Trump's Big Beautiful Bill PASSES Senate | New Tax Cut Stimulus

The Senate just passed the big beautiful

bill, which means now it goes back to

the House for reconciling some of the

differences between the Senate and House

version. Uh in this, we're going to

cover some of the details of what is in

the Senate version, how it affects you,

uh how it affects markets broadly as

well. I'll give you a quick spoiler on

that. Markets probably have already

priced in a lot of what is in this

legislation since the expectation is

very high that some form of the big

beautiful bill will pass. Uh and I don't

think markets are expecting tax rates to

revert to what they would in 2017 should

this bill not pass. So in other words,

there's just significant downside should

this not pass. But we do expect it to

pass marketwise. Now what's in the

Senate bill for you? Well, the standard

deduction is going to go up $750 for

everyone. Keep in mind this still has to

get approved by the House uh and goes up

$1,500 for couples and now includes

inflation adjustments.

This one change alone is expected to

cost about $1.4 trillion. Keep in mind

the total cost of the bill is expected

to be somewhere around $4.4 trillion

with an additional about maybe 1.2ish

twoish of revenues coming in making the

total cost of the bill as projected by

the Congressional Budget Office over the

next 10 years somewhere around $3.2 2

trillion which is somewhat similar to

some of the early stimulus packages that

we saw during co uh now of course a lot

of people especially on Fox News are

saying oh but the CBO is always wrong

with their estimates but what they're

doing is they're taking 2017 estimates

ignoring any of the effects or inflation

on revenues or expenses after 2020 and

2021 and saying ah see the CBO those

estimates in 2017 were wrong. Well, no

duh. We hit COVID and a lot of numbers

changed. We had a whole heck of a lot of

inflation. So, anyway, that said, yeah,

it is a bill that adds to the deficit

and it's one of the reasons that uh Elon

Musk is frustrated about growing

deficits in the country. However, it

does deficit spend by providing tax

breaks to some people, in this case,

everyone, in the form of the standard

deduction. Regarding the alternative

minimum tax for those of you who pay

that, there is a permanent increase in

the AMT exemption. So basically lower

chance of you hitting the AMT for

writing off uh itemized deductions. The

child tax credit is going to move from

2000 to 2.2,000

with one parent required to have a

social security number. It's only a

modest increase compared to what we saw

uh in the House which was going for a

bigger increase in that child tax

credit. tax brackets would be kept at

their current levels which are like

their 2017 levels of between 10 to 37%.

Without this extension, we would revert

back to 2016 levels of between 10 to

39.6% with each bracket in between going

up a bit. We've got no tax on overtime

and tips. Now, the definition of cash

tips from the IRS actually includes

credit cards. So, when we see the IRS

phrase cash tips, it does ironically

include credit cards because the

phrasiology doesn't match. But when you

look up what the definition of a cash

tip is on the IRS website, that's what

you get. Uh, and you also get a car

interest deduction for any made in

America vehicle and a loan that you get.

So, if you buy a car, it's made in

America, and you get a loan on it, you

get to write off your interest as if

it's a business expense. Of course, many

people with side hustles already do that

anyway. Uh so this would really only

affect people without a side hustle who

buy a car that's used personally. Uh and

now you could write off the interest on

those personal loans essentially for

your personal car. The uh salt

deduction, state and local tax deduction

would be increased. Uh so on your

federal tax return, you would be able to

write off up to $40,000 of state and

local taxes that you pay. So if you pay

$40,000, you'd be able to write that off

in your federal taxes. uh that uh a

$40,000 limit per household would revert

back to $10,000 in 2030.

Donald Trump is also increasing a larger

deduction for seniors. This is different

than no tax on social security. Uh it

basically just gives seniors a $6,000

larger standard deduction than non

seniors and only between 2025 and 2028.

For wealthier households, the estate tax

uh exemption has been increased to $15

million of a lifetime limit for gift

taxes and estate taxes uh exemptions up

to $15 million for an individual, $30

million for a joint household. That's

expected to cost $212 billion as part of

the bill. Uh worth noting that the tax

bracket increase is expected to cost

about $2.1 trillion. So, some of the big

numbers are coming from some of these

increases and standard deductions.

Business cuts, bonus depreciation

through 179 expensing, that is 100%

deductions for capital equipment, uh

will apply starting retroactively on

January 19th, 2025

for qualified property purchased on or

after January 19th, 2025. So you can

count this retroactive deduction. Uh and

then of course going forward, this means

we're likely to see aircraft deductions

again. So, should you go buy a plane,

rather than taking an accelerated bonus

depreciation of 50% now or 40% or back

to sort of normal deductions, you're

able to go back to 100% expensing, which

could be good for not only machinery or

aircraft or maybe even companies

installing their own GPU farms. Who

knows? Maybe it's good for Nvidia.

That's expected to cost $363 billion.

Then we're looking at R&D expensing,

full expensing of domestic research and

uh development expenses beginning with

the 2025 tax year. This is good for

businesses spending more money on

research and development. And usually

this works is the benefit you get

applies to the increase in the amount of

R&D spending you spend on each year. Uh,

so uh, in other words, if one year you

were spending no money on R&D or the

last few years you spent no money on R&D

and all of a sudden now you're spending

money on R&D, which could just be

expenses for building an app or some

kind of new technology, you get to fully

expense that. They're making the 20%

qualified business deduction permanent

for those pass through entities like

escorps or LLC's. They are also uh in

this is more of a a drawback, but uh

they're taking they're they're allowing

individuals who take business deductions

more than their income uh to take fewer

of those losses forward be 262,000

losses for single or 524 for joint. On

immigration, there's uh there's some

funding for immigration enforcement in

the military in here. They're also

including work requirements for Medicaid

and food stamp. This for food stamps.

This is where Donald Trump says we're

just trying to remove waste, fraud, and

abuse. Basically saying, hey, like if

you're not even trying to work to

sustain your own household, then that's

waste, fraud, and abuse. Uh this would

be or or would contain a 20-hour work

week requirement if you have no children

under 14 or you are not disabled. It's

possible that 11 million could lose

coverage here. Donald Trump thinks that

number is going to be a lot lower. Of

course, a lot of people looking at this

and saying, "Hey, we support work

requirements if you're looking for the

social safety net of Medicaid or food

stamps." Anyway, uh clean energy cuts

are obviously included with this with

potentially a $250 tax for electric

vehicles since they don't uh pay for a

gasoline tax. And this would also

include cuts to heat pumps, solar

battery manufacturing credits, battery

tax credits for buying batteries,

rooftop uh solar tax credit cuts, clean

energy cuts, including wind cuts, and

then of course that electric vehicle cut

uh which is um uh which is sadly that

$7,500

uh EV tax credit uh expiration that the

Senate is looking to uh expedite. So,

this gives us a little bit of an idea.

This would be September 30th, by the

way. So, uh it would end

on or before September 30th. If you buy

a car on or before September 30th, you

could still get that $7,500. Does create

a little bit of a short-term catalyst

for Tesla, by the way, between now and

September 30th, which is uh the end of

Q3. So, in Q4, you would not have that

$7,500 tax credit anymore, ending that

tax credit one quarter sooner than

expected. Now, uh, keep in mind also

that the all of this still has to be,

uh,

passed by the House. Donald Trump is

hoping that the House will just slam

dunk it over the next 3 days. I think

it'll take a little bit longer. I do

think the bill will end up getting

passed. Uh, but we'll see what kind of

negotiations and sort of the last minute

moves occur. Also noting that Elon Musk

is pretty frustrated with the increase

in deficits. uh and actually verbally

says that he's cheering the removal of

tax credits because they would help

lower the deficit. A lot of people

looking at this and saying, "Hey, Elon's

right. We should be focused on the

debt." But then people on the same token

are also saying, "Hey, but I also like

the tax breaks." So, kind of classic

political situation that we're in. As

far as the $250

fee, there's also to be determined if

that $250 fee would actually end up

going through in the House version. So,

that's something uh that um we'll see if

it makes it in, but uh

we'll see that that is still up in the

air and it's entirely unclear if that

$250 electric fee will be included or

not. trying to get a little bit of an

update on this, but I can't seem to get

an update on that $250 fee. So, we'll

get to the bottom of that. Uh, but

anyway, that gives us a little bit on

the rest. Yeah. So, House bill had the

$250.

Senate, multiple proposals were going

back and forth as to whether or not they

would actually be included. We'll see

when we get to the final version, but if

that's included, it would be some form

of annual fee that would probably show

up on your tax return. And it's a $250

fee for electric vehicles annually and

$100 fee for hybrids and no fee for

gasoline cars since when you go fill up

gas, you're paying a little bit every

single time for those road taxes. So,

we'll see what happens there. Let's see

what some of the comments are that you

have here. We've got what benefits for

future business owners not paying for

overtime tax on their employees. Uh

yeah, that's interesting because I mean

basically what you know what you're

saying is hey are you going to have to

pay like your you know social security

taxes on those overtime wages FICA taxes

and all that. Yeah, that's interesting.

Let's look at that. Uh let's pull up

Senate Bill overtime text. So you really

have to look at the text inside the

overtime provisions in the big beautiful

bill

provides deductions to eliminate income

taxes on certain tips and overtime pay.

So if they're deductions

then it might mean you still as a

business owner have to pay taxes

uh based on the hours and wages that are

paid to your employees. So, you're still

paying uh like the unemployment

insurance uh and other taxes. Uh but the

employee would then get some kind of

deduction to offset

that extra uh

sort of time and a half that they're

being paid or two times uh pay that

they're receiving to offset some of that

extra tax. So, that's interesting. It it

wouldn't actually really help a business

owner in that case. It would be more for

the individual. That's very interesting.

Yeah, that's a that's a great question.

So, when is the last day to get a solar

discount? Can you explain the write off

on loan interest that would count for

the current loan? I don't think it

applies to current loans. I think it

would only be new cars bought that are

made in America. So, the idea is to

incentivize the local manufacturing uh

you know or domestic US manufacturing

infrastructure. But as far as uh the

last day to get solar residential effici

Okay, here we go. the following expir.

Yeah, this is why it's so complicated.

Here's why it's so complicated is

because of the credit dates are all over

the place. Clean vehicle tax credit

expires September 30th, 2025.

Alternative fuel vehicle refueling

credit, June 30th.

Efficient energy home improvement tax

credits December 31st. So, solar panels

and batteries presumably would be the

December 31st deadline. Commercial clean

vehicle tax credit September 30th.

Yeah. Again, energy home improvement end

of the year. So, I wonder if that's a

little bit of an Elon Musk stab right

there that they moved up the vehicle

write off uh expiration but not or tax

credit but not the solar tax credit.

That's quite interesting. So, as a

correction, it looks like the House

version has the $250 for electric

vehicles and $100 for hybrids. The

Senate version does not include that

fee. However, this could be a topic that

ends up going back and forth between the

House and the Senate where we end up

seeing some kind of fee. We'll have to

pay attention to this as the House gets

back to work and tries to reconcile

this. Uh, and as they make these

changes, both chambers have to

ultimately approve the bill before it

gets sent to the president. So, this

gives us a rough idea of what's going

back to the house right now, and then

we'll keep an eye on some of the

changes. Why not advertise these things

that you told us here? I feel like

nobody else knows about this. We'll

we'll try a little advertising and see

how it goes. Congratulations, man. You

have done so much. People love you.

People look up to you. Kevin Praath

there, financial analyst and YouTuber.

Meet Kevin. Always great to get your

take.