Latest news with #BeFluentinFinance
Yahoo
23-07-2025
- Business
- Yahoo
What Trump's New Tax Law Means for Upper-Middle-Class Families in 2025
President Trump signed his 'One Big Beautiful Act' (OBBA) into law and Americans will see sweeping changes to their finances as a result. The final bill includes a senior bonus to help offset Social Security taxes, tax breaks for service industry employees, a bigger Child Tax Credit, but will also make Trump's Tax Cuts and Jobs Act of 2017 (TCJA) permanent and cut funding for Medicaid and Medicare, per the Center for American Progress. Read Next: For You: While the bill has been touted as a way to offer financial relief to Americans, it doesn't exactly give much help. 'This thing is mostly smoke and mirrors for upper middle class families (that $117,000 to $150,000 range),' said finance expert Andrew Lokenauth with Be Fluent in Finance. 'You're not getting hammered, but you're not winning either.' Here's what Trump's new tax law really means for the upper-middle class, according to tax and finance experts. Increased Standard Deduction The standard deduction is rising to $15,000 for single filers, an increase of $400 and $30,000 for married couples, which is an increase of $800 per the IRS.'This is a big win for families in this income bracket who don't itemize deductions,' said Peter Diamond, a federally licensed tax, accounting, real estate and structure and certified bankability expert.'Most upper middle class taxpayers don't exceed the itemization threshold, especially with the SALT (state and local taxes) cap still in place. The increased standard deduction gives them a bigger automatic write-off, reducing taxable income and simplifying filing,' he according to Lokenauth, that change could cost some taxpayers more. 'If you're in that $120,000 to $150,000 income zone, especially with a mortgage, the loss of personal exemptions and caps on SALT means you're probably paying more now than you did before 2018,' he added. Check Out: Expanded Child Tax Credit The Child Tax Credit was a big talking point for Trump and Vice President Vance. The credit boosted from $2,000 per qualifying child to $2,220 beginning in 2026, per CNBC. Parents must earn $200,000 a year or less or joint filers up to $400,000. 'That means many families in the $117,000 to $150,000 range, who were previously phased out of this credit, now qualify again,' Diamond said. 'For a family with two children, that's up to $4,000 in tax credits, which directly reduces the tax bill dollar-for-dollar.'However, the new revisions are not as good as they seem, Lokenauth said. 'We got the credit — but the alternative minimum tax (AMT) and phaseouts on other things like education credits basically neutralized any real benefit,' he explained. 'The math got messier, not cleaner.' SALT Deduction Cap Remains While there are ways the upper middle class can get a small break, the State and Local Tax deduction cap will not offer relief, according to Diamond. 'The $10,000 cap remains, which hits high-tax states hard,' he said. 'Families in this income range often pay well over $10,000 in combined property and state income taxes, but they can only deduct up to that cap. While some benefits elsewhere may offset this, it's still a frustrating limitation for many.' Mortgage Interest Deduction Previously under the TCJA you could deduct mortgage interest up to $1 million in debt, but it's now been reduced to $750,000. 'For a lot of upper middle class buyers in expensive housing markets (California, D.C. suburbs, New York burbs), this wipes out a big deduction you probably relied on,' Lokenauth explained.'A friend who bought in Westchester with a $900K mortgage was shocked to learn that only a portion of his interest was deductible. He said it cost him over $3,000 in missed tax savings in his first year alone,' he added. 20% QBI Deduction Extended The Qualified Business Income (QBI) deduction — allowing up to a 20% deduction on pass-through business income — has been extended.'This doesn't help W-2 earners, but for anyone in this income range with a side business, real estate rentals or 1099 income, it's a powerful tool. Structuring income the right way could significantly lower their taxable income,' Diamond an upper middle class income sounds great on paper, but it's not the comfortable salary needed to live after taxes and cost of living.'If you're making around $125,000, you're probably seeing some benefit from the current system — lower marginal rates, bigger standard deduction — but you're also losing more in deductions. Especially if you own a home or pay a lot in local taxes,' Lokenauth knowing the tax codes is beneficial and can work to your advantage, Diamond explained. 'The truth is, wage earners will always pay the most in taxes, while asset owners often pay the least. That's how the system is designed — but when you understand the code, you can use it to your advantage instead of being crushed by it,' he added. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on This article originally appeared on What Trump's New Tax Law Means for Upper-Middle-Class Families in 2025
Yahoo
05-06-2025
- Business
- Yahoo
What Musk's Possible White House Exit Could Mean for the Future of DOGE — And Your Wallet
Elon Musk has been head of the Department of Government Efficiency since the beginning of President Donald Trump's second term, but the billionaire could be departing soon. A Politico report quoting Trump insiders reveal Musk will be leaving in May or June and say he has overstayed his welcome, but the White House is refuting that claim. Trending Now: Consider This: White House press secretary Karoline Leavitt dismissed the 'scoop' on X stating it was 'garbage,' and that Musk will stay until DOGE's work is 'complete.' Trump also recently said Musk is 'fantastic,' but added that he will leave so he can focus on his companies. 'I want him to stay as long as possible,' Trump told journalists onboard Air Force One, AP News reported. 'There's going to be a point where he's going to have to leave,' he said. Despite the denials, it does seem like Musk could step down from his role in the near future, so what does that mean for DOGE and how will that affect American's wallets? Finance experts explained how the exit could impact the country and what the future looks like for DOGE. According to the DOGE website, Musk and his team have saved taxpayers $140 billion, so when the time comes for Musk to leave, Peter Diamond, a federally licensed tax, accounting, real estate and structure and certified bankability expert, believes the organization will continue to do its job of eliminating waste. 'Elon [Musk] is a master at building high-performing teams and putting mechanisms in place that outlive his involvement,' he stated. 'Just look at PayPal — it's still thriving decades later. If he chooses to step away from DOGE, it won't be a spur-of-the-moment decision.' Diamond added, 'He'll only do it if he's confident the structure and people/mechanisms in place are built for long-term success. I believe the organization will continue to thrive — with or without him.' Learn More: When Musk leaves DOGE, it won't be the end of the organization, but things are likely to be different according to Andrew Lokenauth, money expert and founder of Be Fluent in Finance. 'I've watched DOGE's evolution closely since its inception, and I gotta say — this potential exit isn't surprising,' he stated. 'From my analysis of internal operations, DOGE's structure was heavily dependent on Musk's personal involvement (about 65% of major decisions required his direct input). The organization will need major restructuring.' With that in mind, Lokenauth thinks there will be a big transition. 'Based on my experience working with similar transitions, DOGE will likely shift from its current aggressive cost-cutting approach to a more measured, bureaucratic style,' he noted. 'I've seen this pattern before — when a charismatic founder leaves, institutions typically revert to traditional operational models.' And Lokenauth believes it's already happening. 'Last month, DOGE's internal memos started showing signs of more conventional government processes,' he pointed out. 'They're moving away from those dramatic weekend announcements and sudden policy shifts that defined Musk's era.' If Musk steps down sooner rather than later, Danny Ray, founder of PinnacleQuote, thinks the move will raise more questions than answers and leave DOGE on unstable ground. 'As someone who's led businesses and watched leadership trends for decades, I can tell you this: When a figure like Musk exits quickly, it's rarely without deeper reasons,' Ray explained. 'It could be political pressure, internal conflict, or simply that the mission doesn't align with his long-term interests. Above all, it shakes the foundation of the project.' In terms of what happens to Americans' finances if Musk leaves, Ray believes the savings won't be as plentiful. 'If DOGE loses steam, the promised savings and streamlined government processes could be off the table,' he stated. 'That means fewer tax cuts, slower services and your wallet feeling the pinch. Overall, a Musk exit this soon could turn what sounded like a game-changing project into just another broken promise in Washington.' Diamond has a different viewpoint and says there could be short-term pain with economic instability, but the kinks will be worked out. 'There will be more efficiency, less waste and more opportunity in the long run,' he explained.'There's even talk of refunding a portion of DOGE-related savings back to the American people. That's real money in people's pockets. 'It's about cutting fat and replacing it with lean, effective systems — and that's a win for American wallets in the end. Like any true wealth strategy, the gains come to those who play the long game.' Based on Lokenauth's economic analysis, the immediate impact on America's finances 'will be relatively modest — probably a 2% [to] 3% shift in relevant market sectors.' But he noted to watch out for the longer-term implications because they are more significant. 'The transition will likely slow down DOGE's aggressive cost-cutting measures,' Lokenauth added. 'From my calculations, this means the promised $1 [trillion] in deficit reduction will end up closer to $400 [to] $500 [billion]. That's still substantial but not nearly as dramatic as originally pitched.' However, one thing Lokenauth pointed out is a pattern he's seen before that most people aren't talking about. 'The markets actually tend to respond positively to reduced uncertainty,' he explained. 'When you remove an unpredictable factor like Musk from the equation, you typically see increased stability in government-influenced sectors. My analysis suggests this could lead to more sustainable, though less dramatic, efficiency gains. Think steady 5% [to] 7% improvements rather than flashy 20% cuts that create chaos in the system.' Whatever the reasons for Musk potentially leaving DOGE, finance experts agree that his impact thus far has been significant in terms of gutting waste, but only time will tell if the savings will continue or DOGE folds upon his exit. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates The New Retirement Problem Boomers Are Facing Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck This article originally appeared on What Musk's Possible White House Exit Could Mean for the Future of DOGE — And Your Wallet Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-04-2025
- Business
- Yahoo
Trump Orders End to Social Security Paper Checks: 7 Ways This Affects Recipients' Money
In an executive order signed on Mar. 25, President Trump banished Social Security paper checks and tax refunds in favor of digital payments as of Sept. 30, 2025. 'Paper-based payments, such as checks and money orders, impose unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies,' the order stated. Find Out: Read More: Trump said his administration is cutting out paper payments to save money, create less fraud and set up a more efficient system, but what does this mean to you? If you receive a tax refund or Social Security payment by mail, that will end later this year. While some welcome the new policy, the change creates a significant problem for many older Americans who aren't tech savvy or have access to online are seven ways this major change to Social Security affects recipients' money, according to finance experts. In today's evolving tech world, it seems like everyone has a device at the tip of their fingers, but 15% of seniors only have a smartphone and not a broadband service at home, according to a Pew Research study. It's something that Andrew Lokenauth, money expert and founder of Be Fluent in Finance, often sees with clients. 'Roughly 25% of my elderly clients don't have regular internet access or struggle with online banking,' he stated. As of now, it's unclear how people who don't know how to use a computer or have online banking will receive their payments. Trending Now: Another major issue Americans are facing is the closure of banks. Lokenauth pointed out that many of his clients live in 'areas where bank branches are closing.' 'This means they're often forced to rely on family members to help manage their money, which can sometimes lead to financial abuse,' he explained. 'I've unfortunately seen this happen several times.' While there are some perks of digital payments, there's also drawbacks like more fees. 'When paper checks go away, most recipients end up with prepaid debit cards by default,' Michael Schmied, senior financial analyst at Kredite Schweiz, explained. 'These cards might seem convenient, but they often come with hidden transaction fees that quietly chip away at your benefits.' Unless you're on top of your balance, you might not notice them. 'There can be fees for ATM withdrawals or monthly maintenance even if you don't use the card enough,' according to Schmied. 'That means you could lose money just trying to access the money you're owed. Over time, those costs stack up and make it harder to budget on a fixed income.' Schmied also stated that 'if your benefits land in a checking account, you could run into overdraft fees.' 'Some banks automatically deduct charges or bills before you can even use your money,' he noted. For retirees who rely on paper payments, switching to tech won't be seamless and Schmied suspects financial mishaps will take place. 'For people who aren't used to online banking or mobile apps, it's easy to lose track of what's coming out of your account,' he stated. 'That's how small mistakes turn into bigger financial problems.' The tech barriers are real. Many elderly people have never used a computer and Lokenauth said his clients are really stressed. 'Some people need help setting up direct deposit accounts,' he stated. 'Others are dealing with incorrect account numbers or routing issues. And then there's the timing gap — the last paper check might arrive before the first electronic deposit is fully set up.'People who are affected the hardest are the folks who have been receiving paper checks for years. 'Change is tough,' Lokenauth noted. 'I'm working with several elderly clients who are really struggling to adapt to checking their balances online or using debit cards for the first time.'With anything new, there can be a tough transition phase and Schmied acknowledges that would likely be the case. 'There's almost always a hiccup when setting up new payment systems,' he stated. 'Account details get mistyped, names don't match exactly or verification drags out longer than expected. That holds up payments, sometimes for days or even weeks.' Scams are becoming more sophisticated and seniors are at risk. According to the TrueCaller Scam Report 2024, more than 56 million Americans were victims of a phone scam and lost a collective $25.4 billion to phone scams. It's a concern that weighs on Lokenauth. 'While electronic payments are generally more secure, they create new risks,' he explained. 'I've had multiple clients fall for phone scams where criminals posed as Social Security staff offering 'help' with the transition.' One positive aspect of a digital payment is that the funds will be posted in your account faster than receiving a check in the mail once any glitches are worked out. 'The electronic deposits hit their accounts two to three days faster than paper checks — which makes a huge difference for people living paycheck to paycheck,' Lokenauth noted. The upcoming changes can be brutal for certain groups and while there is some time before the new policies go into effect, many older folks are worried. 'I work with an 85-year-old woman who's never used an ATM and now feels completely lost,' Lokenauth shared. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for RetireesI'm Retired and Regret Moving to Arizona -- Here's Why How Much Money Is Needed To Be Considered Middle Class in Every State?This article originally appeared on Trump Orders End to Social Security Paper Checks: 7 Ways This Affects Recipients' Money Sign in to access your portfolio
