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Chris Drew

Aug 20
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Breaking Down the One Big Beautiful Bill Act

By Retirement Planning, Tax Planning

The “One Big Beautiful Bill Act” (OBBBA), often called the “Big Beautiful Bill,” is a sweeping piece of legislation that touches nearly every aspect of American life. Spanning over 800 pages, it introduces changes across the tax code, retirement savings, estate planning, border security, ICE, and government operations. The IRS is expected to issue further clarifications on many provisions, but what’s clear is that this bill brings a wide range of reforms that can impact nearly every household.

Here are just a few of the biggest changes as we understand them:

  1. Lower Tax Rates Made Permanent and a Higher Standard Deduction

The bill makes permanent the individual tax rate percentages first introduced by the 2017 Tax Cuts and Jobs Act (TCJA) for the tax year 2025 and beyond; thereafter income brackets will be indexed for inflation annually. The tax rates, as well as brackets for 2025, are as follows:

  • The top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly).
  • 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
  • 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
  • 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
  • 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
  • 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
  • 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

Along with this, the standard deduction has been increased slightly to $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers for 2025—adjusted annually for inflation going forward.

  1. Temporary Deductions (For Tax Years 2025–2028 Only)
  • Up to $25,000 of tips may be deducted from federal taxable income for those who work in industries where tips are customary. The deduction amount phases out by $100 for each $1000 when adjusted gross income exceeds $150,000 for single filers and $300,000 for joint filers. While the deduction applies to “cash” tips only, the OBBBA broadly defines “cash” tips to include tips paid in cash or charged.
  • Overtime Pay Deduction: Up to $25,000 of overtime compensation for married filers and $12,500 for single filers may be deducted from federal taxable income. The deduction phases out when adjusted gross income exceeds $150,000 for single filers and $300,000 for joint filers.
  • Senior Deduction: Mistakenly referred to as a Social Security tax cut, the OBBBA established a temporary income tax deduction of $6,000 per eligible filer for people age 65 or older—provided their modified adjusted gross income does not exceed $75,000 for single filers, or $150,000 for those married filing jointly.
  • Auto Loan Interest: Auto loan interest is made income tax deductible for new autos with final assembly in the United States. The deduction is limited to $10,000 and phases out when income exceeds $100,000 for single filers and $200,000 for joint filers.

These deductions can help reduce taxable income to support some middle-income earners but will sunset after 2028 unless renewed.

  1. Child and Family Benefits
  • The child tax credit was permanently raised by another $200 to $2,200 per qualifying child for 2025. Beginning in 2026, this will be indexed for inflation. (Earned income must be at least $2,500 in order to claim any child credit.) The OBBBA also makes permanent the $500 nonrefundable credit for other dependents who do not qualify for the child tax credit, including those over the age of 16, and makes permanent a requirement that the child and at least one parent have a Social Security number.
  • New Trump Accounts: A tax-deferred savings account is meant for American children born between 2025 and 2028. There is a one-time government deposit of $1,000 and families can contribute up to $5,000 per year with investment growth tax-deferred. Employers can also contribute $2,500 to the employee’s eligible dependent child.
  1. Permanently Higher Estate and Lifetime Gift Tax Exemption Amounts

The higher federal Estate and Lifetime Gift Tax exemption amounts will no longer sunset in 2026. Instead of reverting to pre-TCJA levels, the OBBB permanently increases the exemption to $15 million per person, or $30 million for joint filers starting in 2026, with the new exemption amount indexed for inflation going forward. The Generation-Skipping Transfer (GST) exemption will match this amount. (For the 2025 tax year, the exemption amount is $13.99 million or $28.98 million per couple.)

  1. SALT Deduction Expands Until 2030 and Current Mortgage Interest Deduction Amount Made Permanent
  • The deduction cap for State and Local Taxes (SALT) has been increased to $40,000 starting in 2025 and will then climb by 1% annually through 2029 before reverting back to $10,000 in 2030 (phases out for taxpayers with an income over $500,000).
  • Qualified residence interest deduction: Originally set to increase to $1 million, the OBBBA modified the limit on the deduction for qualified residence interest to a maximum of $750,000 of home acquisition debt permanently. The disallowance of interest on home equity loans has been made permanent unless loan proceeds are used to buy, build, or substantially improve the home securing the loan.
  1. Charitable Deduction Increase for Nonitemizers

The OBBB expands the ability of nonitemizers to take a bigger charitable deduction permanently. The preexisting limit of $300 ($600 for married individuals filing jointly) is increased to $1,000 ($2,000 for joint returns). This above-the-line deduction is available only for cash gifts made to public charities.

  1. What’s Ending

While some incentives were expanded or made permanent, others are being phased out. For instance, tax credits for electric vehicles (EVs) end September 30, 2025. Other homeowner tax credits for home energy improvements, such as solar panels, doors and windows, and heat pumps, will end December 31, 2025.

While we’ve only highlighted a few key changes, this bill spans over 800 pages, making it important to stay informed and regularly review your plan. Planning ahead remains foundational, as future shifts or challenges could bring additional changes. More guidance is expected from the IRS in the months ahead, but in the meantime, contact us with any questions or concerns.  You can reach BayTrust Financial in Tampa at 813.820.0069.

 

This overview is compiled from information believed to be true. This article should not be relied upon for tax or financial advice. Please check with your tax and financial professionals before making any changes to your plan.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

Sources:

https://www.whitehouse.gov/articles/2025/06/capitol-hill-touts-benefits-of-the-one-big-beautiful-bill/

https://waysandmeans.house.gov/2025/05/22/passed-the-one-big-beautiful-bill-moves-one-step-closer-to-president-trumps-desk/

https://www.forbes.com/sites/martinshenkman/2025/07/05/big-beautiful-estate-plan-impact-of-the-big-beautiful-bill-obbba/

https://www.fedsmith.com/2025/07/10/what-the-one-big-beautiful-bill-act-means-for-federal-employees/

https://www.whitehouse.gov/articles/2025/07/president-trumps-one-big-beautiful-bill-is-now-the-law/

https://www.cnbc.com/2025/07/11/when-provisions-from-trumps-big-beautiful-bill-go-into-effect.html

https://www.npr.org/2025/07/11/nx-s1-5459955/social-security-megabill-trump-tax-cuts

https://www.calt.iastate.edu/blogpost/one-big-beautiful-bill-act-implements-significant-tax-package

 

Jul 17
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The Pursuit of Financial Freedom In Retirement

By Financial Planning, Retirement Planning

Financial freedom in retirement means more than just having enough money, it means having choices. Putting a comprehensive retirement plan in place can not only help you take control of your finances, but also address how you will spend your time by defining your desired lifestyle and delineating strategies for your future as you get older. With confidence as your goal, the true reward of financial independence may not be found in an account balance, but in the ability to shape your days around what matters most to you in retirement.

Unfortunately, many retirees find themselves feeling “stuck” because of poor planning. Whether it’s running short on savings, carrying lingering debt, or facing unexpected healthcare costs, take a look at these steps designed to help reduce uncertainty and guide you towards financial freedom.

Set Your Foundation

Financial freedom in retirement starts with a clear vision. That begins with defining what freedom looks like to you and getting specific about the goals that will get you there.

For some, financial independence may mean early retirement or a debt-free lifestyle. For others, it’s the ability to travel or support family. Maybe it’s all the above. Start by outlining both your short- and long-term goals. What does your ideal lifestyle look like at different stages of retirement? Use measurable benchmarks such as savings targets, debt reduction timelines, and milestone ages, to create a structure you can track.

Build a Budget

Now that you’ve defined your ideal retirement lifestyle, the next step is understanding how much income you’ll need to support it. Creating a realistic budget can give you the framework to manage your money with purpose.

Start by tracking your income, expenses, debts, and investments. Work with a financial advisor to map out your income sources—such as Social Security, pensions, and retirement investments—and to plan for required minimum distributions (RMDs). Your budget should prioritize your essential living expenses while also making space for the things that bring fulfillment. Whether it’s a weekend getaway or a new set of golf clubs, a budget can give you the freedom to spend without guilt. The goal of budgeting isn’t to restrict your lifestyle—it’s to make sure your spending aligns with your priorities.

Ditch the Debt

Even in retirement, financial freedom can be compromised by lingering debt. While many retirees enter this chapter debt-free, others may still be carrying balances. If that’s you, it’s never too late to take control.

Start by focusing on high-interest debt first, as it tends to be the most damaging to your financial stability. Consider strategies like the snowball method (tackling the smallest debts first for quick wins) or the avalanche method (prioritizing the highest interest rates to help save money over time).

Downsize the Stress

Not everyone will need to consider this step—after all, everyone’s definition of financial freedom is based on their own goals. But for some, learning to live below your means can be a move toward greater freedom in retirement. This doesn’t mean sacrificing the things that matter most, but more so being intentional with your resources so you can align your lifestyle with your financial reality.

Start by evaluating whether your current home, spending habits, or overall lifestyle still make sense for this stage of life. Could downsizing your home reduce your expenses and free up cash flow? Could simplifying your lifestyle reduce stress and create more time for the things you love? Downsizing doesn’t mean downgrading. In fact, it can often create more freedom. Fewer expenses, less maintenance, and a smaller footprint can translate into more time and flexibility.

Prioritize Your Health

You can’t plan for everything, but you can prepare for a lot. Taking care of your health in advance is an important step in protecting your financial freedom in retirement. Planning for medical needs before they become urgent can help you avoid major financial setbacks down the road.

Start by building healthcare and potential long-term care costs into your retirement budget. From prescriptions, dental work, and even assisted living or in-home care, these expenses can add up quickly if you’re unprepared. But don’t just budget—prioritize your wellness. Regular checkups, preventive screenings, and healthy habits can help catch issues early. Think of it as protecting your most valuable asset: you. You’ve worked hard to reach financial freedom—now, make sure you’re able to enjoy it.

 

Whether you’re reviewing your current retirement plan, speaking with a trusted advisor, or simply taking time to define what financial freedom truly looks like for you, the most important step is to start. The goal isn’t just to stop working, it’s to build a life you don’t want to retire from. Are you ready to take that next step? Let’s do it together! Contact us today to explore how we can help you in your pursuit to financial freedom. You can reach BayTrust Financial in Tampa at 813.820.0069.

 

Sources

https://www.investopedia.com/articles/personal-finance/112015/these-10-habits-will-help-you-reach-financial-freedom.asp

https://www.tfnbtx.com/7-steps-to-take-to-achieve-financial-freedom-for-2025/

https://finance.yahoo.com/personal-finance/banking/article/what-is-financial-independence-130044125.html

https://www.forbes.com/sites/enochomololu/2024/01/20/7-steps-to-achieve-financial-freedom-and-retire-early/

This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

Jun 20
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Annuities Don’t Have to be Confusing

By Annuities, Retirement Planning

Annuities Don’t Have to be Confusing

 

In the past, annuities have been a topic avoided by many, but lately interest levels have risen—a lot. In fact, online searches for terms like “annuities” and “pensions” are up by 160% while “are annuities good or bad” are up by 200%, according to ThinkAdvisor.

With retirement lasting longer and retirees worried about recent market volatility, tariff uncertainty, potential Social Security cuts, and continued inflation, now may be a good time to learn more about annuities and the role they can play in the retirement portfolio. And since June is Annuity Awareness Month, we decided to open up the conversation and provide some clarity.

To start, whether you’re planning for retirement, getting close, or already in it, it’s important to have a retirement plan in place, and review it regularly. Having an account like a 401(k) doesn’t mean you have a retirement plan. Too often, people put away money in a tax-deferred 401(k) or similar plan and don’t think about how they will create a stream of income from it once they are no longer getting a paycheck.

As you get closer to retirement, it’s important to reconsider how much of your savings are exposed to the ups and downs of a volatile stock market. This is especially true because of “sequence of returns risk.” Breaking this risk down, if you retire during a stock market downturn and begin withdrawing money from your 401(k) for income, your savings can shrink much faster over time compared to someone who retires and withdraws income when the market is doing well. And since no one can actually predict the future, it’s best to leverage several strategies in your retirement plan.

An annuity is a contract between an individual and an insurance company designed to provide a monthly stipend or income during retirement. There are many different types of annuities, and some have different fee structures and contract terms which may, or may not, be better in your case. That’s why it is best to work with an independent financial advisor who has access to many different types of annuities from multiple highly-rated insurance companies to compare between.

Some annuities, like lifetime fixed indexed annuities, even provide retirement income that won’t run out no matter how long you live, guaranteed by the financial strength and claims-paying ability of your insurance company providing the annuity policy. And some even have contract provisions to address inflation.

Annuities can be appealing because they allow you to take part of your retirement nest egg and purchase monthly retirement income in the form of an annuity, so you don’t have to worry about managing withdrawals aside from required minimum distributions (RMDs).

With your income accounted for, the rest of your portfolio can be accessed or left in the market, depending on future need and economic conditions.

A recent study by David Blanchett and Michael Finke found that many retirees prefer the security of guaranteed lifetime income rather than dipping into their savings or 401(k), even when they could afford to. It can be hard to think of your savings as a source of retirement income, which is why working with a retirement advisor to create a real retirement plan can help give you confidence in your financial future.

Every day, about 10,000 people turn 65 in America, and annuities may be indicated for a portion of the fixed part of their portfolios depending on their situation. Times have changed, and it’s no longer just about the ratio of stocks to bonds. Research done by academic heavyweights in economics and finance in the last 10 years indicates that annuities can help. Roger Ibbotson, Robert Shiller, and Wade D. Pfau have shown that fixed indexed annuities, when used correctly, can improve retirement outcomes compared to using bonds, with annuities helping to address longevity and market risk in the fixed portion of the typical retirement portfolio.

In today’s interest rate environment, some fixed indexed annuities even offer bonuses that can help boost your annuity’s value. Additional features such as optional coverage for long-term care, terminal illness, or spousal income can also be included, making annuities customizable.

With so many choices, it’s important to remember that every person’s situation is unique, meaning annuities may or may not be indicated depending on your specific needs and goals. That’s why we’re here to help you explore your options, explain how different annuities work, and create a long-term retirement plan. If you’d like to discuss how annuities might fit into your retirement strategy, give us a call! You can reach BayTrust Financial in Tampa at 813.820.0069.

 

Sources:

https://www.thinkadvisor.com/2025/04/15/6-reasons-annuity-is-no-longer-a-dirty-word/

https://www.thinkadvisor.com/2025/04/23/for-most-americans-going-broke-in-retirement-is-a-bigger-fear-than-death-survey/

https://www.thinkadvisor.com/2025/04/15/7-things-retirement-savers-are-asking-google-about-annuities-now/

https://401kspecialistmag.com/retirees-prefer-spending-lifetime-income-over-savings/

https://www.kiplinger.com/retirement/annuities-what-you-dont-know-can-hurt-you

https://www.limra.com/en/newsroom/news-releases/2025/limra-2024-retail-annuity-sales-power-to-a-record-%24432.4-billion/

https://www.protectedincome.org/wp-content/uploads/2023/06/RP-20_Pfau_final.pdf

https://thequantum.com/a-closer-look-at-bonds-versus-fixed-indexed-annuities/

https://markets.businessinsider.com/news/stocks/insurmark-announces-barclays-bank-and-yale-economist-robert-shiller-research-showing-fixed-indexed-annuity-with-cape-index-would-have-outperformed-bonds-1028505495

https://safemoney.com/blog/annuity/shaquille-oneals-strategy-why-annuities-are-essential/

 

These are the views of the author, not the named representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. Annuity guarantees rely on financial strength and claims-paying ability of issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by carrier. Annuities are not FDIC insured.

 

 

May 15
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Will Your Nest Egg Withstand Inflation and Market Volatility?

By Financial Planning, Investing, Retirement Planning

It’s no secret that inflation is on the rise, impacting millions of Americans. Mix that in with on-again off-again tariffs, and it’s a good time to assess if your accumulated wealth is being managed in a way that will outlast inflation and a volatile market. It’s important to note that a financial plan is never supposed to be stagnant, it’s supposed to change as your situation and world economic conditions shift. But anxiety around the market and inflation is still very real, so how can we get ahead of it?

Remember, Nothing Stays the Same Forever

In early April, we saw massive swings in market sentiment as Trump teetered back and forth about tariffs. While we all hope to avoid increased inflation or, worse, a recession, we have to be strategic in how we face challenges in the market. This is a good time to remember that the markets are similar to us in the sense that nothing stays the same. The challenges you faced in your early 20s are not the same ones you have today. How long they took to resolve may vary, but they never stayed forever. Imagine if you followed your initial knee-jerk, emotional reaction to those challenges you faced when you were younger. Making decisions based on emotion, especially fear, rarely helps you reach your goals, and frankly, they can sabotage you from ever getting close to them.

So, going back to our current market situation, what can investors do right now? Well, depending on their specific situation, the answers vary.

If You’re Young, or You Have More Than 10-15 Years to Retirement

If you have a long time-horizon to retirement, it may be best to wait it out, and continue to invest. A financial principle called “dollar cost averaging” might apply to you, as you may come out ahead in the long-term by continuing to “buy” during both market lows as well as highs through the years.

See the chart below:

This chart shows that those who exit the market the day after every -2% market move or worse over a 25-year time period usually underperform those who remain fully invested. When you leave the market, you don’t just avoid future bad days, you also miss out on the future good days. Ultimately, missing even just a few of the market’s best days, or getting back into the market only after the market is already up, can significantly impact long-term returns. Because, remember, just like in life, nothing stays bad forever; good days will come again. The market is no different.

If You’re Older and Getting Close to Retirement

As you get closer to retirement, continuing to stay in volatile stock markets exposing all of your savings to stock market risk probably doesn’t make sense due to a financial principle called “sequence of returns risk.” With all things being equal, someone who retires during a down market can see their retirement savings drop precipitously for the long-term if they start withdrawing funds, versus someone who retires when markets are going up. This is a very important consideration at the very beginning of your retirement when your account balance is at its highest, but unfortunately, no one has a crystal ball. You probably need to rebalance in order to reduce portfolio risk.

Consider Rebalancing Your Portfolio

First, you’ll want to ensure your portfolio’s ratios of international stocks, large-cap and mid-cap, bonds, cash, and fixed options make sense in the current economic environment. Different asset classes have varying cycles of performance, which can help address inflation headwinds. But keep in mind that there are other ways you can de-risk your portfolio, especially as you head toward retirement.

Sometimes considered a separate asset class, in the last few years, annuity sales have risen as 10,000 people per day turn 65 in America. An annuity is a contract between an individual and an insurance company designed to provide a monthly stipend during retirement. Some annuities even provide retirement income that won’t run out no matter how long you live, guaranteed by the financial strength of the insurance company providing the annuity policy. There are many different types of annuities, contracts can be complex, they are illiquid, and there should always be other cash and investments to balance out your retirement plan even if you have an annuity or annuities. Furthermore, annuities are not right for everyone. It’s advisable to work with a financial professional to look at your overall plan, compare your options, and closely examine contract terms.

Other Personal Actions You Can Take To Manage Inflation

Additionally, to help make your dollar in your day-to-day life last longer, do a thorough review of your spending. This is the time to evaluate essential vs. discretionary expenses, for example, a mortgage versus a new car. This gives you a chance to identify unnecessary spending that you can cut back on. Most people are shocked by how much they were spending on things they did not need!

Some common expenses that are good to look at critically during this audit:

  • Takeout & Dining – Frequent restaurant visits, coffee runs, food delivery, and takeout orders.
  • Subscription Services – Streaming (Netflix, Hulu, HBO Max), music, gaming, news, and fitness apps.
  • Retail & Impulse Shopping – Clothing, accessories, home décor, and non-essential purchases.
  • Unused Memberships – Gym memberships, fitness classes, warehouse clubs, and subscription boxes.
  • Premium TV Packages – Expensive cable or satellite plans with unnecessary channels.
  • Frequent Travel – Weekend getaways, flights, hotels, and vacation entertainment costs.
  • Luxury & Self-Care – Salon visits, spa treatments, manicures, and pedicures.
  • High-End Brands – Designer clothing, accessories, and premium tech gadgets.
  • Hobby Expenses – Collectibles, gaming, crafting supplies, and other leisure-related purchases.
  • Tech Upgrades – Constantly replacing smartphones, tablets, and accessories with the latest models.
  • Costly Entertainment – Concerts, sporting events, amusement parks, and other high-ticket experiences.

Also, see if you can negotiate on those essential bills. While many essential bills are a fixed amount, some can be adjusted or reduced. You may be able to lower expenses for service contracts like internet or insurance. You may also be able to lower your credit card rates. While there’s no guarantee, it never hurts to call a service representative and see if you can get a better price for the things you have to pay for.

While dealing with inflation and market volatility is no one’s ideal situation, it doesn’t have to be a nightmare either. With a strategic approach, you can get through this stressful time and on to the other side! Do you need help getting your accumulated assets inflation-ready and putting a plan together to hedge against market risk? Call us today! You can reach Bay Trust Financial in Tampa at 813.820.0069.

 

Sources

https://www.kitces.com/blog/clearnomics-10-charts-recession-fears-tariff-risk-market-volatility-economy-investor-anxiety/

https://www.limra.com/en/newsroom/news-releases/2025/limra-2024-retail-annuity-sales-power-to-a-record-%24432.4-billion/

https://www.aarpinternational.org/initiatives/aging-readiness-competitiveness-arc/united-states

 

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

Rebalancing investing involves risk including loss of principal. No investment strategy, such as rebalancing, can guarantee a profit or protect against loss. Rebalancing investments may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability.

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