Mid-Year Wealth & Tax Update: What 2025’s Shifts Mean for Your Financial Plan

As we pass the halfway point of 2025, the economic and tax landscape looks markedly different than it did just six months ago.

From tariff-driven market volatility to sweeping changes introduced by the One Big Beautiful Bill (OBBB), investors and business owners are facing both new risks and new opportunities.

During our recent Mid-Year Wealth & Tax Update webinar, Eric Oh, ChFC®, CFP®, ChSNC®, and David Hilliard, EA, unpacked what these shifts mean for your long-term financial plan. Whether you're focused on retirement, running a business, or simply trying to make wise tax decisions this year, the message was clear:

This is not a “wait and see” moment. It’s a “pause and plan” moment.

Here are some key takeaways from the presentation.

The Economic Picture: Volatile, But Not Unstable

Market and economic trends have recently been driven by a rapidly shifting trade environment.

Tariff Tensions Are Back

Earlier this year, U.S. tariffs were poised to jump to 30%, levels not seen in nearly a century.
After a temporary pause, average rates settled around 15%, but ongoing negotiations are keeping markets on edge.
Despite fears, markets bounced back quickly once it became clear that many trade agreements (EU, Japan) were progressing.

Market Volatility Isn’t a Red Flag; It’s a Reminder

The S&P 500 dropped sharply in early spring but has rebounded and remains near record highs.
Forward P/E ratios suggest stocks are priced on the high side, but that alone doesn’t predict short-term movement.
Diversification matters: International markets are outpacing U.S. equities year-to-date.

"Trying to time the market doesn’t work. Thinking long-term and knowing your risk comfort does." – Eric Oh

Inflation, Interest Rates & Labor: Pressure Points to Watch

Unemployment remains low, and while job switching has slowed, worker shortages in industries like construction and hospitality may raise wages.
The Fed has held rates steady, with one or two rate cuts possible by year-end. Treasury yields are holding at ~4.25%.
Inflation risk remains, particularly from tariffs, but this cycle looks more contained than 2022–2023.

Bottom line? Staying nimble matters.

Tax Planning Updates: What the One Big Beautiful Bill Changes

David Hilliard, EA, broke down the most significant tax changes which will impact nearly every taxpayer.

Tax Brackets Made Permanent

The lowered tax rates from the 2018 Tax Cuts and Jobs Act are now permanent, removing the 2026 “tax cliff” and offering greater long-term predictability.

SALT Deduction Temporarily Increased

The state and local tax (SALT) deduction cap rises from $10,000 to $40,000 through 2029.
High-income filers may see phase-outs; retirees with paid-off homes may not benefit.

Charitable Deduction Floor Coming in 2026

A new 0.5% AGI floor for charitable deductions begins in 2026, meaning smaller cash gifts may no longer count.
However, a new above-the-line deduction of $1,000 (single) or $2,000 (joint) will apply for standard deduction filers.

Planning opportunity: Consider charitable bunching or funding a Donor-Advised Fund in 2025 if giving is part of your strategy.

Campaign Provisions Now in Effect

“No tax on tips”: Deduct up to $25,000 in qualifying tip income (2025–2028).
Overtime deduction: Up to $12,000 deduction on premium pay, with limits.
Auto loan interest deduction: Up to $10,000, but only for U.S.-assembled vehicles purchased in 2025.

For Retirees: Rethinking Roths, RMDs, and Social Security Timing

A new $6,000 deduction applies to taxpayers over age 65, a partial concession in lieu of “untaxing” Social Security.
Roth conversion planning may shift as a result, especially for those holding off on claiming Social Security until age 65.
Chatterton continues to offer customized Roth conversion modeling as part of our tax projection process.

For Business Owners: Key Provisions to Leverage This Year

100% bonus depreciation is back and permanent for qualifying assets placed in service after January 19, 2025.
QBI (Qualified Business Income) deduction made permanent — valuable for S-corps, partnerships, and sole proprietors.
Pass-through entity tax remains a powerful planning tool, especially for high-income earners in high-tax states.

"If you’re not using the pass-through entity tax strategy, it’s time to talk to your advisor. That deduction alone could be worth thousands." – David Hilliard

Watch the Full Webinar On-Demand

If you missed the live event or want to revisit specific sections, we’ve made the OBBB& Beyond: Mid-Year Wealth & Tax Update webinar available on demand.

If you have any questions about how the OBBB might affect your wealth and tax planning, we’re here to help. Contact us today.

Sincerely,

The Team at Chatterton & Associates