Dear Clients & Friends,

We hope you are enjoying these last few summer days with family and friends.

Reminder on Prime Brokerage DocuSign envelopes being sent from FBB

As part of our ongoing efforts to improve fixed income trading capabilities and offer best execution on behalf of our clients, we are expanding our fixed income trading platform to include PrimeBroker services. This trading platform allows us to access more competitive institutional bond pricing while enhancing client data security by combining trades in a singular FBB account. 

We kindly ask that you review and electronically sign the Prime Brokerage Services Forms that our service team will be sending out via DocuSign over the next few weeks.

This form is required to grant us the authority to place fixed income trades on your behalf through our Prime Brokerage arrangement. Without this signed authorization, we will be unable to execute transactions via Prime Brokerage on your account.

If you have any questions or need assistance, feel free to contact your portfolio manager or our service team.

In addition to the thoughts above, we are sharing our most recent Women & Finance blog, The One Big Beautiful Bill - What to Expect this Tax Season, written by Portfolio Manager, Martha P. Callahan, CPA, CFP®. Please find the full blog below and on our insights page.



Michael Mussio, CFA, CFP®

President

FBB Capital Partners

4520 East-West Highway, Suite 450

Bethesda, MD 20814

301-657-8870

The One Big Beautiful Bill - What to Expect this Tax Season 

After much contentious debate, the One Big Beautiful Bill was signed into law by President Trump on July 4, 2025, following narrow approval by the House and the Senate. So far, the reception is mixed, with some taxpayers welcoming tax savings for individuals and businesses, and others concerned about cuts to programs like food stamps and Medicaid and how that will impact lower income Americans. Either way, the new bill is projected to add $3.4 trillion to the national debt over ten years, according to the Congressional Budget Office. If we look back to 2017 when the Tax Cuts and Jobs Act (TCJA) was passed, that bill enacted substantial changes to the tax code, but many of those changes were temporary and were set to expire or ‘sunset’ at the end of 2025. The One Big Beautiful Bill has now made permanent many of those temporary tax provisions from 2017.

We wanted to highlight a few of the key provisions from the new tax bill to give our clients a sense of what they might expect as they approach their 2025 tax preparation next Spring. 

Permanent Changes:

• Changes to tax rates from the TCJA are now permanent and will no longer sunset at the end of 2025. The seven tax bracket structure ranges from a lowest bracket of 10% to a highest bracket of 37% (the top marginal rate was 39.6% pre-TCJA). Five of these seven tax brackets would have reverted to higher rates in 2026 without the passage of the One Big Beautiful Bill. In addition to savings for individual taxpayers, the corporate tax rate of 21% (from TCJA) is now permanent, continuing a substantial change to the tax-code for U.S. companies. (The top corporate tax rate was 35% pre-TCJA).
• Fewer taxpayers itemize and instead take the standard deduction after the 2017 TCJA, which practically doubled the standard deduction. With the new bill, those higher standard deductions levels will be maintained permanently, with an adjustment for inflation each year. The Standard Deduction for 2025 is $15,750 for single filers, and $31,500 for joint filers. (The TCJA temporarily eliminated personal exemptions, and the new bill permanently eliminates them.)
• The Child Tax Credit has increased slightly to $2,200 per child. The Child Tax Credit phases out for incomes above $200,000 for single filers and $400,000 for joint filers.
• Mortgage Interest Deduction – The maximum deductible mortgage interest is on home mortgage debt up to $750,000. Interest on debt above those amounts cannot be deducted. (This was initially changed by the TCJA in 2017, and the $750,000 debt amount has remained unchanged with passage of the new tax bill.)
• Qualified Business Income Deduction: This deduction for self-employed and small business owners is now permanent and allows for a deduction of up to 20% of qualified business income.
• Gift and Estate Tax Exemption: There was uncertainty for estate planners as the higher gift and estate tax exemption amounts set by the TCJA were set to expire at the end of 2025. Those higher exemption levels are now permanent after passage of the One Big Beautiful Bill: the gift and estate tax exemption for 2026 is $15 million per individual, with adjustments for inflation each year. A married couple effectively receives $30 million for the exemption. (Without this update, in 2026 the exemption would have decreased by half to pre-TCJA levels of $7.2 million per individual.)
• Miscellaneous Itemized Deductions were temporary suspended by TCJA and are now permanently removed.
• AMT (Alternative Minimum Tax) Exemption: The new tax bill extends the TCJA increases to the AMT exemption and phaseout thresholds. These amounts are set to adjust for inflation.
• Dependent Care Plans: The Flexible Spending Account (FSA) limit will increase in 2026 from $5,000 to $7,500 (single and joint filers), which allows parents to use pre-tax dollars for childcare expenses. This long overdue change brings relief to working parents as childcare costs have skyrocketed. The $5,000 limit was set in 1986 and until now has never been increased, with the exception of a temporary increase during Covid. The new dependent care FSA limit is not indexed for inflation.
• 529 Plans: The new tax bill brings big changes to 529 plans. The limit for expenditures for K-12 schools has increased to $20,000 per year, up from $10,000. The law has broadened qualified education expenses, and includes books, tutoring fees, and therapies for children such as speech language pathology and occupational therapy. Adults can now use 529 savings to pay for post-high school credential programs and continuing education.

Temporary Changes:

• SALT (State and Local Taxes): The TCJA limited the SALT deduction to $10,000, which significantly decreased the amount of state taxes and property taxes many individuals could deduct. The SALT deduction limit has now been raised from $10,000 to $40,000, but only for those making under $500,000 in income per year (single and joint filers.) However, this is only a temporary increase that extends through 2029. Taxpayers must itemize to use the deduction.                                     
• Senior Deduction: The senior deduction is $6,000 for individuals 65 and older. The senior deduction phases out for incomes above $75,000 (single filers) and $150,000 (joint filers). This is a temporary deduction for tax years 2025 through 2028.
• Deduction for Car Loan Interest: Taxpayers can deduct up to $10,000 of interest for cars with final assembly in the U.S.  The car loan interest deduction phases out for incomes above $100,000 (single filers) and $200,000 (joint filers). This is a temporary deduction for tax years 2025 through 2028.
• Deduction for tip income up to $25,000: The tip income deduction phases out for incomes above $150,000 (single filers) and $300,000 (joint filers). This is a temporary deduction for tax years 2025 through 2028.
• Deduction for overtime wages up to $12,500 (single filers) and $25,000 (joint filers): The overtime wage deduction phases out for incomes above $150,000 (single filers) and $300,000 (joint filers). This is a temporary deduction for tax years 2025 through 2028.

Having certainty around permanency of some of these tax provisions is a positive, however complexity of the Federal tax code remains. We encourage clients to work with your advisor and your tax preparer to address any questions as they arise.

About the Author: Martha P. Callahan, CPA, CFP®

Martha is a Certified Financial Planner® practitioner and brings over 17 years of professional experience to FBB through various roles in finance, business development, and accounting. A Certified Public Accountant since 2012, she enjoys working closely with clients to provide comprehensive and customized planning advice to help them achieve their financial and personal goals.

Martha previously worked for a registered investment advisor as the Vice President of Operations, where she focused on operations, trading, and compliance. Her multifaceted career also includes work in commercial real estate and retail development in Easton, Maryland where she had the opportunity to work with local small business owners.

Martha earned her MBA from Georgetown University’s McDonough School of Business and her Bachelor of Science in Mechanical Engineering from Virginia Tech. Martha works in FBB’s eastern shore office located in Easton. She and her husband Patrick have two boys and reside nearby in Oxford, Maryland where they enjoy spending time on the water.

If you think you or someone in your life would benefit from speaking with us please contact us today

Market Talk: Apple has 'most to prove' in pivotal earnings week (Mike Mussio is featured)

Meme Stock Fever Is Spreading Like It’s 2021 With Kohl’s Soaring (Mike Bailey is featured)

‘Focusing on Discipline’ in 2025 Investing (Mel Casey is featured)