On February 6, 2025, White House It announced a series of tax cuts in the first place that benefit primarily from the middle class and retirees. This is what is on the table:
- No tax on advice
- There is no tax on the advantages of social security for the elderly
- No tax on additional work
- Renewal of Trump tax cuts from the 2017 discounts and jobs law
- Set the salt cover
- Canceling the special tax exemptions for billionaire sports team owners
- Close the interest loophole that was carried to the hedge fund managers
- Tax discounts of products in America
This administration calls on the largest tax reduction in history for working Americans, and with the presence of Republicans who control Congress, these proposals are likely to be submitted.
Tax discounts mean more financial freedom
As a person who is committed to the help of the largest possible number of people reach financial freedom sooner, it is difficult not to be a pro -tax discount. After all, the more money we keep, the more wealth we can build to live in our required lifestyles. This is not related to politics – it is related to the economic opportunity and personal financing strategy.
It was one of the biggest reasons that I retired in early 2012 because I did not want to grind 60+ hours per week, and I found constantly and dealt with chronic pain, only to deliver about 40 % of my income in taxes. Instead of complaining, you choose to earn less money and negotiate a separation package. The earnings of 80 % less money in the first year felt strange at the beginning, but do not pay six numbers in income taxes and enjoy the freedom of public parks on a day of the week, I felt incredibly.
Of course, tax cuts mean fewer government revenues, so the White House is looking for discounts in spending for compensation. while Usaid (1 % of spending) and other estimated spending programs may witness discounts, and the real challenge is to reduce the main budget elements.
The United States government spends a collapse
The government spent about 6.75 trillion dollars in 2024, according to Treasury MinistryWith social security, national defense, and health that includes 50 % of total spending. Thus, if the White House wants to run a balanced budget, it must find and/or equal amount of cuts and/or have more economic growth. Here’s the best 5 decrease in spending:
- Social Security (21 %)
- National Defense (15 %)
- Medicare & Health (13 %)
- Debt interest (13 %)
- Income security and other entitlements (9 %)
Small the proposed tax cuts
Let’s go now through both the proposed tax cuts.
1) There is no tax on the tips
A great victory for service workers. If you are working for tips, you often depend on the customer’s generosity to earn a living. You should keep 100 % of what you gain. Busty of restaurant servers and hotel workers, this tax exemption is well worth it.
2) There is no tax on social security for the elderly
A great step for retirees. The elderly prompted the regime their entire lives. Imposing taxes on their humble benefits already meaningless. Given that the advantages of social security already provide a weak return compared to investing in the stock market or even a 60/40 portfolio, allowing retirees to more money is a fair policy.
Currently, FICA tax employers require 6.2 % social security tax and medical care tax 1.45 % of employee wages. The employers must match these taxes, up to the total FICA contributions to 15.3 %.
The amount that retirees can earn in tax -exempt income will continue, which means less financial burden on their children and the association. Retired people finally deserve to keep more of what they paid.
3) There is no tax on additional work
This is a great incentive for workers to put them in additional hours and work more seriously – one of my predictions of what Trump’s second presidency means to your financial resources. The abolition of additional work taxes means the highest salaries at home, which in turn enhances spending, saving and investing. It may also lead to stronger GDP with increased workers ’output.
I have always thought that people can work longer than the 40 -hour standard per week if they want to proceed financially. Now, with tax -exempt additional work, there is a greater incentive to hit. Perhaps I was going to work easily for another five years if you got 20 hours a week from the profit tax.
4) Renewing Trump tax cuts from the 2017 discounts and jobs law
This step brings certainty to taxpayers and companies, which is good for investors. Among the biggest concerns before 2025 was that the tax cuts for 2017 would end, leaving the financial planners, investors and companies scrambling. Now, there is no big rush to make Roth Ira’s remittances as well.
The main rulings that are renewed:
- Decreased individual tax rates, including reducing the rate higher from 39.6 % to 37 %.
- Standard Supreme Discount: $ 15,000 for individuals, and $ 30,000 for married couples who must continue to rise.
- The corporate tax rate remains 21 % (a decrease from 35 % before 2017).
- 20 % discount for business owners, and benefit from entrepreneurs.
- Regional tax system: American companies no longer pay taxes on foreign profits.
5) Adjust the salt cover
The local tax deduction roof (SALT) was introduced in 2017, limiting the amount of property, income and sales that taxpayers can deduct from the federal tax bill to $ 10,000 a year.
This hurts homeowners in a manner that is not commensurate with high -tax states such as California, New York, Contecticut, Hawaii, Washington, Massachusetts and New Jersey. If the cover is set, the owners of high -income homes can provide thousands. Since 2017, home prices have increased everywhere. Thus, it is only expensive cases that will benefit from the high salt cover.
Instead of a blanket cover, I would like to see a modified salt cover based on local homes. The maximum value of $ 10,000 in Mississippi is different from the maximum value of $ 10,000 in San Francisco. The relative modification is more logical.
High salt hats can lead to a noticeable rise in real estate demand in higher prices. With a return to the offices movement also momentum, we should see the Big City Real Estate shine in the coming years.
6) Canceling the special tax exemptions for billionaire sports team owners
Does anyone care? Maybe not. But it raises the question – why did they get tax exemptions in the first place? The owners of the billionaire team do not need a special treatment. Steve Ballmer (La Clippers, about $ 122 billion in net value) can pay more taxes.
7) Close the preserved interest loophole
The preserved interest vulnerability allows the hedge fund managers and private stock investors to obtain performance -based compensation at low capital profit rates (20 %) instead of a high rate of normal income (37 %).
As a limited partner in eight special boxes, no objection. It is an unfair advantage that allows wealthy investors to pay less taxes than workers. Yes, public partners have to invest in the long term, which helps to finance entrepreneurship, innovation and economic growth. But this great difference in tax rates seems terrible. The closure of this vulnerability will generate billions of additional tax revenues without affecting most Americans.
8) Tax cuts of products in America
This is an incentive to enhance local manufacturing. By reducing taxes on the goods produced in the United States, companies have more reasons for maintaining production at home, and creating more American jobs. This is another victory for the American worker.
What happens after that?
With Republicans’ control of Congress, these tax cuts have a strong opportunity to pass. However, negotiations on discounts that remain and how to finance them are likely to take months.
Currently, the focus is on reducing government spending to help compensate for lost revenues. While agencies such as the American Agency for International Development represent only about 1 % of the federal budget, the larger cuts will need to come from another place if the administration wants to avoid adding to the national debt.
Less taxes, more efficient government
For Americans of the middle and retired class, these tax cuts can be a major financial victory. If you are:
- Work is an inclined function
- Dependence on social security
- Put long hours with additional work
- Owning a small company or pass entity
- Living in a high -tax condition is affected by the salt cover
You can see real benefits in the coming years. Such tax cuts provide more financial flexibility, help Americans provide wealth, investment and build faster.
Personally, I am very excited about the lack of taxes on the advantages of social security and a possible increase in the roof of salt. I do not confirm that social security in my retirement plans, so getting this exempt income from taxes in the mid -sixties is less than the need for savings and investment. I also feel overwhelmed to reduce the annual property tax bill consisting of six numbers, given the inefficiency of the city of my city. Any savings will go towards increasing spending on my family.
Looking at our tendency to spend, we should also think about how these tax cuts affect inflation. Let’s see whether the Americans have already got more of our hard -winning money!
Readers, what are your thoughts about these recent tax cuts? Do you agree with them, or do you think that some people go too far? How many taxes are paying, and how will these changes affect you? Also, what are your thoughts about the aggressive discounts of the American Agency for International Development and other governmental organizations? Are these areas appropriate to expand their scope, or will there be unintended consequences? Let’s discuss!
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