2025 Tax Changes You Can’t Afford to Ignore!
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Twenty twenty five tax changes you can afford ard to ignore brand.

I am so excited to talk about this because no, that there are two things that are certain, death and taxes. And in the same thing, one of the things you know about taxes is that they change and the rules change in the things that we need to know about to possibly impact. Our tax situation also changed. And i'm excited that we can share .

some of those things. Traditions I think about this past year was a special year because we had the the final transcript for millionaire mission needed to be updated with twenty twenty four numbers. And as I come on, it's november. When are these number showing up? And then I think about also the special relationship.

As you get a year old a year longer in your career, if you want something that makes you seem old and seen, it's these annual changes because every year i'm like, so the four one k max this year is what? Twenty two thousand. So this is where we're going to catch you up. There will not be any mystery to what's coming your way in exactly right.

The irs has now released this new inflation adJusting contribution amounts are going to make sure you know them because a lot of us like to do our year and planning and into the year. And one of the things that we do, what would do our year and planning as we set ourselves out to begin planning for the new year as we get into january.

And there are some really unique additions specifically related to secure act two point o then we want to know about because for a number of you, they might impact you. And if you can just take a little bit more and put a little bit more aside, often times I can have a huge outcome for years. Job ryan Brown's talk about the first one employer sponsored retirement plans. So these are four one case, four o three bees, four fifty servants, three of savings plan in two thousand twenty four the salary differ. Lift the amount that you could differ your paycheck into these plans in twenty four was twenty three thousand and twenty twenty five IT is increasing by five hundred dollars to twenty three thousand five hundred.

And look, we come in the december. This is something you pride need to go head and update with your hr so that as soon as we've drop into the new year, this is part of your new year's resolution act. Let's update how much we can put in those shower to further that way.

You don't have that surprise when you getting your november, december paycheck of next year. A man, I didn't max out my four one. Kay, I missed that. This is something you need up.

It's so frustrated when we look at like a client to w two and we see that they still had twenty two or two five, they just didn't update IT. Well, in addition to the sire to follow, if you're someone who is taking advantage of like mega back door author, maybe you just have a very generous employer. The actual section four fifteen limits are increasing as well. So when you add up all of the employee and all of the employer contributions in twenty twenty four, the total amount t they could go into a defined contribution plan for your benefit was sixty nine thousand dollars. That next year is increasing to seventy thousand.

And then this next category because I think they were worried about people might do feel like you maybe have a senior moment. Well, they said, let's keep those catch up. Contributions for fifty and over the exact same. So there's seventy five hundred both and twenty twenty four as well as for twenty five.

Now this is a unique thing, right? So catch up contributions are staying the same. So there is a little bit of an additional change. There are now what are called super catch up contributions for individuals that are turning sixty, sixty one, sixty two or sixty three next year. If you happen to be turning one of those ages in twenty twenty five, in addition to the seventy five hundred dog catch up contribution you can do, you can also do a super catch up of fifty percent of that amount, so you can do another three thousand seven hundred fifty dollars.

So if you are fifty nine now and you will be turning sixty, or you will be turning sixty, you wonder you will be turning sixty two or you will be turning sixty three in twenty twenty five, you can actually do a catch up contribution equal to eleven thousand, two hundred and fifty dollars. It's kind of confusing. I I like, I think it's awesome.

I love people save and more money. But this one just seems like right. I guess it's for people.

but I as even if you are going through that felt like your Green eggs and ham, I thought your shoes and sai am is that is that super catch up? Is that's some special? I guess the legislature is. O, K, let's put this in there. And here we .

are now IT is important to note that these, this is not a Mandate provision of one. K, P, your plan may not adopt this change. So if you are someone who sixty one years old, uh, next year, and you go to a justice in your plan and IT washes, IT doesn't let you. That might be because your plan has not adopted IT. So when you get those annual out days, when you get when you some replanning description, when you get the documents later before kay, make sure read through so that you understand what is available to you, what change happening .

besides people subscribing. I love IT when governments use a good acron um because government is is not going to look past the great opportunity.

One right now a long time part time 的 L T P T。 Long term part time employees are now it's going to be easier for them to participate in employer sponsored timer plans. So this might be seasonal work or this might be part time employees who come on at a certain part of the year and then roll off a certain part of the year.

These are the requirements order for those employees to be eligible to participate in an employer matter time. A plane, they have to complete five hundred hours of service in two consecutive twelve month periods. If you think about like a forty hour worker that's full time for like four to five months out of the year and they have to be h twenty one by the end of the second twelve month period. So this is something if you are a business owner, if you are a plan sponsor, you want to make sure you're paying attention to this because you may have seasonal work or part time work that's now eligible for a benefit that they were not previously eligible.

Pay attention like internships and things, this is going impact a lot of different things. So I don't sleep on this because I think, you know we all want to make four one case eligible al people as fast as possible. But IT is unique when you have seasonal employees and maybe they come their soft more years school and they come their gene years school. I wait him in. This person is already eligible for the four one k, even though they have started full time employment.

So okay, so that is employer sponsored time and accounts. And let's talk about some other savings vehicles that might be available to you, whether you an employee or maybe even a self empty individual. What IT comes to I R S, to additional I R S and rough I R S. Guess what contribution limits are not changing in twenty twenty four? The total contribution for those under fifty or seven thousand dollars that will be saying saying the same in twenty twenty five and catch up contributions for those age fifty and over also staying the same at one thousand dollars in twenty five.

And both talking about with employer plans to four fifteen minutes will sup areas which are only funded by the employer, things they did get to pick up. There were sixty nine thousand and twenty and twenty four. There are now seventy thousand .

going in twenty twenty five. And when IT comes to see a ton of something I R S anymore. But if you do work for employer a present, the solar deferral is increasing as well in twenty twenty four or sixty thousand dollars to 4， it's going to sixteen thousand five hundred.

And similar to four one case, the catch up contributions are not changing. They will remain thirty five hundred dollars. But there are are also the super kitchen of contributions for those individuals age sixty to sixty three next year. So if you happen to follow that category and you're planning adopt, there is five thousand and two hundred and fifty dollars of catch up contributions that you can do .

to a simply you work for a company has a similar, right。 Seriously, most people have upgraded to four one case. It's got ten so much cheaper to administer four one case.

So you can get higher sorry to feral limits. You get higher contribution limits as an employer. I'm just surprised IT. Then you look, this is coming from a person had a small business with simple R A, because that was the progression. You went step R, R A when you didn't have.

You went simply once you added employees, and then once you could afford IT and had no success, I can afford the record keeping. You do a four one. K, all that kind of been changed with, you know innovation and technology lowering the cost. And also you know the legislation is made these numbers even Better as well or you can really ignore because the spread between the sour deferrals well.

no, I think it's it's interesting with four one case. I love seeing that we're able to save more money like that's that's an amazing benefit we get to put more money to work. I was a little bomb to see that.

I rs didn't increase because we love tax free. Ths, why? Brown, do you have the thing that can you also think it's why we have the financial order Operations? And step number five, are your tax free saving vehicles in twenty twenty five?

We did not get a boost on the rap I R A, but you know what? We did get a boost on saves accounts contributions for twenty twenty four. The maximum contribution could do to an H S. A was forty one fifty for a single individual or eighty three hundred for a family. Those numbers in twenty twenty five are and and this is soften you need to you need to pay attention to because a lot of folks have automatic salary to feral arrangements set up where this just comes out your paycheck into ha every prepared well. If you are maxing out of the four you want, fifty or eighty three hundred need to make sure that you increase IT for january, because the new limits are forty three hundred for visuals in eight thousand, five hundred and families.

yeah. And then we can. We even brought up, be gone into education. We are like five, twenty nine enable accounts. This is something we talk about.

And we even we did all defensive research on this because we all know five twenty s are unique in the fact that you can kind of stack your contributions for years. You can can add like five years in the one year if you make that election, so you can really over fun these things. But the typical maximum in the past was for twenty twenty four eight thousand is 42 thousand。

That's because that's the angle gift exclusion able accounts. We were trying to figure out, do they have these same like stacking provision about twenty times because they are t on the same platform we found to the so security administration? No, they are limited by whatever the angle funding limit, gift limit is. So IT is going from eight thousand to nine thousand thousand .

and twenty twenty five. I love it's it's amazing that well, this may not seem like significant changes. Just being able to increase how much you're saving india four or one k, and just being able to to increase how much you're saving H S A. If you want to add to up every year, that's going to be about six hundred and fifty more dollars that you're able to get into tax advances account.

And while that may seem small and that may seem significant, if you can do that next year and the year after and the year after and the year after time can be the most powerful part of your entire financial journey you don't believe we ever deliver. You got to money, guy. That comes less resources and downward is delivered.

What can one percent more do, or what one percent more can do for you? And IT shows the power of that small marginal saving. If I can start today and get my money working for me, it's going to allow my future yourself to have a great, big, beautiful tomorrow. And IT does take a lot today. IT just takes time and discipline to put IT in a .

IT is a small decisions. Do you create that great, big, beautiful to mars, small and criminal decision you think about, like even the cozy, the one dollar for a one year has the potential become eighty eight? We had some in the studio. Fill was in here not too long. O and I looked how he kind of related out.

We were showing some things, he said, I thought about this in terms of tom, and that's kind of what this is, that you can take this one percent is that maybe one month worth of your worker, even one week, might be covering months, if not years, of your future selves retirement. So that one percent, which might seem like absolutely nothing, rounding err, can actually have significant impact in your future self. So don't sleep on that.

You can also find uh twenty twenty five tax bracket, standard deductions and more in are twenty twenty five tax guide. If you're not using this as a quick reference in a resource, make sure you do that. You can get IT a money guy that comes less resources.

You want a deeper dive. And to some of these tax changes that are coming and how they may impact your back pocket, make sure you describe that money guide that comes slash beyond basics. With an article coming out this thursday, it's going to give you the details and let you dive in to all of the changes that you can expect next year and how you can use them to ultimately do money Better.

So you're probably recognizing, if you're brand new the show. We know that there are about forty five percent of you that are constantly coming to our family here is that we are little nerdy. Yeah, we do a lot of the behavioral stuff will focus on the good habits that you need to be focusing on, but we're also give you the deets on what you need to be doing.

Tax policy was and I got say twenty twenty five is a big year because we just had an election. I know, look, we're all like, hey, the elections over and now we can get on with our loves. And twenty fathers could be a lot attacked stuff going on because we have a lot of stuff that was set to sunset.

And now we know that that's going to be on the front of the legislative agenda is looking at tax policy. We will be your scoop will be able to help you up on. And remember, we are very clear, we don't do we don't do politics. We don't do religion. We're just trying to help you make the best decisions, but we're going to keep you on the cutting edge of knowing what you need to do with your personal finances.

And we love that we can stay aboard to these changes that we can what's going on in the financial world. But we also love that we can speak to the things that you care about. We want to make sure wear resource to help you in your financial life. And so with that, every tuesday morning at ten day, and we love to be here answering your questions in the live chest right now, we have a team out in the wings collecting your questions, and we want to load you up. If you have a question, make sure you get IT in the chat right now with that creative director, rev, i'm going to throw out over the.

oh yeah, got one cute ed up. We're gonna kick IT off with a question from john athan v he says, why does the goal of twenty to twenty five percent investors for retirement not change based on traditional versus rough accounts? Having a million in rough could be very different from a million in traditional accounts. What do you think about this?

Yeah so okay. So this is a great question, JoNathan. What the the evidence of his question is, he understands the mathematics that if we make some tax rate assumptions, if i'm in a higher tax bracket now and I think i'll be lower later from a lower tax break now, high or later, rough dollars in traditional dollars are not the same.

If I have one dollar is going into rough, it's actually after tax money. If I have one dollar is going in traditional, it's pretax money. So i'm not actually saving the same nominal amount of money when I can pair those two things.

So what we tell people early on is that when IT comes to building for your financial future, when IT comes to going to have you're going to save, we want to make IT as simple as possible so that you can match for the behavior. That's why we shoot for twenty to twenty five percent. Because if you can do that, odds are you going to set yourself up for future financial service.

But then as you begin moving along in your financial journey, we know that personal finance becomes incredibly personal. And what you will find out, what you will learn as you're moving along in your financial journey, you may recognize because you've been maxing out raw and you took a advances of H. S.

A. And you've built up all three years, twenty years and all three thirties. And as you ties you may do, know course and arrive with conclusion.

Man, I am way to financial independence ence. I'm doing the things and i'm so for doing. And because of my account structure, maybe I don't have to save twenty five for six anymore, maybe my savings for the 1 person seventeen。 That's a decision that you make as you begin to build out your financial plan later on in your financial journey, not one that you make right at the very beginning of i'm going to do something to do to and to. If you start making those assessments too early, I think you're gonna be selling yourself short.

drive out, go and give a to straight. There are two things going on here. We got, get the actual behavior right and the the good habits make them as easier as possible and then keeping the bad behaviors minimize as much as possible.

So always focus on the behavioral side of things first and then we're go get into the execution or the fine tuning later. That's exactly what we've done with the financial order of Operations. So many americans, and this is something funding from you and struggle with, is that they get into the manutius of how do I execute this to maximize IT and they leave behind and a lot of the behavior.

Another thing that's why I feel notice in the financial order of Operations, we got you covered because we are so nearly we focus on both these things. When we design steps one through three, all the way of four is that make sure you get in the free money, making sure that you, you you're not making desperate decisions because you didn't even have access to emergency reserves. We get to five and six.

These are the make wealth phase. You're got to ensure that you're actually getting wealthy through saving and investing, creating your army of dog bills. So that's in steps five would get to in the roof.

The H. C. Is also tax free growth opportunities.

Step six with maxim hour time. This is exactly what you talking about. Twenty five percent. If you've got a money out, less will show you why we landed on twenty twenty five percent.

Because if you started like the majority americans do in your thirties, it's going to land on about twenty five percent from a behavioral standpoint of what you need to be saving and investing to be successful. If you're starting your chinese, it's going get that much easier. If you wait till your forties, you're going to have to save even more.

That leads to your question. Please wait a minute. You guys IT is different when you're looking at a rough account verses and after tax account versus attacks deferred account where you took the deduction on the front end.

You're exactly right, john. And that's why instep seven hyper accumulation, after you've gotten the saving investing twenty, twenty five percent, you move on to the hyper accumulation. And this is the first step. What we say, hey, it's not just about making the wealth and the good behaviors and the habits that got you there, it's about how you actually going to use this money in retirement.

And this is exactly why somebody is part of the fan movement or A K of previously known as far movement, where you think you're moving on to something else in your forties or fifties, you're going to need structure your accounts different than somebody who says, I love my job, I love what i'm doing. I'm going to do this until eight seventy. That is a completely different goal and its to require a completely different account structure.

So that's why we do make those determinations and those different cities in step seven of hyper accumulation or will say, yeah, without a doubt, you could need more than after tax bridge account or if you want these people, maybe your income structured in a unique way where you can do megah, we're going to need even more in that tax free account because of the benefits. And I think you can see, look, I just don't want to get hyper focus on just the tax savings or the this this dollar amount is not the same here because there are some differing taxation within there. It's get you through the behavior of components and then we will connect the math as we get in the step seven. And that's why if you need to focus on all nine steps of the financial water Operations, great. awesome.

JoNathan v thank you for your question. Um in is tumble day, I just remember red, I almost forgot, but how could I forget if you would like a money guy tumbler, just email winner at money guide to come. We d love to send you one john and .

thank you there. What is not just .

a tuber?

Oh, IT is also.

i'm so sorry.

I I T has multiple skills.

Well, do other than we, you can have one if you would like, alright crag w question.

I think my nose is grown. Do you just like about something? Know, every time time I take a drink.

I. I never noted.

never notice time I drink, listen. That has never been a problem before. So either this thing or my nose is grand so we're going okay, i'm sorry. Joys of love share.

Let us know if you .

think bry's noses different.

No.

not inviting comments .

on my nose link because we all know mins, noses and ears to continue to grow.

So I don't I think so. I always .

heard that knows is just like .

an old things. I never .

heard that.

I don't know.

We all know i'm very self dating, deprecating about my age, but we don't need to add to IT. Okay, but but IT, is this thing so exciting?

He's he's going .

to spill, spill, drink all over himself. A guardie .

look forward to a great w yeah crag w he has a question for you. He says, do you believe in paying off a twenty four k family debt at zero percent interest as quickly as possible? We can pay what we want each month, but feel short term struggle for a quicker way to freedom is the way. But what are your thoughts?

Do you even been paying off twenty four thousand, our family, that at zero percent quickly we want to pay month but feel short struggle ick freedom. Okay, so going to make a bunch of assumptions here, right? I got to make assumptions that you borrowed some money from family.

Um maybe this is parents, I it's grandparents and they were position I have to give you zero percent. I think that's incredible. Assuming this was something where like IT was an opportunity.

Hey, I need to go out and i'm going to go buy my first car and i've got to borrow money and I want to follow twenty three, eight and the auto buler ship told me that my first order was going to be and half percent and mom and don ma a said, you know what, we will loan you. The money will only twenty four thousand dollars. You pay us back and we're going to do a percent.

If you come from a situation like that. I am not the opinion issue, feel guilty or feel bad or think that that's like a negative thing. I think it's wonderful that you just happen have the opportunity where that's available to you.

What you have to do is you have to recognize the benefit of the opportunity that you have but also the responsibility of the of the uh social contract events into because yeah if you're thinking about mathematical optimization, okay, great. I've got this twenty four thousand alone. I'll just never pay IT back and a zero percent is forever and they'll just set out there.

I think that, that would be taking advantage of an opportunity entry. So what I would love to see you do as I would love to seek as again, that depends on the type of debt, depends on your financial situation. I would want for you to find a reasonable method and mechanism to pay IT off over the time, and that makes sense for you as well as the Linda.

So if it's like three years, five years, ten years, I don't I don't know again, I know your situation or the specifics of this because what I don't want to see you do is because IT is zero a percent. I don't know that I want to see you focusing on paying off this debt as quickly as possible to knock IT out instead of doing things like getting your employer match, instead of doing things like putting money into raw iri, do things like in hc. But I also don't want to see you taking advantage of a generous family member simply because you can there some there some tension there in the middle that you'll have to figure out. Agree.

one of five. But I remember when I was second legal studies, and in accounting, I love that I had to take to and old quarters of legal studies as an account. And one of the first things are, one of the curious things I learned was that in law, love is consideration when IT comes the family member. So and we know that our our parents love us and they do anything for us. And sometimes that creates where there's unclear expectations or communication on what is expected. And and I share to a millionaire, sion, and I share um cash is such a valuable thing in the financial of Operations that um if I got to have another hand that hold up even more stuff IT, actually it's two steps in the financial water Operations both step one in four and I even detailed my my knowledge comes a lawton from also experience in the struggle. And I got a point when when I was first starting to to do the adult thing, that I really screwed up with credit cards and some other stuff and I had to call my parents and they lent me some money and then when I came to go pay on back then, I don't worry about IT um and I remember no, I was a principal thing for me is because I was in a down and desperate and I felt like I had not close the loop on my changed of becoming a different person with the way I viewed this that I I forced the issue of paying on back a few hundred books. Now your situations different cragg is if you're talking about .

twenty four thousand dollars.

But here's the thing where you need to revise this. If this was not set up on the front end is that any time you do in these family engagements, I would first design a plan of success. Meaning on the front end, what are the assumptions and the expectations from both parties, meaning that did you'll have a five year plan, energy have a seven year plan.

You have even a ten year plan whenever you're doing this stuff for a loved one, tell them and there's nothing wrong with helping our loved ones but put IT on the front and what your expectation is now if your parents said, hey, we're going to do this. This is a tax strategy because it's slightly beyond what the angle gift tax exclusion is. We're going give you this money and then we'll slowly forgive IT.

That's a completely different thing. But if you feel like that there was this desire, this was not a gift, this truly was alone. You need to go back and maybe revisit that conversation with your, your, your parents or whatever family member worked this out.

And then assuming you're now you have the steps of or the assumption set up of what their anticipation is on when you should pay this back, if you now get the step eight nine of the financial water Operations, a zero percent interest rate is a low interest rate ball means I think you pay this thing back even ahead of schedule of what they're anticipating money back. Um but but you've gotta go through those those several determination steps. Was this a gift? Or is this alone? Because other very distinct different things also set yourself up a plan of success, know what they are anticipating and expecting, and then treat this like IT. You know a step eight or nine type thing where you are going to pay, I mean, pay IT back because it's a low interest rate, a natural obligation.

Um what do you like? A little boxy thing. Yeah, this is unsolicited advice, but I want to give IT to because I know you and I have both on into this. We know there be in people uh, in our lives at someone were the a spot and they needed to borrow some money, right? We were in a place where we were able to able to do that and that's fine.

The first thing, if you're ever going to let someone borrows money, family member, otherwise in in my estimation, it's always a good idea to you never going to get that money back like when you go into don't go into with any preconceived notions because what happened is, is something goes quarterly IT gets like you can get real next, especially when is with family. But have you ever seen this happen? Somebody borrowed money and they'll going to tight the, and they need to pay that.

But all the time they just start making financial decisions and you are the time pot. Now things are Better and then we new car, then you win on the trip or then you took the vacant and like. And you just you just want to be mindful of that if this loan originated out of a place of need that you are in and now you're no longer in that place of need, I do think is reasonable to honor the folks that linch the money. And they would just started like, wow. And now, you know.

is is because something, especially if this came from an ask of need, because I have experienced that, where you help somebody out with the anticipation. This is not a gift. This is A A loan, because I get IT.

The economy stinks right now. I don't want you to lose that vehicle. I don't want you to put your family through this. I can help you out. And then IT is amazing that you know, Better days start coming and and I know this is I think the person who's struggling, you look at the person gave you a my, they're doing good. They don't need the money, don't need the money back, but is back to the behavioral things.

And i'm glad you brought that up is because it's true if you got this out of need and now you're starting to do some extras, you know that are with a publicly visible um you might need to revisit that because i've experienced that. And then you know one of the worst things even though you're right but IT is that you probably don't want to do this with the loved ones or family unless you consider a gift. But IT does break your heart when you see that even though they came to you need and they they treated and they called IT alone and said, without IT out when I pay you back and then they they basically nor paying you back, you, you, you saw.

Good answer. Well, craig, thank you for being here and for asking the question. And if you would like a money guide, tom, where we'd to send you one just as a thank you for being here. And since we asked a question, just email winner at money guy outcome .

to cash on that money and families hard sometimes in. But I do like what both of you are.

the one that's giving the money just even if they're gone to pay you back. I mentally treated as a gift like i'm just trying to help this personal.

probably for the best, just for everybody's relationship, and tell people you add, like loan money to family. I approach, hey, assume you will never see this money again. If all that money was a stricken off of your letter, would you still be OK? And the answer is no. Then maybe you're not a position where you should be loaning that money out.

I've even made that mistake here at the office. I mean, where I found out somebody had really bad credit card. Dt, know you help him out, and I don't know if you have to meet money is money is hard.

It's a hard tool. Good number though. Again, thanks for question crag. The money guy show is hosted by brian present about wealth management is a registered investment advisory firm regulated by the securities and exchange commission in accordance and complaints with the securities laws and regulations. A bound wealth management does not render or offer to render, personalize investment or tax advice through the money guys show. The information provided is for informational purposes only and does not constitute financial or tax, investment or legal advice.