Ernie Burns, a real estate planning and wealth advisor, believes the new budget bill presents a chance for everyone, regardless of age, to retain more funds in their pockets.
NEW ORLEANS – The recent budget bill that Congress passed and President Trump signed has sparked a considerable amount of debate, often described as a grand piece of legislation.
Amid ongoing discussions about funding cuts, national debt, and various other concerns, there are some alterations that might directly benefit personal finances.
Ernie Burns emphasizes that the bill allows individuals making less than $75,000 or couples earning less than $150,000 to no longer face taxes on $6,000 of their Social Security income.
MEG: “If someone receives about $2,000 a month in Social Security, will this change help make their monthly budget easier?”
Ernie responds, “You’re actually going to benefit financially because you’re not taxed on that $6,000. This means lower-income individuals might actually see an increase in their income,” said Burns, who is also the president and CEO of Burns Estate Planning and Wealth Advisor.
This change is retroactive to January of this year but is only temporary until 2028.
MEG: “How much would the tax burden be without the $6,000 deduction for a typical person?”
Burns: “If you’re in a 34% tax bracket, you’d save around $2,000. For someone in a 15% bracket, it would be about $900.”
The new legislation also provides additional opportunities for individuals of all ages to keep more of their earnings.
Now permanent, taxpayers can deduct mortgage interest on federal taxes for amounts up to $750,000 and a greater portion of income from state taxes.
Burns points out, “In Louisiana, the $40,000 exemption is a significant advantage.”
MEG: “What did it used to be?”
Additionally, those earning under $150,000 can subtract $12,500 from taxes for overtime income, which doubles to $25,000 for couples with a cap of $300,000.
“Many factory workers and business owners who often work overtime will really benefit from this. It’s a big win,” Burns noted.
He suggests that careful timing and planning for retirement will be critical to optimizing these financial advantages.
It can get a bit tricky depending on your tax bracket. So, it’s essential for people to seek advice on navigating these regulations to avoid missing out on potential savings.
Moreover, the limit for contributions to 401(k) plans has risen from $135,000 to $145,000.
