>> Matt Nelson: Are you prepared for the biggest tax changes in decades?

>> Matt Nelson: The so called one big beautiful bill.

>> Matt Nelson: Just got signed into law.

>> Matt Nelson: So if you are retired, own a.

>> Matt Nelson: Business, have stock compensation, or thinking about estate planning, you need to listen to this episode because your taxes are going to change dramatically. In this video, I'm breaking down how these tax law changes are going to affect most of our financial planning clients. We're going to look at the four key areas that we think are most relevant.

>> Matt Nelson: We'll cover what's changed, changing when it takes effect, and most importantly, what it means to you.

>> Matt Nelson: And make sure to stay to the end because I'll show, uh, you how.

>> Matt Nelson: To get a visual breakdown that makes all this more clear.

>> Matt Nelson: First up, we're going to talk about.

>> Matt Nelson: How this impacts people who are retired.

>> Matt Nelson: There's three main items I want to call out.

>> Matt Nelson: The first one is a boost in the increase of the standard deduction. Retirees are going to be getting relief with an, uh, increase of $15,750 for singles and $31,500 for married filing jointly. But here's the big win.

>> Matt Nelson: If you're over age 65 and you.

>> Matt Nelson: Have income under $75,000 for single filers and $150,000 for married filers, you'll get an additional $6,000 up through 2028. So for a concrete example of that.

>> Matt Nelson: If you're married filing jointly over age 65, have under $150,000 of income, you'll.

>> Matt Nelson: Get a standard deduction of, of $46,000. Now that's a whopping 12,900 more than last year.

>> Matt Nelson: 2024. Next up, big, uh, impact on retired people is tax bracket certainty. We've all been concerned about tax brackets sunsetting to the prior levels, but now.

>> Matt Nelson: Those tax bracket increases that were scheduled.

>> Matt Nelson: For 2026 are gone, your current rates are going to remain in place as permanent, well, as permanent as tax code can actually be.

>> Matt Nelson: But either way, it should give you more certainty in how you're planning for.

>> Matt Nelson: Your financial planning strategies in the future.

>> Matt Nelson: The third big item that affects retirees.

>> Matt Nelson: And higher earners without a lot of.

>> Matt Nelson: Deductions would be the increase in the SALT deduction.

>> Matt Nelson: Now, SALT stands for state and local tax deduction.

>> Matt Nelson: This had been capped at $10,000, but.

>> Matt Nelson: Now it's increasing to 40,000 through 2029, and then it's going to drop back down again to $10,000.

>> Matt Nelson: The one caveat is that for higher.

>> Matt Nelson: Earners over $500,000 a year, you do start to see a phase out in.

>> Matt Nelson: How much they can take of this.

>> Matt Nelson: Deduction, but it's still an improvement over the prior tax law.

>> Matt Nelson: So if you're in a state with high income taxes, pay attention. This is going to save you a.

>> Matt Nelson: Lot of money in the coming year. So the planning opportunities for retirees would be to, uh, consider increasing Roth conversions while you still have your senior deduction.

>> Matt Nelson: Plan major expenses while you still have.

>> Matt Nelson: A larger SALT deduction before it drops in 2030, and consider your state tax.

>> Matt Nelson: Strategy if you're considering relocation. Area Number two of this bill affects.

>> Matt Nelson: Stock compensation, specifically when it comes to qualified small business stock and the AMT.

>> Matt Nelson: Relief for the qsbs.

>> Matt Nelson: Qualified small business stock.

>> Matt Nelson: This is a pretty revolutionary change.

>> Matt Nelson: We're actually going to move from a.

>> Matt Nelson: Five year holding period down to a three year holding period requirement. There's phased benefits of 50% at three.

>> Matt Nelson: Years, 75% at, uh, four years and.

>> Matt Nelson: 100% at five years.

>> Matt Nelson: And while the holding period dropping from.

>> Matt Nelson: Five years to three years is a.

>> Matt Nelson: Big deal, I think even bigger is.

>> Matt Nelson: The that the exclusion amount jumps from.

>> Matt Nelson: 10 million to 15 million and qualifying.

>> Matt Nelson: Companies can now have up to 75.

>> Matt Nelson: Million in assets versus the prior 50 million.

>> Matt Nelson: So as a small business owner, this.

>> Matt Nelson: QSBS changes are pretty transformational.

>> Matt Nelson: Not only do you have a shorter period to get on with faster exits.

>> Matt Nelson: You can also support larger exits and you can grow larger before you lose QSBS status.

>> Matt Nelson: Uh, now the second part of the.

>> Matt Nelson: Bill that has to do with stock.

>> Matt Nelson: Compensation that we find relevant for clients is the AMT relief.

>> Matt Nelson: We now have permanent hire extensions where we have modified Phaseout thresholds of 500,000.

>> Matt Nelson: For single and 1 million for joint.

>> Matt Nelson: This reduces AMT triggers, meaning fewer people are going to get caught in the AMT trap when they're exercising incentive stock options and other stock compensation. So the planning opportunities as part of this bill change that comes to stock compensation would be the shortened QSBS holding period that's going to accelerate exit planning strategy. You also need to review your ISO exercise strategy in light of the improved.

>> Matt Nelson: AMT rules and consider accelerating your QSBS if you're approaching the new limits. Point number three when it comes to.

>> Matt Nelson: Business owners, we're going to focus just on the changes. With QBI becoming permanent, there's actually a number of issues that are improved for small business owners, but it's enough for a whole video.

>> Matt Nelson: So this is the main call out.

>> Matt Nelson: I want to make here because it affects a lot of our clients.

>> Matt Nelson: The 20% qualified business income deduction is.

>> Matt Nelson: Now made permanent with expanded eligibility, phase.

>> Matt Nelson: Ins increase to 75,000 for single incomes, then 150,000 for married incomes.

>> Matt Nelson: The planning opportunity is that at least now we know this is permanent and.

>> Matt Nelson: You can make some strategy for long term.

>> Matt Nelson: You need to definitely structure your business.

>> Matt Nelson: To qualify for this QBI deduction. And if you're considering selling the qsbs.

>> Matt Nelson: Changes may accelerate your timeline while maximizing your benefits.

>> Matt Nelson: All right, area number four, the bill.

>> Matt Nelson: That we think affects a lot of our clients is the way it impacts estate planning. The big headline item is the massive.

>> Matt Nelson: Increase in estate tax exemptions. The estate tax exemption permanently increases to a $15 million level per person and that's 30 million for a couple. This starts in 2026 and then is indexed for inflation. Afterwards. The same $15 million amounts are applied.

>> Matt Nelson: To generation skipping tax, which opens up a lot of multi generational gifting strategies. The main idea here is that there's.

>> Matt Nelson: Permanence with these changes.

>> Matt Nelson: Again, at least as much as tax.

>> Matt Nelson: Permanence can be a thing. But not having the sunset provisions gives some more certainty around advanced estate planning and tax situations.

>> Matt Nelson: So the planning opportunities around estate would include revisiting your current estate plan immediately. Based on these changes, consider larger lifetime gifts. You're going to want to evaluate different.

>> Matt Nelson: Trust structures and some of you will.

>> Matt Nelson: Have more comfort pursuing more advanced strategies such as grats, Grantor Retained Annuity Trusts and Intentionally Defective Grantor trusts, which still.

>> Matt Nelson: Worked before, but it's just more certainty today. So to recap, the one big beautiful bill provides a lot more tax certainty.

>> Matt Nelson: For retirees, expands the opportunity for qualified business stock deductions, provides some relief to.

>> Matt Nelson: Those that may have been subject to.

>> Matt Nelson: Amt, and greatly expands the estate planning tax exemptions. So these aren't just tax changes. These are opportunities that could save you thousands if you plan for them correctly. Don't let these opportunities pass you by. And remember at the beginning I told.

>> Matt Nelson: You I'd have, uh, a visual you could download in the comments below, built out as a mind map that can.

>> Matt Nelson: Explain these concepts very simply and make.

>> Matt Nelson: Them, um, easy to understand.

>> Matt Nelson: It's a visual guide for everything we discussed today.

>> Matt Nelson: If you found this video helpful, please.

>> Matt Nelson: Like and subscribe and check out our other content on retirement tax, savings and investment strategies. And remember, financial freedom takes more than money, so make a plan to live your life well. Take care of each other out there.

>> Ron Stutz: Investment advisory services offered through Savvy Advisors, Inc. Other entities and or marketing names, products or services mentioned here are independent of Savvy Advisors, Inc.