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The Joint Committee on Taxation today posted their analysis of proposed changes to the current tax code. The 400+ page document is long but certainly easier to read than the tax bill that posted yesterday 5/12/2025.
Nothing final here but I think it will give a flavor to what may be coming in 2026.
I perused the document. Thanks for posting. I look forward to your thoughts after you make your way through the rest.
I think perusing is a great way to read a Joint Committee on Taxation analysis on a bill just coming out of the Ways & Means committee. The first 5 pages of JCX-21-25 is a topic index of a long analysis and should allow anyone interested to pinpoint tax matters that focus on what is most important to the reader.
Changing tax law is often compared to sausage making and we are early in the process. I get serious about understanding the coming changes when the conference committee meets to iron out the differences between the House and Senate bills. As there are proposed changes that impact tax year 2025 I hope changes are made final sooner rather than later. Tax software writers for both the IRS and private software companies need time to update their tax software and of course taxpayers would appreciate more than a handful days to update tax plans and implement year end strategies.
As an experiment, I asked Microsoft Co-Pilot to list in just two pages the provisions of JCX-21-25 as they relate to individual taxpayers. This is what I got:
JCX-21-25 outlines several tax provisions that impact individual taxpayers, focusing on extending and modifying existing tax benefits. Here’s a summary of key provisions:
Tax Rate Adjustments
Standard Deduction and Personal Exemptions
Child Tax Credit Enhancements
· The Child Tax Credit would be extended and temporarily enhanced, providing additional relief for families.
Qualified Business Income Deduction
Estate and Gift Tax Exemptions
· The higher exemption amounts for estate and gift taxes would be extended, reducing tax burdens on inherited wealth.
Alternative Minimum Tax (AMT) Adjustments
Itemized Deduction Limitations
Other Provisions
This summary provides an overview of the provisions affecting individual taxpayers. If you need a more detailed breakdown, you can find the full document here. Let me know if you’d like me to refine or expand on any section!
As a follow up, I then asked Co-Pilot to summarize the provisions related to individuals over the age of 65. Here’s the results:
For taxpayers over the age of 65, JCX-21-25 includes several provisions aimed at providing financial relief and tax benefits. Here’s a focused summary:
Standard Deduction Increase
Retirement Account Adjustments
Medical Expense Deductions
The threshold for deducting medical expenses is lowered, making it easier for · seniors to claim deductions for healthcare costs.
Social Security Taxation Adjustments
Estate and Gift Tax Exemptions
Long-Term Care Credits
These provisions aim to support financial stability for older taxpayers. You can find the full document here. Let me know if you need further details!
Of course, the quality of the response is only as good as the questions asked, but I am amazed at the ability of AI to summarize a massive document in seconds. Did it miss anything? I’m not planning to read 400 pages to find out, but you can experiment with asking more pointed questions.
Thanks Howard, what a great use of AI.
Two bullets on the list caught my eye (see below). I searched the document but I didn’t find anything in the JCX-21-25 that addresses these two points. Let me know the page number if you find them in the JCX-21-25 report.
As Howard points out in his posting the summary is from AI and is not authoritative.
The RMD age change to 75 is already law from Secure 2.0 for those born in 1960 and later. I am not aware of proposed changes to accelerate that change.
I expect the bullet point regarding SS benefits and lowering the tax burden for lower income retirees is AI being incorrect given that those I consider low income generally have a small social security benefit which is often the majority or all of their total income.
Thanks, Bill. I agree that AI is incorrect. AI generally shows its sources, which is always a good check. (I fall in the age 73 bracket and was interested to see if it got pushed to age 75.)
The Secure Act 2.0 adjusted the RMD age to start at 73 and gradually increase to 75. RMDs must begin by age:
Thanks Howard. There certainly are matters that appear to be designed get enough votes in the House to pass.
My favorite proposed junk provision is up to $10K of interest paid on some car loans that allows a non itemized deduction in tax years 2025-2028. (see pg 68)
Bad tax law from where I sit.
“Bad tax law from where I sit.”
Along those lines quite a few of the changes are only in existence through the end of the current administration. I wonder why. 🤔
My best guess is the requirements of the budget reconciliation act which allows the Senate to pass certain bills with a simple majority instead of a 60 vote majority.
Thanks, Bill, for posting the proposed tax changes. I didn’t know about the enhanced deduction for seniors (senior bonus) of $4,000 per individual (65 & over). This is in addition to the standard deduction of $33,200 (mfj).
I didn’t see a proposal for no tax on Social Security benefits in this draft (not surprised).
I would not be surprised the Ways and Means members found the problems of no tax on SS benefits too high given approximately half of the people currently getting social security benefits do not pay any income tax and for those who do pay income tax on some of their benefits a change no tax on SS benefits would create a field day for Roth conversions.
You can read about the proposed Enhanced Deduction for Seniors which starts on page 66 of the linked document. Interestingly, this, and some other proposed changes have an effective date for tax years beginning after 12/31/2024 so that likely means changes from what many may have been expecting on their 2025 1040 returns.
I have read about 25% of the linked JCX document and my initial takeaway is more complexity, not less.
For some reason Congress doesn’t get that simpler is better.
God, here I was thinking Elon Musk had another kid… 😂
I wish I had thought of that.
Thanks, Bill. Our taxes are different now that we are retired and not W2 employees. Looking forward to some of your thoughts on this. Chris
A flavor that runs through the proposed bill for many of the provisions that are being extended is that they sunset quickly. I would prefer longer certainty in our tax laws