With the latest tax bill now signed into law, you may be wondering how these changes could affect your financial plan. While we don’t expect a major shift for most of our clients, several new provisions present opportunities for strategic planning.
At Connecticut Wealth Management (CTWM), we’ve guided clients through evolving tax landscapes before, and this moment is no different.
Our team is reviewing how the new legislation may impact your strategy, whether that’s reducing taxes, transferring wealth, or planning for the next generation. Here’s what you should know.
Key Provisions that May Impact You:
1. Higher SALT Deductions: Starting in 2025, the State and Local Tax (SALT) deduction cap increases from $10,000 to $40,000 for households with income under $500,000. The cap is indexed for inflation through 2029 before reverting to $10,000 in 2030.
This could lead to meaningful tax savings, especially for Connecticut residents with high property or income taxes.
2. Increased Lifetime Gift & Estate Tax Exemption: The federal lifetime exemption is now permanently set at $15 million per person, indexed for inflation. This is a shift from the previous sunset expected in 2026.
The added clarity may allow families to move forward with gifting and wealth transfer strategies with greater confidence.
3. New “Trump Accounts” for Children: A newly introduced savings vehicle allows up to $5,000 in annual contributions and can be converted to a traditional IRA once the child turns 18. For children born between 2025 and 2028, they will receive a $1,000 contribution from the federal government. Employers have the option to contribute up to $2,500 per child on a tax-free basis into these accounts.
While these accounts may have niche uses, we continue to believe that 529 plans offer greater long-term benefits for education-focused goals.
4. Higher Standard Deductions for Seniors: From 2025 through 2028, the standard deduction will increase to $15,750 (single) or $31,500 (married filing jointly). Individuals over the age of 65 will get an additional $6,000, with phaseouts starting at $75,000 (single) or $150,000 (married filing jointly).
This change may reduce taxable income for many retirees and support meaningful tax savings in later years.
5. Charitable Contribution Floor: Beginning in 2026, individuals who itemize will be subject to a charitable deduction floor of 0.5% of Adjusted Gross Income (AGI).
This means charitable gifts will only be deductible to the extent they exceed 0.5% of AGI. For example, someone earning $300,000 would need to donate more than $1,500 to receive a deduction.
6. Charitable Deduction for Non-Itemizers: A new charitable deduction allows $1,000 (single) or $2,000 (married filing jointly) in donations to be deducted without itemizing.
If you give regularly but don’t itemize, this may offer an added incentive to continue your charitable giving.
Move Forward with a Personalized Plan
We believe planning is most powerful when it’s proactive. That’s why we’re already working these changes into client conversations, evaluating how they may open doors for tax savings, family gifting, or long-term strategy refinement.
Have questions or want to discuss how these changes might affect your plan? Reach out to your advisory team. We’re here to help keep your financial plan aligned with your goals and aspirations.
Disclosure:
The information provided is for general informational purposes only and does not constitute tax, legal, or investment advice. The legislative landscape is evolving, and this summary does not include all provisions or nuances of the final legislation signed into law on July 4, 2025. We encourage you to consult with your tax professional or financial adviser to understand how these developments may apply to your personal situation.
CTWM does not provide tax or legal advice. Investment advisory and financial planning services are provided through CTWM, a registered investment adviser.