Power Up Wealth podcast – Episode 96 – Unpacking the One Big Beautiful Bill: Simplifications and Surprises
James Derrick 0:00
The One Big Beautiful Bill Act was passed on July 4, 2025, and its impact is certainly going to be big for all of us. I’m James Derrick, President of Smedley Financial. Today, we’ll be talking with expert and guest, Jordan Hadfield, to unpack what is in this big bill and how we can make it beautiful for all of us.
Sharla Jessop 0:30
Welcome to the SFS Power Up Wealth podcast, where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:44
Thank you for joining me today, Jordan.
Jordan Hadfield 0:54
I’m glad to be here James. Thanks for having me.
James Derrick 0:57
Jordan is the Vice President of Wealth Management at Smedley Financial Services. He has a Certified Financial Planning designation, and he is our company expert on this big, beautiful bill passed by Congress. It is a big bill, Jordan.
Jordan Hadfield 1:12
It is a big bill. I’m not sure how beautiful it is. There’s a lot of things in this bill. This bill is very nuanced, and so if you’re reading it and trying to figure out how it’s going to affect you, you can get confused really quickly. It is a big bill. Realistically, there’s not a lot of big and beautiful things in here. There’s a couple that we want to highlight, but a lot of it is very, very small. I think most taxpayers aren’t going to notice a big difference.
James Derrick 1:37
Yeah, well, speaking of not a big difference, there were some extensions in here, some tax cuts from 2017 that were going to end are now permanent. Let’s start right there.
Jordan Hadfield 1:48
That’s correct. So in Trump’s first term, he passed a bill, the Tax Cuts and Jobs Act. And in that bill he reduced taxes and he doubled the standard deduction. There was a number of things in that bill that were really helpful for taxpayers. The tax cuts from 2017 were set to expire. They are now continued indefinitely. So they’re not going to expire. We’re going to continue with the same tax brackets, largely, that we had, you know, from Trump’s first term. That is the biggest and most beautiful thing in this bill, and again, that’s going to feel normal at this point to most taxpayers.
James Derrick 2:25
Just one little thought here. My whole career, people have been talking about two things. One, simplifying the tax code.
Jordan Hadfield 2:31
Never going to happen.
James Derrick 2:33
And taxes going up.
Jordan Hadfield 2:35
Might not ever happen either. I don’t know what happens there.
James Derrick 2:39
Let’s talk about the standard deduction and how many people it might affect. And then let’s get into the SALT deduction for the itemizers.
Jordan Hadfield 2:47
Let’s do it.
James Derrick 2:47
So these are, these are two different ways of filing your taxes, and you said most people are not itemizing anymore.
Jordan Hadfield 2:54
Yeah. So again, thanks to the Tax Cuts and Job Act passed in 2017 the standard deduction doubled. What that means is the amount of money that we got to deduct from our taxable income increased with the Tax and Jobs Act. It didn’t just increase a little. It actually doubled. That standard deduction doubled. And so if you were itemizing, if you had deductions that you could itemize, you now had to have twice as many to meet the minimum of the standard deduction? Well, most Americans, 88 to 90% of Americans, didn’t meet that threshold when itemizing the standard deduction was more so they were taking the standard deduction. So most people now take the standard deduction. By the way, that is a simplification of taxes. Taxes are still very complicated, but doubling that standard deduction did help simplify greatly.
James Derrick 3:42
All right, let’s talk about the SALT deduction.
Jordan Hadfield 3:45
Yes, so SALT. That stands for state and local taxes. And if you’re not taking the standard deduction, if you are itemizing, the SALT deduction will help you. It increased from $10,000 to $40,000. That is set to expire in 2028. There is a benefit there. But again, this is going to help a very small number of people. Probably 10 to 12% of Americans will be affected by this.
James Derrick 4:08
With the standard deduction going up a tiny bit and being indexed to inflation, and the SALT deduction going up a lot, there’s this potential to do the bundling that sometimes people do, where they will get the standard deduction one year and then itemize the next, and kind of go back and forth every other year.
Jordan Hadfield 4:24
Some people will try and bundle as many deductions as they can in one year in an effort to receive a greater benefit than the standard deduction provides. And if they can take all their deductions and squeeze them into one year and take and itemize, then the next year they don’t have as many standard deductions because they’ve squeezed them all into the year prior. Well, now they just take the standard deduction, and it’s called bundling deductions. That is a benefit. It’s very difficult for people to do. Most people just take the standard deduction. But if you’re in a place where you’re close, you know if itemizing for you is is close to that standard deduction level, and you can pull in deductions that you were planning for the next year into the current year to get you over that threshold. Then bundling makes a lot of sense. And so, yeah, there’s some games that we can play to try and reduce taxes a little bit here.
James Derrick 5:16
Let’s talk Social Security. This is a big one.
Jordan Hadfield 5:18
I get a lot of questions about this. Lot of confusion about this.
James Derrick 5:22
Well, it was a campaign promise. People were expecting not to have to pay taxes on Social Security.
Jordan Hadfield 5:28
Yeah, there was a lot of talk about forgiving taxes on Social Security. In other words, Social Security would be exempt from federal tax. That did not happen. I’ve got a lot of people asking me about this, and they’re surprised when I tell them there is no changes to Social Security tax in the One Big Beautiful Bill.
James Derrick 5:46
Directly.
Jordan Hadfield 5:47
Directly, there is no changes to Social Security.
James Derrick 5:50
All right, let’s talk indirectly. What benefit is there? Indirectly?
Jordan Hadfield 5:54
Indirectly, a lot of these little things add up. The standard deduction increasing slightly is going to help offset some of your Social Security tax. It’s indexed to inflation. A lot of little things here that will kind of help. The biggest thing for seniors, and this isn’t going to affect everybody, but the biggest thing for seniors is now a temporary senior bonus deduction. It’s a $6,000 deduction on top of the standard deduction and on top of the age based deduction that already exists. So this is a third deduction that is possible for seniors, again, $6,000 and it is temporary, but that $6,000 will help to offset Social Security taxes for many Americans. Now, there is a phase out, so not everybody’s going to qualify. It’s not like, Okay, I’m receiving Social Security. I’m of Social Security age. I qualify for this deduction. Not how it works. Which is why you can’t say this is directly going to offset Social Security tax. Many Americans will not see a change in their taxes on Social Security, but some who qualify for this deduction will.
James Derrick 6:58
This seems like a good one to come in, talk to your financial advisor or your tax preparer and make sure you know where these cutoffs are, because you may make some adjustments in your retirement distributions so that you do qualify for this.
Jordan Hadfield 7:13
Yeah, there’s a lot of little things like this in here, and again, they’re all little. Nothing is game changing, but there are some small opportunities, and if we add those up, you know, we could have a significant benefit. And so if you’re in retirement, you want to be very careful about any taxable income that you were taking. So before you go take a big distribution from your 401(k) or your IRA, that’s going to be reported as taxable income for you, you should absolutely check with the professional, your financial advisor, because it may push you outside of some of these limits, and you won’t notice the benefit.
James Derrick 7:48
I see there’s some changes for businesses, deductions for businesses.
Jordan Hadfield 7:53
Yeah, there is, and there’s some depreciation benefits that came back. This is a really complicated area of the bill. If you’re a small business owner or a big business owner. If you own a business it is worth looking into here. I don’t know if this is the right place to address it. Lots of avenues here, lots of little things here, for business owners, but there’s some depreciation benefits that came back, and this is a good thing. This will help business owners.
James Derrick 8:19
All right, how about for children? We’ve got child tax credits and we’ve got the new accounts.
Jordan Hadfield 8:26
Yeah, so the child tax credit increased from $2000 to $2200. Again, not a big deal.
James Derrick 8:31
I’ll take it!
Jordan Hadfield 8:32
Well, so will I. I’m not going to fight it, but it’s not massive. I don’t know that I would call this big and beautiful. It’s, it’s a slight increase of $200 and it’s indexed for inflation. So absolutely, I’ll take it, not a big thing, but it’ll definitely provide a little bit of help there.
James Derrick 8:46
Yeah. And then we’ve got these accounts for new babies.
Jordan Hadfield 8:50
Yeah. So the Trump accounts. This is another thing I’m getting a lot of questions about. The federal government is opening a investment account for young children. They have to have been born between January one of 2025, and December 31 of 2028, okay, okay. And if you were born in that time period, the government is going to open up an investment account for you, and they are going to seed it with $1,000. This is a one time gift of $1,000 from the federal government.
James Derrick 9:20
And they allow you to add money to it.
Jordan Hadfield 9:22
They do, but in most cases, we don’t recommend it. $1,000 again, we’ll take it. $1,000 is nice. This isn’t going to change the world for these young kids. If parents are willing to or wanting to save for their children, this becomes an option. We already have a lot of options for children and savings as far as UGMA accounts and 529 accounts, and there’s a lot of them out there. Some of those other accounts offer some greater benefits. So I wouldn’t be rushing out as a parent to fund these Trump accounts. Take the $1,000 that they’re giving you. It’s going to grow over the childs life. So it’ll, you know, equate to something much more than $1,000 by the time the child hits college age. But for any additional savings, I’d be careful about this one. This is not an account that I would be excited to fund. I think there’s better options out there. It’s worth some planning.
James Derrick 10:15
Take the free money. Look elsewhere for adding more. What about access to that money? What? What is it like? You take it, you get the $1,000. What if you need that money? When can it be taken out?
Jordan Hadfield 10:28
Lot of details here that are still changing. Lot of information about these accounts that are still coming forth. We’re all just kind of waiting to see some of these details.
James Derrick 10:37
I think it’s my understanding, though, that it’s intended for the future?
Jordan Hadfield 10:41
Yes, you it’s accessible when the child is 18 and older in most situations.
James Derrick 10:45
Let’s jump into tips and overtime. Two more campaign promises. Did we get no taxes on tips and overtime?
Jordan Hadfield 10:54
Temporarily. We got no taxes on tips and no taxes on overtime. But it isn’t really no taxes on tips and no taxes on overtime. There’s phase out limits, so as long as your income is low enough that you qualify for this benefit, then you’ll see a slight reduction in taxable income.
James Derrick 11:14
I actually think this is a good thing. I you know, when I heard, oh no taxes on tips, I thought, Oh my this is there’s a lot of room for manipulation on this one. I mean, you really had to have a but in here, you know, you had to have some rules to make sure that it could be used the way it was intended to be used.
Jordan Hadfield 11:30
If you were married filing jointly, you can now deduct up to $25,000 in taxes and tips. I do want to point out that that doesn’t mean you’re going to save $25,000 in taxes. That’s not what’s happening here. The Tax Policy Center estimates that this will equate to about $1,300 in savings for the average American, and that is for tips and for the overtime pay deduction. Same phase outs $25,000 if you’re married filing jointly, this equates to an average savings of about $1,400 per year. So if you qualify and you can deduct that much in tips, you’re only saving the taxes on that amount. You’re not saving that amount. You’re not saving the $25,000 you’re only saving the taxes due on the $25,000, which means, you know, $1,300 $1,400 a year, average if you qualify for these deductions. Again, I’ll take it, but it’s not huge. This isn’t going to make or break anybody.
James Derrick 12:28
Okay. How about clean energy credits and auto loans? There are a couple of changes that affect electric vehicles, solar panels, things like that.
Jordan Hadfield 12:36
Yeah. So this one makes me a little bit sad. There were a lot of incentives for people to go green, to try and be a little bit more environmentally aware, and make choices that that help clean the air we breathe, and a lot of those deductions are now done away with. So I’ve had multiple clients who’d come in and had qualified, you know, I’ve got one client in particular, I’m thinking of, he had put solar on his house, and he had qualified for some deductions because he put solar on his house, and that deduction allowed him to convert a big chunk of his IRA from traditional to Roth tax-free because he had this deduction. Was a tremendous deduction for him. In this case, it was, it was awesome. And a lot of people, through a lot of different ways, electric vehicles and other things have qualified for tax benefits that have provided some tax savings. Again, all of those environmentally friendly tax benefits have now gone away. They’ve disappeared.
James Derrick 13:33
They disappeared September 1, 2025.
Jordan Hadfield 13:36
That’s true. Yep, they’re gone.
James Derrick 13:37
All right what about interest deduction on auto loans?
Jordan Hadfield 13:41
Yes, so you can now deduct interest on an auto loan if that auto was built here in America, and it was and it has been purchased brand new. So there is a savings there. You can deduct up to $10,000. Again, this isn’t $10,000 a year in savings. They are estimating it’s going to save probably $20 a month. Is about what this will save, but it’s something, hey, I’ll take it.
James Derrick 14:02
It’s something that’s quite a bit of interest, $10,000 in interest.
Jordan Hadfield 14:06
Yeah.
James Derrick 14:06
I mean, you nobody actually wants to pay that much interest. I think on the loan.
Jordan Hadfield 14:10
Absolutely not. No.
James Derrick 14:11
Jordan, how do we even know if we’re buying a new car, if it’s going to qualify as Made in the USA? Because I’ve heard reports that it’s very complicated.
Jordan Hadfield 14:20
Yeah. So a couple things. The car has to be new. It has to be for personal use only, and it has to be secured by a first lien loan. The final assembly has to be in the US. It has to weigh under 14,000 pounds, and it has to be bought within the tax years 2025 through 2028. So there’s a lot of things here that qualify. Again, the savings aren’t big, but here’s some of the automakers that would qualify, Acura, BMW, Cadillac, Chevrolet, Ford, GMC, Honda, Hyundai, Jeep, Kia, Lincoln, Mercedes-Benz, Tesla, Toyota and Volkswagen.
James Derrick 14:43
Well, that’s a pretty big list.
Jordan Hadfield 14:49
Significant list.
James Derrick 14:50
Yeah. So a lot of the car companies are going to qualify for this, and they’ve got every incentive to qualify for it. If you’re looking to buy a new car, it may change your decision.
Jordan Hadfield 15:03
Yeah, again, $20 a month of savings is definitely worth taking. It’s not huge, but not every make and model from these manufacturers may qualify. So this is something that you’re going to look into before you rush out and you buy a Toyota.
James Derrick 15:15
How about the projected fiscal impact? We’re getting really close to $40 trillion in debt as a country. Who knows when it’ll really, really matter, but we’re paying a lot of interest. What do you think is going to be the financial impact on the country?
Jordan Hadfield 15:30
This is the one that’s hardest to swallow. This bill is projected to add 3.3 to 4.5 trillion, with a T, trillion dollars to the national deficit. So this is a very, very expensive bill. As a financial advisor that’s really hard for me to see, for someone who’s fiscally conservative, that’s really hard for me to see, for someone who is paying attention to the national debt, this is really hard for me to see. So this is a concern for me personally. I think it if it’s not a concern for most people now, if we continue down this trend, it very well will be a concern for most people. The benefit of this bill is also something that I’m not super excited about. If you make under $50,000 a year, your taxable income is expected to increase. If you make over $4 million a year, your benefit is supposed to be the highest, at almost $400,000 of savings a year. The average American won’t see much of a change at all. So there is more pressure on the lower class. Significant savings for the highest 10% of earners and most Americans that fall in that middle won’t see much of a change. There’s a slight increase, but it really jumps as you as you reach kind of the more wealthy status. That’s really where the bill is going to provide the most benefit. So if you’re making, you know, under $175,000 a year, you may see between $1000 and $2,000, which is significant. If you’re making less than 50, you’re going to pay more. If you’re making over 4 million, you’re going to see a significant increase.
James Derrick 17:13
Fascinating, is there anything that you didn’t have room for in your article that you’d want to address on this podcast?
Jordan Hadfield 17:21
Over the next decade, a projected 11.8 million people are projected to lose their health coverage, either through Medicaid or through health insurance marketplace changes. So again, if you’re in the lower class, if you depend on Medicaid, or if health care is expensive for you. This is a struggle. These costs are going to go up. A projected 11.8 million people are going to lose their health coverage through the One Big Beautiful Bill Act over the next decade. This is also heartbreaking, in my opinion. Other than that, there’s some good things in here. Overall, I don’t think the bill is as big and beautiful as everyone is talking about, there are some things in here that are nice. The extension of the tax cuts is going to be the biggest thing. Other than that, there’s some minor opportunities here and there. It’s worth talking to your financial advisor about early to make sure that you’re hitting these phase out limits, you’re not going over so that you can take advantage of these minor savings here and there.
James Derrick 18:19
Yeah, you absolutely want to take advantage of what’s available. And it looks like there are a lot of things available, but you got to get into the weeds a little bit with a professional so that you make sure that you’re getting them.
Jordan Hadfield 18:30
They’re absolutely nuanced. Yes, they are complicated. There is one other thing of note for individuals who are charitably inclined. Typically speaking, if you take the standard deduction, then you’re not writing off any donations to charity. Well, the One Big Beautiful Bill does add a charitable deduction for non itemizers. This means, if you’re taking the standard deduction, you can still deduct up to $1,000 if you’re single, and $2,000 if you’re married, filing jointly for cash contributions to qualified charities. So Donor Advised, funds do not qualify. If you’re donating anything other than cash, it does not qualify. This will not be indexed for inflation, but it is nice to know that if you’re charitably inclined and you are taking the standard deduction, you can still deduct some of those donations to charity up to $2,000. That’s a pretty cool thing, and I think it’s going to help some people.
James Derrick 19:22
I think when you start adding all of these together, they definitely can make some financial difference in your life. And so you don’t want to ignore any of these. You want to get in and talk with somebody who knows about all the changes and can give you some advice.
Jordan Hadfield 19:38
Yeah, absolutely. That’s my biggest advice about this is don’t try and attack this by yourself. Make sure you include your financial professional. They should be aware. Here at Smedley Financial, we are definitely aware of the act and how some of these little avenues can be a benefit for you. We want to help you implement them into your financial strategy. Save you some money on taxes.
James Derrick 19:59
Thank you. Jordan, so much for coming in to make sense of all of this from the big, beautiful bill.
Jordan Hadfield 20:04
Yeah. Thanks for having me, James.
Shane Thomas 20:11
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
