Episode 16 | Understanding the 2025 Tax Code Changes
Welcome to Your Wealth Journey podcast powered by Bradford Financial Center, where we'll always share how small changes equal big results because your wealth journey is our focus.
Shallon Weis, CFP, AIF:So welcome to Your Wealth Journey, the podcast that helps you make confident, informed decisions about your financial future. And I'm Shallon Weis.
Jim Tausz, CFP, AIF:And I'm Jim Tausz. We're actually the financial advisors that you'll find at the Bradford Financial Center, and we're glad that you're with us for episode 17. Today, we're going to be tackling a timely and a very important topic. It's understanding the 2025 tax code changes, what you need to know, because if you know it, you might be able to use it.
Shallon Weis, CFP, AIF:So we'll break down what's changing, who's impacted, and what smart moves you can start making now. And don't miss the end of the show where our five in five segment will highlight five strategic planning ideas that could make a big difference for your bottom line in the next tax year.
Jim Tausz, CFP, AIF:So I think it wouldn't be a bad idea to start with the big picture. In 2025, several provisions from the tax cut and also the JOBS Act of 2017 are actually sent to sunset. That means that we could see higher tax rates, lower deductions, and reduced exemptions. That needs to be a concern for all of us.
Shallon Weis, CFP, AIF:The standard deduction, for instance, could shrink, and the child tax credit may get slashed, and estate tax exemptions could be cut in half. And that's just the beginning.
Jim Tausz, CFP, AIF:So if you built your financial plan around the current tax code, now's the time to revisit it before it's too late.
Shallon Weis, CFP, AIF:So these tax shifts will have the greatest impact on high income earners, retirees drawing from tax deferred accounts, families' independence, small business owners, and those with estates nearing or exceeding $6,000,000.
Jim Tausz, CFP, AIF:It's not just about writing a bigger check to IRS. It's about how you structure your cash flow, your investments, and also the state going forward. Planning moves to make now is very important.
Shallon Weis, CFP, AIF:So here are a few planning levers to consider. One is growth conversions while rates are low, bunching charitable contributions, accelerating income into 2024 if possible, reviewing your withholdings, and gifting assets before the estate exemption drops.
Jim Tausz, CFP, AIF:We'll go deeper into these during the five on five, but the message here is listen, be proactive. That's so important. Don't wait for the changes to hit before you act because it could be too late. Our team works hand in hand across the tax planning, investment management, and also retirement strategies as they all have to be considered as you do your financial plan. We're not just thinking about next year.
Jim Tausz, CFP, AIF:We're actually thinking beyond that. We're thinking long term because successful planning isn't about reacting. It's about positioning yourself ahead of the curve. Being ahead of the curve will allow you to be ahead in your financial plan.
Announcer:In our last five minutes, we'll bring listeners a roundup of five smart ideas they can apply to their own wealth journeys. So let's get started with this episode's five and five.
Shallon Weis, CFP, AIF:Alright. It's time for our five and five. Five smart tax planning strategies you can consider right now as we prepare for 2025.
Jim Tausz, CFP, AIF:Okay. Let's jump in. First thing is, start a Roth conversion early. I think that's important. Convert a portion of your traditional IRA into a Roth while tax brackets are still favorable.
Jim Tausz, CFP, AIF:This locks in today's rates before they go up, and we know that rates most of the time do go up rather than down. Also, number two, maximize your gifting. Here's your annual gift dollars 18,000 per recipient in 2025, and consider lifetime gifts to lower your tax estate before the exemption levels shrink because the government is definitely talking about that as we speak. Accelerate number three, your deductions. If you itemize, consider prepaying certain expenses or stacking charitable donations before limits return to the pre-twenty seventeen levels, which you need to be ahead of that as well, and that is important, again, to your bottom line.
Jim Tausz, CFP, AIF:Number four, revisit business structures. If you're a business owner out there and you're listening to this program, your pass through deduction may change. It's not gonna be the same. Matter of fact, every year we seem to see different things happening in that area. Now's the time to actually take your identity structure compensation planning, put those together, and figure a plan that's gonna work for your particular business.
Jim Tausz, CFP, AIF:Number five, don't skip a withholding checkup. That is so important. With shifting brackets, your tax liability could increase. Believe me, they probably will if you don't get ready for it and don't do something about it to protect yourself. Adjust your withholdings now to avoid surprises next April.
Shallon Weis, CFP, AIF:And each of these moves can help soften the blow of higher taxes and position you for a smoother transition.
Jim Tausz, CFP, AIF:And, of course, as always, Shallon, the best strategy is make it personalized to your goals and your situation. Don't let other people tell you what your goals and situation should be. You're the only one that can do a good job of that.
Shallon Weis, CFP, AIF:I totally agree, Jim, and thanks for joining us today. If you're feeling a little overwhelmed, that's okay. The good news is you don't have to do this alone.
Jim Tausz, CFP, AIF:Well, being on with you all the time, Shallon I always feel overwhelmed. But having said that, we're here to help you, and don't forget, we create tax smart strategies for you to help you get where you wanna go and align your overall plan into a working plan that will be proactive and work. What do you say we talk? And if we talk, we will listen, and we will help you arrive at your destination that you wish to be in.
Shallon Weis, CFP, AIF:So remember that your financial journey is our priority, and we're here to help you navigate it successfully. So until next time, take care and plan wisely.
Announcer:Thank you for tuning in to your wealth journey podcast powered by Bradford Financial Center. Be sure to tune in to our next episode where we'll continue to explore the smart financial strategies you need to know. Securities are offered through United Planners Financial Services, member FINRA, member SIPC. Advisory services are offered through Bradford Financial Center, a registered investment adviser. Insurance services are offered through Bradford Insurance.
Announcer:Tax and accounting services are offered through Bradford Tax and Account Network. Bradford Financial Center, Bradford Insurance, and Bradford Tax and Accounting Network are not affiliated with United Planners. Neither Bradford Financial Center nor United Planners provide tax or legal advice. This podcast is for general information and educational purposes only and is not intended to be specific advice for any individual. Consult your financial professional regarding your personal situation.
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