Taxes

I WAS RANDOMLY scrolling on social media and saw this post:

“Can you just open an LLC and write things off?”
That’s a real question someone asked, and I’ve seen this question asked many times.
There are a lot of misconceptions around LLCs, their purpose, and how LLC changes your tax structure. With TikTok, there are “tax experts” sharing terrible advice, so let me clarify how it could be useful.
 
First, what is an LLC?

The IRS just published their 2026 inflation adjusted numbers.
Some notes:
1. Standard Deduction
In 2025, the standard deduction for a single taxpayer is $15,750 ($31,500 for married filing jointly). In 2026, the standard deduction is increasing by $350: $16,100 (single), $32,200 (mfj)
2. Brackets
2025 brackets:
10% for income $11,925 or less ($23,850 MFJ)
12% for income over $11,925 ($23,850)
22% for income over $48,475 ($96,950)
24% for income over $103,350 ($206,700)
32% for income over $197,300 ($394,600)
In 2026,

IMAGINE YOU ARE already doing all things possible to minimize your taxes:

You are maxing out your pre-tax 401k
You do tax loss harvesting
You did tax efficient placement
You are maximizing Roth IRA through Backdoor Roth

But what other strategies can you use to minimize taxes? You also might not want to start a business or buy real estate.
Another option that many people aren’t aware of is the cash balance plan (CBP).

Significant changes to tax law took effect in 2018. I heard some interesting comments from clients. Some didn’t believe taxes went down because their refunds didn’t increase. To be fair, taxes did go down for most people, but so did tax withholding from paychecks, keeping many refunds level with prior years. I guess people didn’t notice the extra take home pay. 
The other thing I sometimes heard was that they thought their tax return would fit on a single piece of paper.

THE IRS JUST released a new form called Schedule 1-A, which includes all the new tax bill deductions.
I wanted to quickly go through some of it, so that you are more aware of the new potential savings opportunities.
I’ve previously discussed some portions of the bill, but this is the first time we have a peek of the new lines.
All of these deductions are in addition to the standard deduction or itemized deduction.

The IRS released a draft Form 1040 and the new  Schedule 1-A for 2025. It shows calculations for the new some OBBBA deductions, including the No Tax on Tips, Overtime, Car Loan Interest, and the Enhanced Senior Deduction.

This morning the IRS in IR-2025-91 announced that the pending Secure 2.0 final regulations regarding catch-up contributions to qualified retirement plans will be published tomorrow, 9/16/2025, in the federal register.
My initial reading of a summary has two key takeaways for me.
A requirement that catch-up contributions that will require such catch-up contributions to be ROTH for certain taxpayers based their on earned income ($145K indexed) of the prior tax year.
The effective date of the new catch-up provision will now be for tax years after 12/31/2026,

Humble Dollar frequently posts articles about TIPS – Treasury Inflation-Protected Securities. This post is not about inflation protected bonds.
The OBBBA includes new code 224, a deduction for tax years 2025-2028, for up to $25,000 in qualified tips received during the year for cash tips received by an individual in an occupation that customarily and regularly received tips before 2024. That code section also includes subsection 224(d)(2)(B) which provides that tips do not qualify for the deduction if they are received in the course of certain specified trades or businesses —

I keep a spreadsheet that helps me estimate my current year taxes. As a result of tax changes from the Big Beautiful Bill and further tax changes resulting from the recent Ohio budget bill, I expect tax savings in 2025 in the neighborhood of $1800 on the Federal side and $300 on the State side. And, I expect further savings in 2026.
Political discussions are forbidden on the Humble Dollar site and this post is not political commentary.

THE OBBBA CREATED A NEW tax deduction for “qualified passenger vehicle loan interest” effective 2025 through 2028. 
It comes with a lot of rules and nuances, so I wanted to cover this topic a bit more in depth in case you are planning to acquire a vehicle soon.
So, what is “qualified passenger vehicle loan interest”?
It means any interest that was paid during the taxable year (e.g 2025) on a loan started after Dec.

I recently came across the tax estimation tools page on the Bogleheads Wiki. I found the information and links useful and think it is likely that other HumbleDollar readers will also.
It was interesting to me to learn to that the AARP free tax calculator that I often use appears to be a licensed version of the current Dinkytown program referenced in the Wiki article with the Dinkytown version being updated more frequently and thus the Boglehead’s recommend over the licensed versions.

The IRS recently released the new 2026 W-2 form.
Just as I predicted in the “OBBBA Tax Breakdown“, the IRS included new boxes for line 12 of the W-2:
TA – Employer contributions to your Trump account.
TP – Total amount of qualified tips. Use this amount in determining the
deduction for qualified tips on Sch. 1-A (Form 1040).
TT – Total amount of qualified overtime compensation. Use this amount
in determining the deduction for qualified overtime compensation on
Sch.

I live in a paid off house in Kansas City Missouri and I have 2 paid off rental properties here also. I eventually would like to move to Delaware. My idea is that I either do a 1031 exchange selling one of the rentals and buying a more expensive rental property in Delaware by about $200,000 more and then some day in the future, maybe in 4 years, move to Delaware and have that property become my primary residence.

I recently read that something in the secure 2.0 act allows taxes paid on annuity
income from a qualified, annuitized annuity will count toward a rmd from
a separate ira account. Is this accurate?

Suzie and I recently spent a few days in London, while there we grabbed the opportunity to visit a few great museums. We thoroughly enjoyed hours wandering the halls and displays of the Natural History Museum and the equally impressive Science Museum. Though I suspect it should have been obvious, I’ve only just discovered that both these world class institutions are funded by public tax receipts. In my mind, that’s a wonderful illustration of the tangible benefits of paying income tax.