What the New Tax Bill Means for Your Financial Plans

After months of negotiation, a sweeping new tax and spending bill was signed into law on July 4. While political debate continues, the legislation brings clarity to a number of provisions that were previously set to expire—most notably, by making many aspects of the 2017 Tax Cuts and Jobs Act (TCJA) permanent.

Why does this matter? Because while trade policy has dominated headlines in recent years, uncertainty around tax and spending has quietly loomed in the background. This bill removes the risk of a “tax cliff” at year-end and provides a more stable foundation for long-term financial planning—especially for professionals managing complex compensation and benefits, such as those at Cardinal Health.

Let’s take a closer look at what’s changed—and what it means for your personal finances and the broader economy.

Key Tax Changes That May Affect You

The new legislation—nicknamed the “One Big Beautiful Bill”—extends and expands several TCJA provisions while introducing new measures for individuals and businesses. There’s a lot in the bill but some of the main highlights include:

• Permanent TCJA tax brackets, which were previously set to expire in 2025
• Higher standard deductions: $15,750 for single filers and $31,500 for joint filers in 2025
• A new $6,000 “senior bonus” deduction for qualifying individuals over a certain age (phasing out for incomes above $75,000; expires in 2028)
• Above-the-line Social Security exclusion: New above-the-line deduction for Social Security benefits of up to $6,000 per senior ( $12,000 per couple), available 2025–2028, phasing out at MAGI above $75K (single) and $150K (joint)
• Permanent alternative minimum tax (AMT) exemption, with higher phaseout thresholds indexed to inflation
• Child tax credit increase to $2,200 per child, with future inflation adjustments
• State and local tax (SALT) deduction cap raised to $40,000, with gradual increases through 2029 before reverting to $10,000 in 2030
• New tip income deduction of up to $25,000 annually for workers earning under $150,000 (through 2028)
• Qualified Business Income (QBI) deduction rises from 20% to 23% in 2026, becomes permanent, with adjusted phase-in rules for high-income service businesses
• Introduction of a tax-advantaged child-savings account (Kids’ RIA) for long-term education and growth—annual contribution limits pending
• Repeal of certain green energy credits, including those for electric vehicles and residential energy efficiency
• Federal debt ceiling raised by $5 trillion, reducing near-term political brinkmanship
• Expanded business tax incentives to promote domestic investment and job creation

These changes reinforce a relatively low-tax environment—especially when viewed in historical context. Top marginal rates today remain far below peaks of the 20th century, when they exceeded 70% and even 90% during wartime:

The Bigger Picture: Deficits and Debt

Tax cuts often come with trade-offs. Lower revenue typically means higher deficits unless offset by spending cuts—something that’s politically difficult given that most federal spending goes to Social Security, Medicare, defense, and interest on existing debt.

According to the Congressional Budget Office, this bill is projected to add $3.4 trillion to the national debt over the next decade. That’s on top of a federal debt already exceeding $36 trillion—roughly $106,000 per American.

While some argue tax cuts can spur growth and partially offset revenue losses, the U.S. has struggled to balance its budget even during strong economic periods. The last balanced budget was in the late 1990s.

For investors, the key takeaway is this: while deficits and debt levels can influence interest rates and inflation expectations over time, they rarely warrant dramatic portfolio shifts. A well-diversified investment strategy remains the best defense against fiscal uncertainty.

Estate Tax Exemptions Made Permanent

One of the most impactful changes for high-net-worth households is the permanent extension of the higher estate tax exemption. Starting in 2026, the exemption will rise to $15 million per individual and $30 million per couple.

Even if your estate falls below these thresholds, estate planning remains essential. For professionals at companies like Cardinal Health—where equity compensation, deferred comp plans, and multigenerational wealth planning often intersect—this is a timely opportunity to revisit your long-term strategy. Don’t forget: state-level estate taxes may still apply, often with much lower exemption limits.

What This Means for You

The new tax law reinforces the importance of proactive financial planning. While it extends the current low-tax environment, it also underscores the need to:

• Review your tax strategy in light of these new provisions.
• Revisit your estate plan to ensure it aligns with updated exemption limits
• If you believe tax rates are likely to rise in the future, consider whether your assets are being accumulated in the most tax-efficient account types (e.g., Roth vs. traditional, taxable vs. tax-deferred)

If you’re wondering how these changes may affect your long-term financial goals as a Cardinal Health employee, we’re here to help you navigate the path forward with clarity and confidence.

Take care and, as always, stay the course!

^{Colburn Wealth Management, LLC is a registered investment adviser. The information provided is for educational purposes only and should not be construed as an offer, solicitation, or recommendation for the purchase or sale of any security or investment strategy. All investments involve risk, including the potential loss of principal, and are not guaranteed unless otherwise stated. Before implementing any strategy discussed, consult with a qualified financial or tax professional. Past performance is not a guarantee of future results.}