Understanding the “Big Beautiful Bill”: Balancing the Building Years - Taxes, Family, and Financial Priorities
If you’re in the stage of life where your kids are entering high school or heading off to college, you already know how demanding it can feel. Parenting starts to look less like something with seasons of downtime and more like a nonstop, full-contact sport. Between school, sports, extracurriculars, and everything in between, life often manages us more than we manage it.
On top of that, financial priorities stack up quickly. College savings, retirement contributions, lifestyle expenses, and even planning for your own future can all collide at once. At TAMMA Capital, I work with many families in this exact season of life—what I call the “building years.” These are the years where thoughtful planning can make a big difference.
Let’s take a closer look at how today’s tax rules and the recent legislative updates—the “One Big Beautiful Bill”—impact families in this stage of life, and the planning strategies worth considering.
The Good News: Stability and Catch-Up Opportunities
One of the biggest wins from the new legislation is the stability in marginal tax rates. By keeping tax brackets steady, families can plan with a greater sense of clarity. Without this bill, most taxpayers would have faced a 2–3% increase in their rates, something the economy would have struggled to absorb.
For those age 50 and over, retirement catch-up contributions remain a valuable tool. You can add an extra $7,500 to your 401(k) beyond the standard maximum, as well as an additional $1,000 to an IRA (Roth or traditional). These extra contributions can be powerful, particularly when compounded over the last decade or so before retirement.
Small business owners also saw some meaningful wins. Provisions like the qualified business deduction and bonus depreciation have been extended, which can create tax-saving opportunities when coordinated with a family’s overall financial plan.
SALT Deductions: The Limits and Phase-Outs
The State and Local Tax (SALT) deduction saw some adjustments, but it remains heavily restricted. The deduction has been raised from $10,000 to $20,000 for joint filers, but the benefit begins phasing out once your modified adjusted gross income (MAGI) exceeds $500,000. At $600,000, the deduction is reduced by $30,000, leaving you with the minimum $10,000 (or $5,000 for single filers).
Even for dual-income families earning between $250,000 and $400,000, itemizing deductions is still difficult. The standard deduction, now $31,500 for joint filers, often outweighs the limited itemizations available. Many of the deductions eliminated in 2017 have not been reinstated, and that reality is unlikely to change in the near future.
Vehicle Interest and Energy Credits: Not As Beneficial As They Appear
Certain deductions make headlines, but once you peel back the layers, many families won’t qualify. Take the vehicle interest deduction. To claim it, the car must be new and assembled in the U.S. Used vehicles or imports don’t count.
Even if you meet that hurdle, income thresholds quickly phase out the benefit. For joint filers, the phase-out begins at $200,000 of MAGI. In practice, very few families in the building years qualify.
The same story is true with energy credits. The once-popular $7,500 electric vehicle credit and home efficiency credits are being rolled back. For families planning a remodel or energy upgrades, that means fewer savings than in the past.
New “Trump Accounts”: A Mixed Bag
The legislation introduces a new type of account for children under 18, similar to a traditional IRA. While there’s government seeding for newborns between 2025 and 2028, most families with older children won’t benefit.
Parents or relatives can contribute up to $5,000 per year using after-tax dollars, and business owners may be able to deduct $2,500 annually per child. However, investment options will be limited to diversified funds, not individual stocks.
For many families, Roth IRAs for working children or 529 college savings plans remain more effective tools. Roth IRAs in particular provide the advantage of tax-free growth, which is hard to beat when started at a young age.
Capital Gains and Tax Bucket Management
Capital gains rules remain unchanged, with rates of 0%, 15%, or 20%, plus a 3.8% surtax for high earners. What this means for families is the need to carefully manage the timing of sales—whether stock options, restricted stock, or other taxable investments.
A major planning priority is diversifying tax buckets. Having assets across Roth accounts, traditional accounts, and taxable brokerage accounts allows for greater flexibility in retirement. By strategically choosing where to withdraw from each year, you can minimize your effective tax rate. Too many families arrive in retirement with only traditional assets, which can lead to unexpectedly high required distributions and higher tax brackets.
The Retirement and College Savings Squeeze
One of the toughest realities of the building years is the squeeze between saving for your own retirement and funding your children’s college education. Add in the ongoing expenses of raising teenagers, and it’s easy to feel overwhelmed.
The key is to establish clear priorities. You may not be able to fund every opportunity, trip, or activity, but aligning your spending with your family’s values makes those trade-offs easier. Remember, you can borrow for college, but you can’t borrow for retirement. Balancing these goals requires intentional planning.
Practical Planning Actions
Here are a few strategies that matter most in the building years:
Maximize Retirement Accounts: Take full advantage of catch-up contributions if eligible.
Leverage Roth Strategies: Decide carefully when to use Roth versus traditional contributions based on your tax bracket now and your expected bracket in retirement.
Strategically Manage Capital Gains: Consider the timing of asset sales to benefit from lower brackets.
Diversify Tax Buckets: Build flexibility into your portfolio by holding a mix of Roth, traditional, and taxable assets.
Plan Proactively as a Business Owner: Use deductions and depreciation provisions to align personal and business planning.
Use Charitable Deductions Wisely: Even if you don’t itemize, you can still deduct up to $2,000 in charitable contributions as a joint filer.
Finding Harmony in the Building Years
For families in the building years, the financial picture is complex. Multiple priorities compete for attention, while tax rules continue to evolve with added layers of complexity.
The good news is that with a clear plan and a balanced approach, you can provide for your family today while building toward the future you want. It’s about creating harmony between the personal and financial aspects of your life, setting clear priorities, and revisiting your roadmap as life unfolds.