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The Big Beautiful Bill, Rolling Back Public Television and Radio, and Regulating the Cryptocurrency Industry

The Big Beautiful BillOne Big Beautiful Bill Act (HR 1) – Introduced by Rep. Jody Arrington (R-TX) on May 20, this bill passed in the House on May 22, the Senate with changes on July 1, and once again in the House on July 3. Signed into law on July 4, this bill includes the following provisions:

  • Makes permanent the income and estate tax provisions passed in the Tax Cuts and Jobs Act of 2017.
  • Increases the annual limit to $7,500 for Dependent Care Flexible Spending Accounts (FSAs), starting in 2026.
  • Makes permanent the ability for employers to offer tax-free student loan repayment assistance up to $5,250 a year, with the cap indexed for inflation.
  • Starting in 2026, new tax-advantaged “Trump Account” savings plans may be opened for eligible children under age 18. The account will receive a one-time $1,000 deposit by the government (for children born in 2025 through 2028) and allow for non-deductible/after-tax contributions of up to $5,000 a year (indexed for inflation). However, note that funds cannot be withdrawn before the beneficiary turns 18, and money withdrawn before age 59½ is subject to both income taxes and a 10 percent penalty (with exceptions for college tuition and a first-time home purchase).
  • While the bill calls for untaxed tips and overtime pay, this tax break will be delivered in the form of a deduction claimed on individual tax returns. For cash or charged tips, up to $25,000; for overtime pay, the deduction is up to $12,500/$25,000 for joint filers. Phase-out deductions will apply to both based on income.
  • Allows up to a $10,000 tax deduction for interest paid on an auto loan used to purchase a qualified vehicle.
  • New tax deduction for seniors age 65+: $6,000 for single filers; $12,000 for joint filers.
  • The bill does not include an extension of the enhanced credits for the Affordable Care Act, scheduled to expire at the end of the year. This is expected to increase average exchange health insurance premiums by 75 percent starting next year.

Relating to consideration of the Senate amendment to the bill (H.R. 4) to rescind certain budget authority proposed to be rescinded in special messages transmitted to the Congress by the president on June 3, in accordance with section 1012(a) of the Congressional Budget and Impoundment Control Act of 1974 (HRes 590) – On July 17, Rep. Virginia Foxx (R-NC) introduced this rescissions bill, which essentially cuts $1 billion from the Corporation for Public Broadcasting (CBP). The CBP is a private, nonprofit corporation that was authorized by Congress in 1967 to be the steward of the federal government’s investment in public broadcasting. The elimination of this federal funding will force many local public radio and television stations to shut down. The legislation, which also rescinds $8 billion from a variety of foreign aid programs, was passed as a House rule that enabled full passage of the rescissions bill due to a provision that avoids a direct vote on the bill. The bill passed in the House on July 18 and does not require approval by the Senate or to be signed into law by the president.

GENIUS Act (S 1582) – Introduced by Sen. Bill Hagerty (R-TN) on May 1, this legislation is designed to regulate the currently unregulated cryptocurrency industry. The Act requires issuers to back stablecoins on at least a $1-to-$1 basis. The bill is intended to set guardrails for the industry via full reserve backing, monthly audits, and anti-money laundering compliance regulations. This bill also enables a wider range of issuers to enter the market, including banks, fintechs, and major retailers. The legislation was passed in the Senate on June 17, the House on July 1,7, and was signed into law on July 18.

Anti-CBDC Surveillance State Act (HR 1919) – Introduced by Rep. Tom Emmer (R-MN) on March 6, this is a companion bill to the Genius Act. It would prohibit Federal Reserve Banks from offering certain products or services directly to individuals and disallow the use of central bank digital currency for monetary policy, among other provisions (CBDC stands for Central Bank Digital Currency). The bill passed in the House on July 17 and currently awaits its fate in the Senate.

Digital Asset Market Clarity Act of 2025 (HR 3633) – Another Genius Act companion bill, the goal of this legislation is to provide a regulatory system by the Securities and Exchange Commission and the Commodity Futures Trading Commission for the sale of digital commodities. The bill was introduced on May 29 by Rep. French Hill (R-AR), passed in the House on July 17, and currently lies with the Senate.

Tax and Financial News for October 2015

Smarter Charitable Giving

Many donors who give substantial sums regularly or on occasion often make the same mistake – not having a plan. Donor-advised funds offer a great way to give with a plan.

Donor-advised funds are charitable giving vehicles administered by a public charity. They are created to manage charitable donations on behalf of organizations, families or individuals. In order to participate in a donor-advised fund, the donating individual or organization makes an irrevocable contribution of cash, securities or other financial instruments. While the donor surrenders ownership of whatever they place in the fund, they retain advisory privileges over how their account is invested and how it distributes money to charities. Further benefits of a donor-advised fund include flexibility in grant recommending and the ability to remain anonymous.

Some of the key characteristics of donor-advised funds are:

  • Upfront tax deductions for cash donations of 50 percent and 30 percent for appreciated assets
  • Eliminating capital gains on long-term appreciated stocks and other securities
  • The ability to accept a variety of assets, including nearly any type of financial instrument
  • Professional investment management services
  • The ability to name successors

An effective approach to donor advised fund giving involves the following four-part plan:

  1. Create A Mission Statement. Fewer than one in three donors who gift greater than $100,000 a year have a mission statement or written goals for giving. Those who give $25,000 or less per year plan even less often – only 16 percent of the time. Mission statements help provide a clear direction on what grants to make and what to decline. A mission statement does not need to be long or complicated. Even just a few sentences that encapsulate your giving philosophy can help keep plans on track and make sure your money goes to the type of causes you care about.
  2. Make An Action Plan. Research charities of interest, create a giving budget and explore ways to leverage giving by establishing legacy gifts.
  3. Test Potential Grantees. Learn more about the organization’s programs, goals and needs with questions such as, “What is your most successful program and why?” You can also assess their resourcing and opportunities by asking things like, “What do private donations allow you to do that other funding sources do not cover?” This will help you give effectively and efficiently.
  4.  Maximize Your Impact. Donors who learned about giving from their parents are more likely to pass it on and teach their own children the importance of giving. Ways to instill and cultivate the importance of giving in children can include things such as providing an allowance allocated to three parts: spending, saving and giving – or family traditions such as volunteer days.

Ultimately, having a plan, mission and purpose are what will drive your giving to maximize its potential impact. Donor-advised funds are not the only way to go for big or regular donors; however, they offer a flexible structure and many management and tax advantages over giving directly to charities on your own.

Tax and Financial News for September 2015

Tax, Estate Planning and Benefits Opportunities for Same-Sex Couples

On June 26, the Supreme Court made a historic ruling in the case of Obergefell v. Hodges, affirming a constitutional right to same-sex marriage in all 50 states. Prior to this decision, the following 13 states still did not recognize same-sex marriage:

  • Arkansas
  • Georgia
  • Kentucky
  • Louisiana
  • Michigan
  • Mississippi
  • Missouri
  • Nebraska
  • North Dakota
  • Ohio
  • South Dakota
  • Tennessee
  • Texas

Same-sex couples in these states were in an odd sort of limbo. They could go to another state and be legally married and have the marriage recognized federally, but it would not be recognized in their home state. As a result, they could file a joint return for their federal taxes but each spouse needed to file as single for their state returns. If one of the spouses died, their estate was subject to federal estate tax laws, but not at the state level. If their employer only operated within their home state, they could be denied certain benefits available to married couples. As a result of this Supreme Court decision, this limbo no longer exists and a number of tax, estate planning and benefit opportunities are now available to same-sex couples in these states. Here are the details on some of the changes.

Income taxes

Married same-sex couples are now allowed to file joint tax returns in all states. Usually, this results in a lower tax liability, but not always. Couples who were married in another state can retroactively amend all open past year tax returns. Going forward, these couples also can file 2014 returns that are currently on extension.

Gifting

Married spouses are allowed to make unlimited gifts to each other without any concern over federal or state gift taxes. One practical example of how this applies to same-sex couples is when they purchase a house together but contribute different amounts. Under the new ruling, they can enjoy the benefit of 50/50 joint ownership in the home without any gift tax consequences.

Estate planning

A basic estate planning principle allows one spouse to leave property to the other without paying estate taxes. The recent Supreme Court decision in Obergefell extends this spousal exclusion to the state level for everyone. Married same-sex couples also now have the right to inherit property, even in the absence of a will, under a state’s intestacy statute.

Divorce

Before, same-sex couples could only get divorced in certain states; but now that is no longer the case. Until this ruling, same-sex couples who wanted a divorce might not have had access in their own state. Now, every state must accept the fundamental right to divorce, which means spousal rights and benefits such as alimony apply to everyone in every state.

IRA rollovers

A spouse who inherits an Individual Retirement Account from a deceased spouse is allowed to defer taking distributions until age 70 ½ and stretch payments over his or her lifetime. Distributions over time allow the tax-deferred investment to grow and can save federal and state income taxes over taking a lump-sum distribution. This benefit is now available to all married same-sex couples at the state level. To ensure they receive these benefits, married same-sex couples should double check their IRA beneficiary designation forms.

Summary

The recent Supreme Court ruling opens up a variety of tax and benefit opportunities in states that previously did not recognize same-sex marriage. Couples in these states should assess their situation to ensure they are taking full advantage of everything the change in law offers.