8 Tax Opportunities on the Table, Leveraging Retirement Accounts, A Navy SEAL Motto for Your Finances, and More

Read Time: 3-minutes

Happy Saturday,

Here is this week’s edition of 6-Point Saturday — financial insights to help you make smarter money decisions.

Let’s get into it.

Point #1 — Proposed Tax Legislation: SALT Deduction Changes, Car Loan Interest Deduction, & Bonus Deduction for Seniors

There are a number of key points from proposed tax legislation (389 pages) that just came out on Monday. So, I’ll share a “CliffsNotes” on these over the next 3 points.

While this is still proposed legislation (subject to change), it does give us a glimpse at what our tax breaks & changes may look like this year and into the future:

Deductions:

SALT (State and Local Tax) Deduction Changes:

• New higher caps: $15k for married filing separately, $30k for everyone else

• Caps phase out starting at $200k/$400k AGI (Adjusted Gross Income) levels:

  • Deduction reduced by 20% of amount of AGI over phase-out (but no lower than current $5k/$10k limits)

• Contains "marriage penalties" in both the caps and phase-outs

Car Loan Interest Deduction:

• Car loan interest deduction up to $10k (for US-assembled vehicles):

  • Phased out by 20% of income over $200k for joint filers & $100k for others

  • Would be an above-the-line deduction

Bonus Deductions for Seniors:

• Seniors (likely defined as Age 65+) get an Additional Deduction of $4k:

  • Phased out by 4% of income above $150k for joint filers & $75k for everyone else

  • Below-the-line deduction but available to those itemizing and non-itemizers

Point #2 — Proposed Tax Legislation: Tax-Free Tips, Tax-Free Overtime, & new “MAGA” Accounts

• Proposed to be effective for tax year 2025:

  • Tax-free tips proposal for traditional tipping occupations

  • No tax on overtime (unavailable for "highly compensated" individuals)

• New "MAGA Accounts" (Money Account for Growth and Advancement):

  • $5k annual contribution limit

  • For beneficiaries under 18

  • Tax-advantaged savings for education, first home purchase, or small business

Point #3 — Proposed Tax Legislation: HSA (Health Savings Accounts) Changes & 529 Plan Expansion

HSA (Health Savings Account) Changes:

• Medicare Part A enrollment would no longer prohibit contributions

• Gym fees up to $500 ($1k for joint filers) would be qualified expenses

• Doubled contribution limits for some income levels

Education Changes:

• Elementary/secondary school expenses would qualify for 529 plans

• Professional credentialing programs would be eligible for 529 funds

• Employer student loan payments up to $5,250 would be permanently tax-free

Point #4 — Basic Capital…not so Basic

A startup called Basic Capital was featured in Bloomberg this week. The idea?

Helping “everyday people” access financing up to 5X their retirement savings.

The costs?

Complexity. Leverage. Multiple fees.

You’ve got to do your own due diligence—and as usual, this isn’t investment advice. At the same time, that’s not a combination I typically like to see in a retirement strategy.

Point #5 — Productivity Tip of the Week

Point #6 — My Question of the Week

Thanks for reading — I hope you found a helpful idea or two.

I’ll see you next Saturday with more.

Have a great weekend,

Benjamin Daniel, CFP®

Founder, Money Wisdom

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Disclaimer:

This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.

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