Ep. 206 – Paul Fenner – What Parents and Young Adults Should Know About the New One Big Beautiful Bill
What does the new One Big Beautiful Bill mean to parents and young adults?
I am kicking off the "Big Beautiful Bill" series by breaking down what the new legislation means for those just starting their financial journeys—think high schoolers, college students, and anyone landing their first job.
I deep dive into the bill's highlights, including the extension of marginal tax rates, increased standard deductions, and hot topics like deductions for reported tips, overtime pay, and vehicle interest—clearly outlining who benefits, the real dollar impact, and the fine print you need to know.
I also highlight the bill's downsides, including tighter student loan limits, the phasing out of home energy credits, and EV incentives.
If you're wondering how these changes could shape your financial future, or that of your kids or grandkids, this series offers practical advice.
Connect with Paul
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And feel free to email Paul at pfenner@tammacapital.com with any feedback, questions, or ideas for future guests and topics.
ADDITIONAL RESOURCES YOU MAY LIKE
1 Big Idea to Think About
While the "big beautiful bill" brings new tax deductions and benefits for those just starting out, the rules are filled with nuances and limitations—so understanding your own financial situation and planning accordingly is more crucial than ever.
1 Way You Can Apply This
If you're just starting out financially, take advantage of the increased standard deduction and new universal charitable deduction by setting up a simple system to track your donations and basic expenses, such as using a notepad or budgeting app. This not only streamlines your tax filing but also encourages intentional giving and savings habits early on, building a strong foundation for your future financial wellbeing.
1 Question to Ask
Given my current life stage and income, which of the new deductions or tax changes outlined in the 'big beautiful bill' could I actually benefit from—and are there any important limitations I need to watch out for?
Key Moments From the Show
00:00 Getting started with the "big beautiful bill" series—focus on those just starting out, like high schoolers, college students, or first-time job holders.
00:57 Big benefit: The bill locks in existing marginal tax rates, preventing higher taxes from resetting. Standard deduction increases by ~$750.
01:48 Tips deduction explained: Capped at $8,000, and only amounts reported to the IRS qualify. Actual benefit is smaller than media suggests.
03:44 Income phase-outs: The more you earn over $150,000 (single) or $300,000 (joint), the less you get from deductions.
04:51 Tips deduction only applies to reported tips—cash "under the table" tips don't count.
05:39 Overtime deduction: Caps at $12,500 (single) or $25,000 (joint), only applies to premium pay, not base salary, and is federal only.
07:48 Vehicle interest deduction: Only for new cars assembled in the US, subject to income limits. Used cars and foreign-assembled cars don't qualify.
10:01 Downsides of the bill: Student loan borrowing limits tighten and repayment flexibility decreases.
11:38 Home energy improvement credits and EV credits are being phased out, reducing incentives for new buyers and owners.
12:48 Planning actions: Prioritize student loans, start saving early, and build an emergency fund based on job stability.
15:49 Rent vs. buy: High home prices and interest rates make renting more attractive for flexibility.
17:57 New universal charitable deduction: Even standard deduction filers can deduct up to $1,500 in charitable contributions.