8229 Boone Boulevard,
Suite 300,
Vienna, VA 22182

Kirk Capital Advisors

Kirk Capital Advisors logo

Financial Advisor in Northern Virginia

Tax Planning

by

By: Nitish Kommoju, Intern

A new tax law just passed — and it could help many Americans save. The One Big Beautiful Bill Act (OBBBA) extends key current tax rates from the 2017 Tax Cuts and Jobs Act (TCJA), which were set to expire at the end of this year. It also introduces new opportunities to reduce your overall tax bill. Without this bill, many Americans would have faced higher taxes starting in 2026, reverting to 2016 rates. This article outlines the key changes, focusing on tax rates, deductions, and credits that may impact household finances. The information in this article applies to married couples filing jointly (MFJ). Other filing statuses—such as single, head of household, married filing separately, or qualifying widow(er)—have different implications. Some general highlights for those groups are also included.

What’s in OBBBA?

The OBBBA keeps the TCJA’s lower tax rates and higher deductions in place, preventing a return to 2016’s higher rates, which could have cost a couple earning $150,000 over $8,000 more annually. It also introduces new deductions and exemptions as follows:

  • Standard Deduction: $31,500 for Married Filing Jointly (MFJ) in 2025, up from $30,000 (TCJA) and $12,600 (2016).
  • Child Tax Credit: $2,200 per child, up from $2,000 (TCJA) and $1,000 (2016).
  • Tax Brackets: Maintains the current 10%–37% brackets, compared to 10%–39.6% brackets in 2016.
  • State and Local Tax (SALT) Deduction: Cap raised to $40,000 from $10,000 (TCJA).
  • New Deductions (2025–2028): Tips/overtime ($25,000), auto loan interest ($10,000), seniors 65+ ($6,000).
  • Estate Exemption: $15 million per person ($30 million MFJ) in 2026, up from $13.99 million (TCJA).
  • Business Income: 20% deduction, with a $150,000 MFJ threshold (vs. $100,000 TCJA).
  • Charitable Donations: Starting in 2026, non-itemizers can deduct $2,000 (MFJ) for cash donations.

How Tax Rates Stack Up

OBBBA maintains TCJA’s tax brackets, which are lower than or equal to 2016’s tax brackets. The table below compares 2016 and 2025 OBBBA tax brackets for MFJ:

Tax Rate 2016 Pre-TCJA (MFJ) 2025 OBBBA (MFJ)
10% $0–$18,550 $0–$23,850
12% N/A $23,851–$96,950
15% $18,551–$75,300 N/A
22% N/A $96,951–$206,700
24% N/A $206,701–$394,600
25% $75,301–$151,900 N/A
28% $151,901–$231,450 N/A
32% N/A $394,601–$501,050
33% $231,451–$413,350 N/A
35% $413,351–$466,950 $501,051–$751,600
37% N/A $751,601+
39.6% $466,951+ N/A

The following graph depicts the taxes paid by couples with various (MFJ) gross incomes, comparing Pre-TCJA tax brackets with the permanent 2025 OBBBA tax brackets.

For a couple earning $150,000:

  • 2016: Married couples would owe $23,917 (15.94%)  in taxes after a $12,600 standard deduction and $8,100 in exemptions.
  • OBBBA 2025: Married couples would owe $15,880 (10.59%) in taxes with a $31,500 deduction, saving $8,037.

OBBBA’s wider 10% bracket and lower rates (12% and 22% vs. 15% and 25%) mean less of taxpayers’ income is taxed at higher rates.

Standard Deduction: Lowering Your Taxable Income

The standard deduction reduces the income the IRS taxes. OBBBA allows you to deduct more:

Filing Status 2016 TCJA 2025 OBBBA 2025
Married Filing Jointly $12,600 $30,000 $31,500
Married Filing Separately $6,300 $15,000 $15,750
Head of Household $9,300 $22,500 $23,625
Qualifying Widow(er) with Dependent Child $12,600 $30,000 $31,500

State and Local Tax (SALT) Deductions: When to Itemize

  • Itemizing vs. Standard Deduction: In 2025, under OBBBA, MFJ couples should itemize if their state and local tax (SALT) deductions exceed the $31,500 standard deduction, reducing taxable income more.
  • SALT Deduction Cap: If income is below $500,000 for MFJ couples, they can deduct up to $40,000 in SALT (state income, property, or sales taxes), but only if they’ve paid at least $40,000.
  • SALT Phase-Out: If income exceeds $500,000 for MFJ couples, the SALT cap drops by $0.30 per dollar over $500,000, reaching $10,000 at $600,000.
  • Need Enough Deductions: With income over $500,000 for MFJ couples, they would need other deductions (e.g., $22,000 mortgage interest plus $10,000 SALT) to beat $31,500.
  • Future Change: The $40,000 SALT cap reverts to $10,000 in 2030.

Child Tax Credit: Support for Families

The child tax credit helps families with kids under 17:

Category 2016 (Pre-TCJA) TCJA 2025 OBBBA 2025
Amount per Child $1,000 $2,000 $2,200
Phase-Out Start (MFJ) $110,000 $400,000 $400,000
Reduction Rate $50/$1,000 above Phase-Out Start $50/$1,000 above Phase-Out Start $50/$1,000 above Phase-Out Start
  • Phase-Out Rate Explained: In 2025, under new OBBBA rules for MFJ couples with two children, the Child Tax Credit would decrease by $50 for each $1000 over $400,000, resulting in a $0 Child Tax Credit once their income reaches $488,000.
  • Two-Child Household Example: Under OBBBA, a two-child household with an annual gross income under $400,000 may receive up to $4,400 in total Child Tax Credit—$400 more than under TCJA and $2,400 more than in 2016. This can support families with school expenses or savings.

More Ways OBBBA Impacts Your Taxes

OBBBA offers additional benefits:

  • SALT Deduction: $40,000 cap (vs. $10,000 TCJA). If you’re paying $30,000 in state/property taxes, you could save $6,600 (22% rate) if itemizing. This phases out above $500,000 (MFJ).
  • New Deductions (2025–2028):
    • Tips/Overtime: Deduct up to $25,000, saving $3,000 (12%) for a server with $40,000 in tips.
    • Auto Loan Interest: Deduct up to $10,000 for U.S.-made cars, saving $500 on a $40,000 loan at 5%.
    • Seniors (65+): Extra $6,000 deduction, saving $2,640 for an MFJ couple (22%).
  • Estate Exemption: $15 million per person ($30 million MFJ) in 2026, up from $13.99 million. A $20 million estate saves $404,000.
  • Business Income: 20% deduction, $150,000 MFJ threshold (vs. $100,000 TCJA).
  • Charitable Donations: Starting 2026, non-itemizers deduct $2,000 (MFJ), saving $440 (22%).

What If OBBBA Had Not Passed?

Without OBBBA, 2016 rules would return in 2026:

  • Higher rates (10%–39.6%).
  • Smaller standard deduction ($12,600 MFJ).
  • Lower child credit ($1,000).

For a couple with $500,000 income:

  • OBBBA 2025: Tax = $104,076 (20.82%).
  • 2016: Tax = $138,738 (27.75%), a $34,662 increase.

We’re Here for You!

OBBBA, overall, lowers taxable income for most taxpayers and small business owners, which generates extra cash flow available for discretionary income, savings, paying down debt, and more. The extra savings can go a long way to bringing Americans closer to retirement (e.g., funding a Roth IRA for yourself, helping fund a child or grandchild’s college savings, offsetting Roth conversions for higher income earners).

We are analyzing the various tax planning opportunities OBBBA may offer clients. Every situation is unique, and now is the time to start planning for 2026. Contact your advisor today to see how OBBBA can bring your family closer to financial independence.

Additionally, be sure to check out the sources mentioned on the next page to dig deeper into the numbers and visit www.irs.gov for IRS updates or reach out to us to see how these rules apply to you.

Sources:

by

By: W. Kirk Taylor, CFP®

We’re pleased to provide you with the Kirk Capital Advisors 2024 Tax Guide.

The tax filing deadline (Monday, April 15, 2024) is less than three months away and taxpayers are busy gathering their tax documents, e.g., W-2s, 1099’s, K-1, bank statements, and expense receipts, and making the mad dash to their tax advisors office for their annual checkup.

Since taxes, and most importantly minimizing taxes, are on everyone’s minds currently, we thought this would be a good time to share with you our 2024 Tax Guide.

This reference tool is invaluable in our daily investment and tax planning discussions with clients. In this guide, you will find information on tax rates for ordinary income, capital gains, and gifts, as well as marginal tax rates and contribution limits for retirement plans.

As you make the push to wrap up 2023 taxes, don’t forget to use this Tax Guide as a planning tool for minimizing your 2024 taxes.

Please view the Tax Guide by clicking the button below!


Kirk Capital Advisors – 2024 Tax Guide

Disclosure

The information provided in the 2024 Tax Guide is general in nature and is not intended as specific tax or legal advice. The information provided is believed to be accurate, but no assurance is made to that effect. Tax laws are subject to change. Please consult with your tax advisor before acting on any of the information contained herein.

by

By: W. Kirk Taylor, CFP®

According to the World Health Organization (WHO), cancer is the leading cause of death worldwide, accounting for 1 out of 6 deaths [1]. Unfortunately, and like many of us, I have personally lost friends, family, and clients to various types of cancer over the years.

My first memory of death as a child, was that of my mother’s mother, who died of breast cancer when I was 12 years old. Just last week, a friend finally succumbed to his long battle with brain cancer. Fortunately, though, I also know more than a few cancer survivors. So, not all is lost and the fight to end our battle with cancer gains momentum every day!

While the last day of October is best known as Halloween… the evening when the little one’s go door-to-door saying “trick or treat”, at Kirk Capital Advisors we’re closing out the month not just with tricks but also with treats, as we take this opportunity to reflect on one of our firms core values – Connection.

Our team members greatly value the interpersonal relationships, connections, and close bonds we have formed with the families we serve. These relationships often span multiple decades, encompassing fond memories of milestone birthdays, high school and college graduations, weddings, and the births of children and grandchildren. Regrettably, they also entail the somber experience of losing family members.

The interactions and connections we’ve established with clients over the years inform many of our firm\’s and personal core values, and philanthropic principles are integral to them. We firmly believe that we can \’do well by doing good\’, and thus, we proudly support charitable giving among our staff by matching their contributions to the causes they are most passionate about [2].

In this commentary, we’d like to shine a light on breast cancer, while simultaneously highlighting the financial benefits of supporting qualified 501c3 charities. In our book, it’s perfectly fine if doing well is a financial byproduct of doing good.

October, known for its captivating autumn colors, also heralds Breast Cancer Awareness Month. This global movement, originating in the 1980s through a partnership between the American Cancer Society and AstraZeneca, highlights the significance of early detection, patient support, and the pursuit of a cure for breast cancer.

Breast cancer remains a formidable challenge, with an estimated 43,700 deaths expected in the United States in 2023 [3]. Incidence rates continue to rise due to factors like weight and reproductive trends, underscoring the need for support.

To contribute to the fight against cancer, many people support charities like the American Cancer Society. Donations not only help the cause but can also provide tax benefits. By donating to IRS-recognized nonprofits, you may be able to reduce your taxable income leading to significant savings.

To claim a charitable deduction, you typically need to itemize your deductions and keep records of your donations. Different types of donations, including cash, property, and appreciated assets, can provide tax benefits but the benefit varies based on the type of contribution. A Qualified Charitable Distribution (QCD) is a tax-efficient strategy for retirees to support their causes, while allowing them to exclude their RMDs from their taxable income.

Cryptocurrency and stock donations offer tax advantages as well, and most well-established nonprofits accept these securities in lieu of cash donations. Employers may offer gift-matching programs, thereby increasing the impact of your donation.

Of course, charitable giving towards breast cancer extends beyond monetary donations and can include participation in events, volunteering, and raising awareness by wearing pink during Breast Cancer Awareness Month.

In this month of reflection and awareness, we invite you to join us in making a difference. Whether it\’s supporting cancer research, lending a helping hand to those in need, or simply spreading the word about the importance of early detection and patient support, your actions can have a profound impact. Together, we can transform Breast Cancer Awareness Month into a catalyst for positive change. Let\’s not only think about how we can do good but take concrete steps to make a real difference in the lives of those affected by cancer and other causes close to your heart. It\’s time to turn our hopes into actions, our support into solutions, and our awareness into meaningful change. ■

Footnotes:

[1] Cancer, World Health Organization, 2022 https://www.who.int/news-room/fact-sheets/detail/cancer

[2] Contributions must be made to a qualified 501c3 charity. We match a maximum of $1,000 per employee.

[3] Our work improves lives, American Cancer Society, 2023 https://raiseyourway.donordrive.com/index.cfm?fuseaction=cms.page&id=1007