long as you're under income limits. So, this is where we were talking about where the wealthy aren't going to be taking advantage of some of these, is because if you're making over $400,000 in a high income tax state such as California, or New York, New Jersey, whatever it is, you're not going to be able to partake in this increased cap.

So, that is the importance of tax planning because you could make $700,000 as a W2 earner, tax plan, and get you under the $400,000 limit, and then it frees up another $20,000 more deduction you wouldn't have been eligible for. So now, you're kind of snowballing because you're getting into the more favorable tax brackets. Even though your cash take-home is definitely above the $400,000, your tax bill is going to be under those thresholds.

That is what a tax strategist does, and saves you hundreds of thousands of dollars a year, if you plan. Plan, plan, plan. That's the moral that we try to.. Every week, Mike and I just want to, if you don't take anything away from us, I don't care if you go with us, your buddy down the road, I don't care where you go, just plan and get your taxes in order. It's very important. And this is just another example of it.

Mike Pine: Yeah. If you don't change your tax, you can't change your facts. I'm just going to throw a little commentary on this SALT cap. I don't like this increase. I don't like it.

Kevin Schneider: I do.

Mike Pine: Yeah, you do because your property taxes are over $10,000. Mine aren't, buddy. You're in the wrong county here.

Kevin Schneider: Yeah.

Mike Pine: So, here's why I don't like it, and why I thought it was good to implement. The way it used to be before the Tax Cut and Jobs Act of 2017, everyone in any state could deduct on their federal taxes, 100% of their state local income tax, property tax, sales tax.

In effect, what that was really doing was having states like ours in Texas, and our, the taxpayers, the citizens here in Texas, subsidize the sad, corrupt, or just pathetic economic planning of the politicians in California, in New York, in Illinois, in New Jersey, and all the states where they are making their state bankrupt, and where they're charging super-high taxes to pay for their inefficient services.

The politicians were not held accountable because their citizens didn't mind. “Hey, wait. You want to charge me $100,000 in taxes, but I get to use that as a deduction to reduce my federal taxes by nearly the same amount? I don't care. I'll keep voting for you. It doesn't matter if you don't balance our checkbook, or balance your budget. It doesn't matter if you waste money day in and day out, and we don't get a return on what you're spending money on. I like that cap.”

But because of the reconciliation process, there's Republican congressmen in New York. There's Republican congressmen in this one little, single congressional district in Nebraska. Their constituents were begging for it. I wish their constituents would push their assemblies to actually learn how to budget their checkbook, budget their balance, actually insist on efficiency in government spending. I wish they pushed on that. Instead, they pushed on these Republicans and said, "You got to raise this limit or I ain't voting for you again."

Those guys were asking, gals were asking for $80,000 or more limit. They've compromised this $30,000. And they've also compromised by having it capped at $400,000 adjusted gross income. So, I'll accept it. It's a compromise. I don't like compromises, but we need to have them at times. That's why it was here, and that's what we're doing.

Kevin Schneider: Well said. I disagree, but hey, I respect you enough to not agree with you on everything. All right. Next up, cars. Interestingly enough, never in the history of, ever, as a personal deduction, has interest…

Mike Pine: Well, there was pre-‘86 tax bill, but now..

Kevin Schneider: I was three. I was three years old.

Mike Pine: I was in love.

Kevin Schneider: Never in my recollection have I ever seen personal interest on a vehicle deducted. So, tell me a little bit about that, and what are the stipulations on it?

Mike Pine: It's allowed, and you're skipping my order, so let me find it. It's allowed now for people making not too much money. It's actually a much lower threshold. If you're single making over $100,000, you don't get to deduct it. If you're married, making over $200,000 combined, you don't get to deduct it. But it will allow, and it's also only for four years- from 2025 through 2028- it will allow you to deduct your car interest.

I love it. With the interest rates that we have thanks to the rapid inflation we've experienced the last five years- four actually, three and a half years, people can't afford cars now. Some of us were lucky enough we can absorb that interest. The hardworking people in America that are the backbone of this country are having to drive Beaters and can't upgrade to even a used car because interest rates are so high.

I think this is right. I think this is good. Give them a break. They need it. They deserve it. They're what's building our country. They're the engine driving our country. This bill is beautiful. I just don't like it's only four years. They should make it permanent, but because of the reconciliation process, they got to cap it after four years.

Kevin Schneider: Yeah. You're missing one piece that I found interesting which incentivizes taxpayers. Can I go buy a BMW and get this?

Mike Pine: There's a limit.

Kevin Schneider: Can I buy an Audi? No.

Mike Pine: That depends how much it is.

Kevin Schneider: Not that. It has to be manufactured in the United States. You cannot go buy a BMW- anything manufactured overseas. Ford. Yep. GMC. Yeah, sure. Even Tesla. Yep.

Mike Pine: If they're manufacturing them here domestically. If they're choosing to save money, and inflate their corporate profits, and do their stock buybacks and stuff by offshoring, or just moving south of the border or north of the border…

Kevin Schneider: So, if you're a Ford dealer out there and you manufacture in the United States, you're going to have a leg up when you're in that room closing, because you could say, "I know our interest rates are 4-5%. but you get to deduct them.” and I believe it's above the line.

Mike Pine: It is. It's an above the line. Yep.

Kevin Schneider: So, what that means is you can itemize or be a standard deductor. It don't matter. That's very Texan. It don't matter. You get to deduct it regardless above the line of itemization.

Mike Pine: Let me just say I think it's above the line. I read this part about 2 am this morning. I could be wrong, but I believe it is above the line. We could be wrong. Caveat there.

Kevin Schneider: Caveat. All right.

Mike Pine: Let me throw in another big one. This is a revenue enhancer, but it's not as bad as it could be. If you guys remember before the Tax Cut and Jobs Act of 2017, under George Bush, they instituted the Pease limitations. If you made a lot of money, not what I consider a lot of money, but what the IRS considers a lot of money, you weren't allowed to deduct all your itemized deductions.

As a matter of fact, if you made a certain amount, you got zero itemized deductions. Tax Cut Jobs Act changed that. Got rid of all the limitations. Fair, not fair, I don't know. The people who could afford it weren't paying as much taxes as they could afford to pay. I think they still pay the fair share. We'll talk about that in another podcast. But that being said, if current law expires, and we don't change something before the end of this year, we go back to the Pease limitations.

If we pass this law, we still have a new limitation that comes in, but much better than the Pease limitations. People who make money, and spend money, or contribute to charities, which is a big itemized deduction- charities need it for good causes- they should be able to deduct that. Let the government give them credit for doing a good cause. This allows that.

But the people who make the most money, the people in the top 37% tax bracket, they're not going to be able to deduct 100% of that. Instead of getting a 37% benefit, the way I read this bill currently, they'll be able to get a 35% benefit. So, it enhances a little revenue on them, but man, it's a good deal. This is a good compromise. I approve of it. I'd rather be able to deduct all of it.

If I can make a million dollars a year, never done it yet- one day, Kevin, I hope we are- if I could do that, and I want to give $900,000 of it to a charity, or at least half a million to a charity, I want to be able to deduct all of that. I think that's fair. But at least, I can deduct most of it under this new law. Pass this bill. What's next, Kevin?

Let's see. We've got car loan interest. We've got- they'll allow additional benefits to be able to use 529 plans now for elementary school and high school. I think that's a great need especially because public school systems have failed us. They have failed us. I hope they change that, but they have failed us. I'm putting my kids in private school. I can't. They're now in elementary school. I cannot get a tax deduction or tax benefit. It's expensive. It hurts. I thank God I'm able to afford it by His grace. Most people can't. Give them a break. Let them use a 529 plan to put them in there. I love it.

Modified business interest deduction. It improves the ability for businesses to deduct interest. There was a big limitation put in the 2017 tax cut jobs act. This makes it a little bit easier, but there's still a limit. I think it's more fair under this.

Let's see. Next one. Increased expense. Just know they've doubled those 179 deductions. So, when and if bonus depreciation expires, which is, if this passes, it'll expire in 2031 or 2030, one of those two, you'll be able to 179 twice the amount, and that's permanent. I love that.

Kevin Schneider: And maybe they snuck that in there. They're like, bonus is going to expire. Let's just up the 179 limits real quick, and get those permanent.

Mike Pine: I mean, I suspect that's what they are, because we've seen the turmoil our economy has gone through with the phasing out due to the sunset clauses required under reconciliation of these tax cuts of bonus depreciation. This will soften the landing a little bit if we have another ineffective Congress in 2030 that is unable to renew this cut. It helps give some certainty to business owners.

Talked about clean energy vehicles… I hate this part. I hate this part. It's the excess business loss. This has been tough for tax planning for clients. Under- this is part of the Tax Cut Jobs Act- they put excess business losses. Basically what it did, it said, "Hey, if you have a person making a lot of money, even if they take an entrepreneurial risk, create a new business, and have a big loss, a big tax loss for it, we're going to cap them at how much they can offset from that new business against the rest of their income."

I don't like it. It's a penalty. It says, "Hey, stop creating businesses,” in my humble opinion, to a certain point. Only spend $500,000, $600,000 on these businesses a year. It slows the growth of our economy. They’re making that permanent now in this bill. That's a huge revenue enhancement. It's disgusting. I understand compromises need to be made to get this passed. I just wish they could find a better compromise. Or more, what I really wish is we could get bipartisanship in Congress to accept these things and make them permanent, not have to worry about a filibuster.

This is.. such is life. I'll accept it for the rest of this bill. when you net them all together, it's still a good bill for our economy, and our clients.

One other thing- now, they add a 5%. There's a few other things. We'll get on this in another podcast. There's a few things they did that is going to tick a lot of people off politically. But right now they're going to start charging, if they pass this, 5% excise tax on all foreign remittances. You come here from another country, send most of your money back to that country, that's good. You're helping your family. I approve of that. I love that you're working and generating stuff in the economy here, but you're taking money from here, and sending it away to other countries.

Get, let America help pay down some debt with that. America's done a lot for you, and providing you the opportunity here, creating the groundwork for the businesses you're working at. They're collecting 5%. That's in this bill. There are other very similar items we'll talk about in another podcast.

Two things I love, and these are the last two, the final two. Kevin. This bill promises, if it's passed, to put $25 million in an account for Medicare, HHS, to employ AI to try to figure out where all the fraud is. Medicare is going bankrupt, y'all. Medicare is rife with fraud, y'all. There are people that shouldn't be getting it that are getting it. There are doctors getting millions of dollars committing fraud by saying, "Hey, these patients who I've never seen, I saw them. Give me $100,000 for treatment I provided them that I didn't provide."

AI could find that stuff quickly. This would help shore up the sustainability of Medicare. I love it. It's $25 million. I don't know how much they can do with that, but hey, it's a good start.

And finally, some serious laws enforcing the COVID ERTC. That ERTC- ‘Employee Retention Tax Credit’, has been so full of fraud, because of that fraud, the people who truly needed to get reimbursed this, the people that were able to keep their employees paid even if it hurt them a lot during the shutdowns, they deserve this credit. That's a good credit. But more people in my opinion that didn't need it, that didn't deserve it. If not more, a heck of a lot of people have applied for this.

And it's not just the people's fault. Mostly it's tax preparers. It's our profession that have created fraudulent… They say, "Hey, look, give me 20% of what I get you. I will find a way for you to qualify for the ERTC, even if you didn't." This penalizes- this part of the law, Section 112205, puts a stop to that. It gives the government teeth to go after those preparers. It gives the government teeth to go after those thieves. It should have been done five years ago when the laws passed. Let it be done now. Pass this bill. We love it.

Final thoughts, Kevin.

Kevin Schneider: I need a nap or more coffee. One of the two. But guys, this is a big one, and that's why it is called the “big, one beautiful bill”, or whatever he's coining it. it. Now, we don't like everything, but I am in agreement that I think about 90% of this is beneficial to our client base, to investors out there earning, and working hard, and trying to earn financial freedom. This jumpstarts a lot of that, and I could see the heart behind this bill.

Now, not every everything I would agree with, but they didn't ask me. So unfortunately, I am a citizen and taxpayer, but they didn't come to my house and ask my opinion, but I get to have one, even though we do. But that's the beauty of the country is I get to have an opinion. So, you might have your own, but opinions aside, this this is kind of what we're working with.

No matter what administration's in office, we're going to have to deal with tax law changes. But that's why we love what we do. This this is exciting stuff, and if you can get ahead of it and plan, you could see change for you, personally, in your pocketbook. Now don't rely… my big takeaway is always, I like to preach, “Don't rely on the government to financially provide for you. Do not allow the government to have so much say in your life that you're waiting for new legislation changes, so that you could finally get this new big break.”

Be in charge of yourself. You are in charge of your own destiny. You're in charge of your own decisions. And no matter what administration's in office, love him or hate him, you still are responsible for yourself. You know, you're held accountable with your family, with your God if you believe in one. You're held accountable to people that rely on you, you know, employees, if you're a business owner. You have to show up and work every single day. What this tax law does is it provides a little relief for those truly working hard, and that's why I love it.

Mike Pine: It allows you to be a better steward of what God has given you. We're going to wrap this up now. We meant to do it in 20 minutes. We're a lot longer than that. I hope you found this informative.

Stay tuned to the Hidden Money podcast. Please like this or subscribe to it so you can see our updates.

We're going to update a lot over the next days, the next weeks, and as this bill finally becomes law, we will have it nailed down on how this bill is going to change your life.

Change your facts to change your tax. That's what we're here about. www.hiddemoney.com

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