Financial Intelligence Newsletter for Q3 2025

In this publication of Financial Intelligence, Bethany Aylor and Brent Yanagida will share their expertise in tax planning by reviewing the One Big Beautiful Bill Act with you. They will present the provisions that have now been made permanent by the legislation, and reveal planning opportunities associated with changes in the law, such as the significant increase in the State and Local Tax (SALT) deduction and the increase in the deduction available for seniors 65 years of age and older. Bethany and Brent also take a deep dive into both charitable planning and how it is affected by the new law, and how the new Trump accounts compare to other accounts you can open for minors, and considerations relevant to what type of account to utilize. Like all financial planning, tax planning is nuanced and should be tailored to your specific situation and objectives. We would be happy to review your unique set of circumstances and provide recommendations and guidance.

We have another new addition to Peak I would like to introduce! Cassidy Steck joined Peak in August as an Associate Advisor. Cassidy grew up in Wisconsin and earned her degree in Wealth Management from the University of Wisconsin–Madison. She has built a career in financial services over the past 8 years, with a focus on financial planning, retirement income strategies, portfolio management, and delivering exceptional client service. Before joining Peak Asset Management, she worked with a wealth management firm that specialized in serving entrepreneurs and ultra-high-net-worth families. She has a deep understanding of complex financial needs, and our team welcomes her expertise and her analytical skills. Outside of Peak, you may find her in the mountains, skiing, biking, rock climbing or camping. She loves the outdoors, so she is a perfect fit both at Peak and in Colorado!

The New Tax and Spending Bill: A Summary and Key Planning Considerations

By Bethany Aylor, CFP®, EA and Brent Yanagida, CFP®, EA

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”), a sweeping piece of tax legislation designed to simplify parts of the tax code, extend certain provisions that were set to expire, and introduce new tax planning opportunities.

Whenever Congress passes a large tax bill, one of the most common questions we hear from clients is: “How does this affect me and my family’s financial plan?” While each situation is unique, this article is intended to highlight the provisions that will matter most to individuals and families.

Key Permanent Provisions

Lower tax brackets remain in place:

Note: The 10% and 12% brackets will receive an extra inflation adjustment in 2026.

Standard Deduction: The new rates for 2025 (will be indexed for inflation in future years

Other Permanent Provisions

Existing Provisions with Material Changes

Clean Energy Credit Phase-Outs

While not a new benefit, it’s important to note the reverse – many clean-energy tax incentives are being eliminated or phased out early:

New Temporary Provisions (2025-2028)

Other New Tax Provisions

• Charitable deduction for non-itemizers: Beginning in 2026, individuals who do not itemize their deductions can now deduct up to $1,000 ($2,000 for joint filers) in cash only donations to public charities.
• Investment accounts for children “Trump accounts”: Beginning in July 2026, a new tax-deferred account for children under 18 will be available. The federal government will contribute$1,000 per child into accounts for eligible children who are born between 2025 and 2028. Parents, relatives, and employers can make after-tax contributions in aggregate up to $5,000 annually (indexed for inflation). There are restrictions and guidelines that determine how and when the funds can be used for the child’s benefit.

Key Planning Considerations

The new tax legislation offers ample planning opportunities to minimize taxes. The following OBBBA topics represent key components of the new bill and related planning strategies worth exploring as you consider ways to reduce your tax liability now or in the future.

New Senior Deduction Explained

Beginning in 2025 and continuing through 2028, seniors 65 and older may be able to take advantage of a new $6,000 tax deduction that can help cover the rising costs of housing, health care, and daily living by potentially allowing more of their income to remain untaxed.

Taxpayers who are aged 65 or older by the end of the tax year and have a modified adjusted gross income (MAGI) of less than $75,000 may claim the maximum $6,000 above-the-line deduction. This deduction gradually phases out for single filers with a MAGI between $75,000 and $175,000. Married taxpayers aged 65 or older filing a joint tax return with a combined MAGI of less than $150,000 can both claim the deduction for a maximum total of $12,000. The deduction for joint filers begins to phase out at $150,000 and is eliminated when their MAGI is $250,000 or more.

Claiming the Deduction. For qualified taxpayers, this new above-the-line deduction is available no matter if one takes the standard deduction or itemizes their deductions. In 2025, the standard deduction amount is $15,750 for a single individual and $31,500 for married couples filing jointly, with additional amounts ($2,000, if filing single or $1,600 per person, if filing jointly) continued from prior tax laws if age 65 or older. The new deduction means that for 2025, an eligible individual that takes the standard deduction can deduct a maximum of $23,750 ($6,000 + $15,750 + $2,000). Qualified married couples taking the standard deduction may deduct up to $46,700 ($12,000 + $31,500 + $3,200).

Social Security impact. Although this deduction reduces taxable income, it does not directly change the way Social Security benefits are taxed. Benefits remain taxable if the taxpayer’s adjusted gross income, tax-exempt interest income, and half of the taxpayer’s Social Security income exceed $25,000 (single) or $32,000 (married filing jointly). However, the higher deduction may reduce combined income enough to keep taxpayers below these thresholds, depending on all income sources and amounts. While the tax benefits may be immediately beneficial to seniors, less tax revenue collected may negativity impact Social Security benefits for future generations.

Maximizing the deduction. With the deduction currently only available through 2028, certain strategies may be available to keep taxable income below the phase-out range while this deduction exists. For certain individuals, this may include the delaying of Social Security benefits for at least one spouse, making continued contributions to retirement accounts if still working, and the strategic withdrawing of funds from different types of accounts to support cash flow needs. If taxable income is currently well below the start of the phase-out, opportunities may also exist to make IRA to Roth conversions at a low effective tax rate and/or realize capital gains at a 0% federal tax rate. Both strategies can help minimize taxes in the long run.

State and Local Tax (SALT) Deduction

Starting this year and through 2029, the $10,000 cap on claiming an itemized deduction for state and local (including property) taxes paid is increased to $40,000 for all but the wealthiest taxpayers, whether filing a joint or single return, with a 1% increase adjustment each year. This may make it possible for many taxpayers to donate less to charity and still itemize deductions that in total exceed the standard deduction, plus the previous age 65 and older bonus deductions ($2,000 for single or head of household, $1,600 per person filing jointly). One strategy is to bracket state/local/property tax payments and/or charitable contributions in certain years resulting in larger tax deductions that might not otherwise be the case without the dramatic SALT deduction increase now available.

Charitable Giving Strategy Update

Qualified Charitable Contributions (QCDs). For those taking Required Minimum Distributions (RMDs) from taxable IRA accounts (both owned and inherited), continuing to make QCDs after age 70 1/2 can be the most effective way to donate to charities to lower taxable income. These withdrawals are paid directly to the charity from the IRA and count toward the RMD without being taxed. This strategy also reduces a taxpayer’s AGI which may be beneficial in lowering other taxes or payments which are based on AGI and could potentially help maximize the new senior deduction.

For those not able to take advantage of QCDs, a new tax provision effective in 2026 allows for small cash donations totaling up to $1,000 for single taxpayers, and up to $2,000 for joint taxpayers, to still be deducted even if the taxpayers plan to utilize the standard deduction. This new provision does not apply to donations of non-cash gifts such as clothing or appreciated investments, or contributions to Donor Advised Funds. Since the deduction is not available this year, some donors that will likely be taking the standard deduction may want to postpone s maller cash gifts to charity this year and give more next year to take advantage of the tax deduction.

For those not able to make QCDs but are charitably inclined and want to give beyond the $1,000 (single) and $2,000 (joint) annual amounts, the charitable strategy of utilizing Donor Advised Funds could be the best way to maximize charitable deductions over a multi-year time frame. A bunching strategy allowing the donor to itemize in one year and take the standard deduction in other years may be even more beneficial w ith t he increase i n t he SALT deduction discussed earlier.

The .5% charitable disallowance. This provision starting in 2026 imposes athreshold on filer’s itemized charitable contributions on Schedule A. For most, it disallows an amount of donations that’s equal to .5% of Adjusted Gross Income. As an example, a couple with $200,000 of AGI and planning to itemize deductions could not deduct $1,000 of their charitable donations on their schedule A. For those filers that were already planning to contribute to their Donor Advised Fund in 2025, it might be advisable to contribute more this year than in future years when the .5% reduction goes into effect. This provision does not apply to the deduction allowed starting in 2026 when taking the standard deduction and giving cash donations up to $1,000 (single) and $2,000 (joint).

Trump Accounts versus college 529 and Roth IRA Accounts

Although the new Trump custodial accounts available in July 2026 offer some savings opportunities for newborns mentioned below, there are also limitations and uncertain implementation details that exist. It is still recommended that parents and grandparents first consider contributions to college 529 accounts and custodial Roth IRA accounts, if qualified based on earned income.

The opportunity with Trump custodial accounts comes with the Department of the Treasury being involved in enrolling children born this year through 2028 with a $1,000 seed grant, which would, of course, be beneficial to have regardless of other funding goals. But since funds in a Trump account cannot be withdrawn until after 18 and any investment gains would be subject to taxes and penalties if withdrawn before 59 1/2, we see significant benefits to the continued use of 529 accounts to fund potential education expenses, whereupon no taxes or penalties apply on investment gains if used for qualified expenses. 529 account beneficiaries can also be changed to other family members, whereas the Trump accounts do not look to have such flexibility. Any extra funds left over from 529 accounts that won’t be used for education expenses may, subject to limitations, be rolled over to Roth IRA accounts. 529 and Roth IRA accounts not only have higher contribution limits, but both can also be invested in a wide variety of investment choices as compared to very limited equity-only choices for the Trump accounts. Furthermore, many states (including CO) offer a state tax deduction for contributions to their 529 accounts. Some states such as CO also offer programs for newborns which provide cash startup benefits above the $1,000 Trump account seed money amount. For more information on Colorado 529 accounts, which offer a $100 initial gift, plus up to $2,500 in matching gifts, see www.collegeinvest.org/first-step. 

Federal Spending Cuts

To help fund significant increases on defense spending, border control, Immigration and Customs Enforcement (ICE), and other new programs, large spending cuts will be implemented over the next few years which include cuts to Medicaid, SNAP benefits for meal assistance, extended Affordable Care Act subsidies for health insurance purchased through marketplace exchanges, electric car and home energy credits, etc.

Many of the cuts related to healthcare (e.g., Medicaid cuts) may result in certain costs being absorbed by state governments. With states now having less sources of taxable income and with federal funding programs being cut or reduced, tax revenue may have to increase through higher tax rates and/or less credits or refunds. For example, Colorado, which was able to pass through tax subsidies between $181 and $1,143 via TABOR tax refunds on 2024 tax returns, might not be able to offer any TABOR refunds with 2025 tax flings, per legislative sources quoted after the passage of the latest tax and spending bill.

Summary. There are numerous planning opportunities that should be evaluated and assessed based on the latest tax and spending laws. With tax laws changing regularly and seemingly getting more complex, it is important that you continue to work closely with your tax and legal professionals when seeking guidance tailored to your specific situation. Whether it be tax planning, retirement planning, investment planning, college planning or estate planning, we look forward to helping you and your family understand and implement strategies that can best meet your financial goals.