Take Advantage of The Big, Beautiful Tax Holiday
The recent enactment of “The Big, Beautiful Tax Bill” H.R.1 – 119th Congress (2025-2026): One Big Beautiful Bill Act | Congress.gov | Library of Congress represents one of the most significant overhauls of the U.S. Tax Code in recent history. Despite a contentious battle in the House and Senate, the Trump Administration was able to secure the requisite votes to continue the prior tax cuts enacted in December, 2017, that reduced corporate and individual tax rates. Although the new law was described as “making the prior tax rate cuts permanent” it is almost a certainty that these rates are far from “permanent”. A more likely description of the present tax law is that it is an unsustainable reprieve from the very likely tax increases that will occur at some point in the near future; likely no later than the final month of the Trump Administration’s second term when a lame duck president and Congress take the very unpopular steps necessary to both reduce government spending and to increase tax revenue to finally address unsustainable deficit spending.
The tax bill is like getting a huge increase in your credit limit and using the available credit to take a luxury vacation at a time when you are borrowing money from relatives to be able to pay your minimum required monthly payment. Inevitably your debt load becomes unsustainable and immediate cuts are needed to avoid total financial collapse and potential bankruptcy.
For those individuals that are presently secure in their finances and have accumulated assets that they intend to pass on to the next generation, there is now a window of opportunity to take advantage of the present low rates on income, capital gains and estate tax rates that are unlikely to stay at their present levels. In addition to the likelihood of rising federal tax rates, it is extremely likely that states will impose greater burdens on resident taxpayers as more regulatory responsibility is passed from the federal government to the states. Seventeen states and the District of Columbia presently impose some form of estate or inheritance taxes, and it is likely that more states will follow suit in the future since many state budgets are in no better fiscal shape than the federal government. Even those states that require “balanced budgets” often achieve the “balance” using gimmicks, such as one time revenue enhancements or “creative” accounting utilizing overly optimistic revenue growth. Despite Congress’ own Budget Office analysis showing that the recent Bill will add $4 Trillion to the national deficit, members of Congress voting for the bill claimed that tariff revenue and fiscal growth will cover the deficit, an opinion shared by almost no credible economist.
If you expect to have assets left over when you pass that you intend to leave to your children, now is the time to take advantage of the opportunities presented under the present tax laws. The Gift Tax Exemption under the new law increases to $15 million as of 2026, and in a state like Arizona, which has no estate or inheritance taxes, this is a great way to transfer assets to children or beneficiaries. Even individuals of modest means and income should consider whether it makes sense to increase draws from tax sheltered accounts at what are today’s likely lower rates as opposed to deferring the withdrawals to a later time when tax rates are likely to be higher. Also, it may make sense to sell long-term capital assets and take advantage of the present lower capital gains rates rather than holding assets to a later time when rates are increased. Trump’s Tax Plan for Capital Gains Taxes
The full impact of the provisions of the new tax legislation are still being determined and tax experts are sifting through the legislation to determine the best course for their clients to follow. It is very important that you look out for updates on how the new law will impact your future and how you might adjust your savings or investing to maximize your ability to provide for your future beneficiaries.