Opportunities in the New Spending Bill

The recently passed spending bill brings a wave of new tax and planning opportunities. Many of these updates are temporary, so timing and coordination matter. Here are some of the provisions most relevant for individuals and families to consider.

$6,000 Senior Deduction (2025–2028)

If you’re age 65 or older, you’ll be able to claim an additional $6,000 deduction ($12,000 for joint filers) from 2025 through 2028. The benefit phases out above $75,000 for individuals and $150,000 for couples.

This deduction can reduce or even eliminate taxes on a portion of Social Security benefits. It may also create a window for Roth conversions, though income levels need to be managed carefully to avoid losing the benefit.

Vehicle Loan Interest Deduction (2025–2028)

For the next four years, financing a new U.S.-assembled car or SUV may allow you to deduct up to $10,000 per year in loan interest, subject to income limits.

While not everyone will qualify, this is a rare case where a personal vehicle purchase provides a tax break. If a new car is already in your plans, timing the purchase during this window could help free up cash for other priorities.

Higher SALT Deduction Cap (2025–2029)

The state and local tax (SALT) deduction cap rises from $10,000 to $40,000 (indexed for inflation) until 2029.

For residents of high-tax states, this can significantly reduce taxable income. It may also create space for additional strategies—like Roth conversions—without pushing you into a higher tax bracket.

Permanent TCJA Tax Rates & Higher Estate/Gift Exemption

Tax brackets from the Tax Cuts and Jobs Act are now permanent, with the top rate locked at 37%. The estate and gift tax exemption increases to $15 million per person (indexed for inflation).

Permanent brackets improve long-term planning predictability, while the higher exemption allows more wealth to be transferred without federal estate tax—important for family and legacy planning.

Expanded HSA Eligibility

Starting in 2025, more health insurance plans will qualify for Health Savings Accounts (HSAs). HSAs combine deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

If you become eligible, contributing can provide both immediate tax benefits and long-term healthcare funding.

Increased Dependent Care FSA Limits

Contribution limits for Dependent Care FSAs will rise in 2025 (pending IRS guidance).

Families paying for childcare or eldercare will be able to set aside more tax-free dollars, helping free up after-tax income for other goals.

Expanded 529 Plan Usage

529 plans now cover up to $20,000 of K-12 education, professional credentials, and certain homeschooling costs.

This flexibility makes 529s an even stronger option for education savings, whether for children, grandchildren, or continuing education.

The Bottom Line

Many of these provisions are temporary, so planning ahead is key. For some, the opportunities will be straightforward—like funding an HSA. For others, they’ll involve coordinating deductions, income, and timing over the next few years.

Let’s Talk Strategy

If you’d like to see how these updates apply to your situation, let’s review your plan together. That way, we can take advantage of the provisions that fit—before the window closes.

This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, legal advice, a recommendation for purchase or sale of any security, or investment advisory services. Please consult a financial planner, accountant, and/or legal counsel for advice specific to your situation.