As we enter the final stretch of the year, it is always a good time to take stock of the changes that have occurred and plan strategically for what's ahead. It calls to mind a line from the song This Time Last Year by Kelsea Ballerini, where she sings, "But, oh, how the tides change in 365 days." The fact is, taking time to make the updates and adjustments where they are needed now can lead to positive outcomes in 2026.
Carolanne's Corner
Speaking of changes in the past year, the newly passed One Big Beautiful Bill Act (OBBBA) came loaded with an assortment of updates to tax law that should impact almost everyone, whether working or retired. In this edition, we hope to help you not only understand what has changed but also see how it may impact your financial plan and the opportunities available to you before year-end. We've also included a checklist with ideas for planning out the rest of the year financially.
What You Need to Know from OBBBA
- Permanence of Tax Cuts and Jobs Act (TCJA) Tax Structure
- The OBBBA locks in key elements of the 2017 TCJA that were set to expire at the end of this year, including tax rates and bracket structure (10%, 12%, 22%, 24%, 32%, 35%, and 37%). No more waiting and wondering.
- Standard Deduction Bumped Up
- For 2025, the standard deduction will be:
- $15,750 for single or married filing separately
- $31,500 for married filing jointly or qualifying surviving spouse.
- These amounts will continue to adjust for inflation
- For 2025, the standard deduction will be:
- Extra Senior Deduction (2025–2028 Only)
- If you're 65 or older, you may qualify for an additional $6,000 deduction, available whether you itemize or not. This benefit begins phasing out when income reaches $75K (single) or $150K married filing jointly (MFJ) and phases out completely at $175K and $250K, respectively.
- Bigger SALT Deduction Cap
- The deduction cap for state and local taxes (SALT) increases to $40,000 ($20,000 if married filing separately) from 2025 through 2029, with inflation adjustments. The benefit phases out beginning at $250K of modified adjusted gross income (single) or $500K (MFJ) and is fully phased out at $300K / $600K. Even after this phaseout, taxpayers will still be entitled to a minimum $10,000 deduction.
- New "Trump Accounts" for Children
- From 2025 to 2028, newborns get a one-time $1,000 federal contribution into a new tax-deferred account, with additional family contributions capped at $5,000/year (indexed to inflation).
- Tax Breaks for Workers on Tips and Overtime
- Through 2028, taxpayers may deduct up to $25,000 of qualified tip income, and up to $12,500 (single) or $25,000 (MFJ) of qualified overtime pay. Both deductions phase out once income exceeds $150K (single) or $300K (MFJ).
- Auto Loan Interest Deduction
- A new deduction allows up to $10,000/year in auto loan interest for U.S.-assembled vehicles, offered from 2025 to 2028. The deduction phases out starting at $100K (single) and $200K (MFJ).
- Higher Gift and Estate Tax Exemptions
- The federal gift and estate tax exemption is $13.99 million in 2025 and will increase to $15 million in 2026, with adjustments for inflation thereafter.
- Above-the-line Charitable Deduction
- Starting in 2026, taxpayers can deduct $1,000 (single) or $2,000 (MFJ) even if they don't itemize.
Your Year-End Planning Checklist
Here's your go-to list to make the most of what's still available through the rest of the year:
- Max Out Retirement Plans
- 401(k)/403(b): Max out contributions by December 31.
- IRA & Roth IRA Conversions: Consider partial Roth conversions, especially if your income dips this year and you want more tax-free growth and fewer required distributions later.
- Health Savings Accounts (HSAs) & FSAs
- HSA: Contribute up to $4,300 (individual) or $8,550 (family) in 2025, plus $1,000 catch-up if 55+.
- FSA: Use remaining balances before year-end unless your plan offers rollover or grace period provisions.
- Charitable Giving & QCDs
- Qualified Charitable Distributions (QCDs): If you're 70½+, up to $100K from your IRA can be gifted directly to charity tax-free and this counts toward your required minimum distribution (RMD).
- Annual Gifting Limit: The gift tax exclusion is $19,000 per person in 2025, meaning you can give that amount to as many individuals as you'd like without using the lifetime exemption.
- Education 529 Contributions
- Contribute up to $19,000 per year per beneficiary without gift tax.
- Consider a lump-sum contribution of up to $95,000 per beneficiary with 5-year advance contributions.
- Double-Check Beneficiaries
- Review to ensure your beneficiaries on all accounts are up to date, consistent with your wishes outlined in your estate plan. Ask us if you would like to review your beneficiaries at Charles Schwab.
- Estate Plan & Legal Documents
- Review your will, trust, power of attorney, and healthcare directives if you have had major life changes (marriage, divorce, inheritance, new grandchild).
- Coordinate with your estate attorney if updates are needed.
Jordan's Journal
Market Update: September 30, 2025
U.S. stock markets continue to hover near record highs, with the S&P 500 up nearly 13% year-to-date, led by strength in technology stocks. Small-cap stocks, as represented by the Russell 2000, recently reached a new all-time high, signaling broader market participation and bullish momentum. International equities are also performing well, with Japan's Topix hitting fresh records and emerging markets up nearly 25% this year in U.S. dollar terms.
Economic data points to ongoing resilience. Second-quarter GDP was revised upward to a strong 3.8% growth rate, while core GDP growth also accelerated. Durable goods orders and new home sales data continue to surprise positively, and inflation as measured by the Fed’s preferred PCE index remains moderate with a 2.7% year-over-year rise.
Investors face some near-term uncertainty due to the U.S. government shutdown and upcoming labor market reports. The September jobs report release could be postponed if the government closes, potentially impacting Federal Reserve policy decisions. Market expectations are for the Fed to implement another 25 basis point rate cut at its late October meeting, but any stronger-than-expected labor data or a prolonged shutdown could alter these expectations.
Bonds have experienced some volatility due to shifts in long-term Treasury yields, which recently edged up to around 4.18%. Commodities continue positive momentum, up about 10% year-to-date. Entering the final quarter of the year, some volatility is expected as fund managers make portfolio adjustments, “window dressing.” As always, diversification and a disciplined approach remain the best strategies to navigate these market conditions. If you have any questions or concerns, please do not hesitate to reach out to our Prosperity Wealth Planning team.
News and Upcoming Events
Supercharge Your Finances – YouTube Channel
We're excited to announce that Supercharge Your Finances is now available on YouTube! You can easily access valuable financial planning content anytime, anywhere. Simply search Prosperity Wealth Planning or Supercharge Your Finances to explore our growing library of videos, including
- Supercharge Your Finances – The Podcast
- Short, monthly episodes featuring your trusted financial planners—and special guests—covering today's most relevant financial planning topics.
- Supercharge Your Finances – The Financial Education Series
- Bite-sized, easy-to-follow micro-learning videos designed to break down complex financial concepts into practical insights you can use.
Click here to visit our YouTube channel and be sure to bookmark the link so you never miss new episodes. Fresh content will be added regularly!
Speaking of Supercharge Your Finances – don't miss the most current podcast episode that just dropped last week, in which the Prosperity Wealth Planning team discusses estate planning issues with Special Guest Josh Bromley, Esq. It's full of insightful tips on legacy planning and how to prepare your estate in light of recent changes to estate laws.
2025 Summer Photo Contest
Thank you to everyone who submitted a photo from your summer adventures. It was wonderful to see so many smiling faces. And a reminder to our team that we need to get out of the office more!
And the winner is.... Dennis & Ann Radcliffe
Second Place - Andy & Tara Barton
Third Place - Three-Way Tie!
- Kris & Robin Vensel
- Michael & Shiela Medalla
- Kim Kirkpatrick & Dave Dayter
Voice of the Client Survey
There is no better way for us to find out how we are serving you than to go directly to the source. That's why we ask you to take a few minutes each year to complete our anonymous client survey. The short survey should take less than 10 minutes to complete. Please take a second to leave some comments, as we love to read your responses. If you didn't receive the survey, please let us know and we will resend the link to you.
Client Appreciation Events are coming up soon!
We invite our Texas-based clients to join us for a fun evening of catching up with old friends! The Texas Client Appreciation event will take place at Quartino Restaurant at The Colony on October 8, 2025. If you have not received an invitation, please reach out to Jenny at jenny@prosperitywealthplanning.com, and we'll get you on the list.
The California Client Appreciation event is just around the corner. Please join us for an evening of good fun, food, and friends. The California event will be held on November 6, 2025, at Spaghettini Restaurant in Seal Beach. Invitations were sent in early September. Please RSVP and we look forward to seeing you there. If you did not receive an invitation, please reach out to Jenny at jenny@prosperitywealthplanning.com so we can send one your way.
Next year will be here before you know it, and the busy holiday season will provide plenty of distractions from the things that need to get done. Please take a close look at these year-end checklist items and consider putting these ideas into action. We know one constant is change, and 365 days from now could look very different from today. If you need any help, please don't hesitate to reach out to our team. We hope you all have the best holiday season ever, and an even better 2026!
Sincerely,
The Prosperity Wealth Planning Team