The Formynder Field Manual - Tax Edition!

July 7th, 2025

From the field

Last Friday, on the 4th of July, President Trump signed into law, the One, Big, Beautiful, Bill (OBBB). Regardless of where you stand politically, this bill is going to have some effects on your taxes, some of them this year! You can read the entire bill here, but I've taken the liberty of drawing out a few sections I felt were most applicable to military families. Here we go!

Extension of the Current Tax Rates & Brackets

The Tax Cuts and Jobs Act (TCJA) of 2017 decreased most tax rates and brackets. That decrease was meant to expire at the end of 2025, which most financial planners were planning for (worst case). The current rates are now permanent individual tax rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. This is excellent news!

Extension and Additional Enhancement of Current Standard Deductions

The TCJA almost doubled the standard deduction for single, head of household, and married filers. The result was that many people received a significant tax deduction without having to itemize. In fact, most people could not itemize enough to meet the standard deduction. This provision was meant to expire in 2025, but is now permanently extended and adjusted for inflation.

An added provision for tax years 2025-2028 allows a deduction of $31,500 for joint filers, $23,625 for head of household, and $15,750 for all other filers, inflation adjusted thereafter.

Extension of the Child Tax Credit

The child tax credit, set to revert back to $1,000 per child at the end of 2025, is now not only permanent, but for tax years 2025-2028, increased to a maximum of $2,200 per child. There is still an income threshold of $200,000 for single filers and $400,000 for married filers.

State and Local Taxes (SALT) Cap

For those who itemize their taxes, the TCJA capped the maximum amount of state and local tax deductions at $10,000. For some who live in highly taxed states and/or local municipalities, this hurt their ability to itemize some or all of their tax deductions. The OBBB increases the SALT cap to $40,000 for those earning less than $500,000 annually. The SALT cap of $40,000 will sunset in 2029 and return to $10,000 in 2030.

Limitation on Home Mortgage Interest

This provision makes permanent that you can only itemize interest on the first $750,000 of your home mortgage, which is the current limit today.

Above the Line Charitable Deductions

If you give to charity, but don't itemize, you can still claim above the line charitable deductions of $1,000 for single filers and $2,000 for married filers.

Permanent Elimination of Qualified Moving Expenses - Except for Active Duty and Members of the Intelligence Community

That's right! If you are an active member of the Armed Services, you can still take above the line deductions for qualified, unreimbursed moving expenses. Check out my post for a few more details about what you can claim and how you claim them.

ABLE Account Improvements

There are several improvement provisions for those with ABLE accounts.

Previous year contribution limits remain the same.
Designated beneficiary qualified contributions are eligible for the Saver's Credit.
Tax-free rollovers from a Section 529 to an ABLE account.

No Tax on Car Loan Interest

This is a tricky one, but here's the interpretation. This is an above the line deduction of up to $10,000 per year for loan interest that meets the following standards:

Was manufactured for use on public roads, streets, or highways
Has at least two wheels
Is a car, minivan, van, SUV, truck, or motorcycle
Final assembly done in the US

This does not include all-terrain vehicles and recreational vehicles. The tax deduction is only good for tax years 2025-2028 and there are income phase-outs.

Repeal of Clean Energy Credits

There is a substantial repeal and phaseout of clean energy credits as it relates to your home or car in 2026. (Please don't go buy home improvements or cars just to get the credits while you can.) I mention this in case you were already thinking about these type of purchases. 2025 may be the year to do it if you want the credits.

529 Account Enhancements

Beginning in 2026, beneficiaries will be able to use their 529 accounts for quite a few more qualified educational expenses. In fact primary, secondary, and homeschool expenses are specifically named, including:

Online educational materials
Tutoring or educational classes outside of the home
Testing fees
Educational therapies for students with disabilities

Also, 529s can be used for “qualified postsecondary credentialing expenses” in connection with “recognized postsecondary credential programs” and “credentials”. Think occupational certificates, licenses, apprenticeships, etc.

Money Accounts for Growth and Advancement, a.k.a. MAGA Accounts

Stay with me - last one. This is new for 2026. MAGA accounts are tax advantaged incentive accounts for young adults to use toward entrepreneurship, home ownership, or higher education/training programs. Here are the details (trust me, I have a lot of questions too):

Parents of children under the age of 8 and born before Jan 1st 2024 can open an account.
Contributions to each account are capped at $5,000 of after-tax dollars annually, but parents, relatives, and any other tax-paying entity can contribute to the account.
There are no distributions allowed before age 18 (I assume there will be taxes and penalties). After 18, the adult can distribute up to 50% of the account towards qualifying expenses (above) and receive long term capital gains rates. For nonqualified expenses, ordinary tax rates apply.
At age 25, up to 100% of the account can be distributed, but by age 30, 100% of the account must be distributed.

There is also a MAGA Pilot program in which the government will contribute $1,000 to the MAGA account of a child born between Jan 1, 2024 and Dec 31, 2028.

There are some details around these MAGA accounts that have me scratching my head a bit, so I'll need to see how this plays out when the IRS completes their actions.

Summary

There is a lot more to this bill and many questions stemming from it. If you have any questions, you can submit them below and I'll either reach out or maybe even get them in my next newsletter. I hope you've found this special edition of the Formynder Field Notes, helpful! If you think someone else might find it helpful, I always appreciate it when my letter

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