The Big Beautiful Bill: What It Means for Your Wealth

On July 4, 2025, President Trump signed into law the sweeping “One Big Beautiful Bill Act,” a nearly $4 trillion tax-and-spending package that’s his signature legislative accomplishment. Let’s explore how this legislation could reshape your financial future and your wealth.

💸 Key Tax Changes: Who Gains?

- Extension of 2017 Tax Cuts: The bill locks in the Trump-era tax cuts, avoiding a scheduled expiration at the end of 2025. This means:

  - Lower individual income tax rates remain in place

  - Increased standard deductions and estate tax exemptions continue (adjusted for inflation)

  - Child tax credits stay elevated

- New Deductions**:

  - Up to $6,000 for Social Security recipients 65 years old and older earning under $75,000

  - Workers can now deduct tips and overtime pay ~ limitations are as follows:

💵 Deduction Caps

• Tips: Up to $25,000 per year for individuals; $25,000 per spouse for joint filers

• Overtime Pay: Up to $12,500 per year for individuals; $25,000 total for joint filers

  
  

  - SALT (state and local tax) deduction cap raised from $10,000 to $40,000—especially beneficial for high-income earners in states like NY, NJ, and CA who itemize their taxes

- Business Incentives:

  - 100% bonus depreciation for equipment investment

  - Immediate deduction of domestic R&D expenses

📈 Financial Market Impacts: Winners, Watchouts, and Your Wealth

🏗️ Infrastructure & Energy

- The Big Beautiful Bill boosts your wealth through traditional energy (oil, gas, coal) while slashing clean energy tax credits from the Inflation Reduction Act.

- Companies like Caterpillar and ExxonMobil may benefit, while solar and EV sectors may face challenges.

🏥 Healthcare

- Deep cuts to Medicaid and Affordable Care Act (ACA) subsidies could hurt hospital operators and insurers reliant on government reimbursements.

🏠 Real Estate

- Housing prices may rise due to the higher deduction allowed for state and local real estate taxes.  This might cause potential buyers to look for higher priced homes.

💵 Fixed Income

- Treasury yields are rising as investors brace for $3.3 trillion in added deficits over the next decade.

- Expect more volatility in bond markets and potentially higher borrowing costs.  This could also boost savings rates on U.S. Treasuries, CDs, and High Yield Savings Accounts.

🧾 What Investors Should Watch

🧠 Strategic Takeaways for Your Wealth

1. Reassess Sector Investments: Consider shifting toward sectors poised to benefit from infrastructure, energy and defense spending.  The Fidelity New Millennium (FMILX) is a fund to consider.

2. Review Tax Strategy: For high tax states, the SALT cap increases, and new deductions may open doors for real estate investments.

3. Monitor Interest Rates: Rising yields could affect borrowing costs, mortgage rates, CD returns, and U.S. Treasuries.  Look to reduce loan amounts, but also look for favorable short-term savings opportunities.

📬 Want to know how the Big Beautiful Bill affects your wealth?  Reach out to Paycheck to Wealth today—we’re here to help you navigate your investments with clarity and confidence.