Every piece of legislation is about making choices. This one did, in spades. The One Big Beautiful Bill Act spans almost as many pages as War and Peace and it covered way more than taxes. Viewed from 30,000 feet, it really represents a large set of choices that ultimately result in big cost shifts for all of us.

On the tax front, it almost goes without saying that higher-income households and small business owners made out the best. The special deduction given to pass-through business owners was made even more generous and is now permanent. And, the cap on the deduction of state taxes and property taxes was also raised significantly. These two changes, among others tax items, exclusively help high earners.

For moderate-income households, the tax picture also improved for some. New deductions were added for tips and overtime pay. And, seniors also got an added deduction that’s designed to offset taxes paid on Social Security benefits. Those were Trump’s campaign promises, after all, so they weren’t a big surprise to see.

Now, for lower-income households this bill was disappointing. For example, the child tax credit was increased by $200 per child. But, for the millions of households with little or no federal tax bill – due to the fact that they don’t earn enough money – they won’t see any of that extra $200. Given the tax cuts others will receive, that policy choice is hard to understand.

Added to that small insult for the poor is some real injury. The bill imposes some impactful changes to both Medicaid and the SNAP food program. There are added work requirements for some people and some new administrative hurdles to leap just to stay eligible. For some, they will even face added out-of-pocket costs.

These changes are expected to affect millions of households over the next decade. Importantly, states will now be responsible for covering a portion of the costs of both programs – expenses they don’t currently have budgeted. Almost certainly, states will trim both Medicaid and SNAP benefits to close the gaps. Ironically, this will likely hurt “red” states the most, even though the bill was passed exclusively by Republicans.

Climate policy took a hit, too. The bill eliminated a lot of energy efficiency incentives that were introduced only a few years ago. The tax credits provided for installing energy-efficient upgrades to homes will be gone by the end of the year and the tax credit provided for buying an electric vehicle will be gone by October.

Overall, it’s safe to say that this bill widens the gap between households with means and those without. It’s also fair to say that when budget discipline was imposed, support for low-income families was the first item on the chopping block.

Let’s not fool ourselves, however. There is no free lunch. The true cost of losing federal support for the poor will increasingly land at our feet in our local community. Unsolved problems don’t just magically disappear, they simply shift to others to solve.

Q: I recently inherited a regular IRA and a Roth IRA from my mother. I’ve heard something about a 10-year rule for my future distributions. But, I’m confused about how it all works from a tax standpoint for these two inherited accounts. Can you explain it?

A: The fact that your mom had already started taking her RMDs makes the rules a bit more complex. But, overall, it’s not too bad.

For your Inherited IRA, you will have to take annual distributions based on your age, not your mom’s age. In addition, you also have to fully distribute the entire account by the end of the 10th year, starting with the year following your mom’s passing. And, remember, your Inherited IRA distribution will be taxable income.

Things are treated a little differently with your Inherited Roth IRA. First, there’s no requirement to do annual distributions. But, the 10-year rule still exists. You just have to empty out your Inherited Roth by the end of that 10th year. Finally, assuming your mom’s Roth IRA was started at least five years ago, your Inherited Roth distributions will be tax-free.

The difference in tax treatment between these two inherited accounts is important to understand. Your Inherited IRA distributions will increase your taxable income. Your Inherited Roth IRA distributions won’t.

Depending on the size of your inheritance, you might want to spread out your Inherited IRA distributions to manage your tax picture. Of course, for your Inherited Roth IRA, you should let that account grow tax-free for the full 10 years.

Q: I’ve always made cash donations, but a friend of mine recently told me I could donate some of my appreciated stocks instead. Why is that a better way?

A: Donating appreciated securities, like individual stocks or even mutual fund shares, has a couple of advantages over just donating cash.

To start, when you donate appreciated shares, you still get to deduct the current value of those gifted shares. If you donate $10,000 worth of stock, you can deduct that $10,000, just like you do with your cash gifts (assuming you itemize your deductions, that is.)

But, here’s the added tax benefit. When you give away appreciated shares, you get to avoid paying tax on any of those built-up capital gains. Let’s say you originally paid $3,000 for a stock that’s now worth $10,000. If you sold that stock and donated cash, you’d owe tax on that realized gain of $7,000. Donating those shares “in-kind” directly to the charity and letting them sell it as a non-profit results in no tax at all. It’s a win-win.

Before moving forward, be sure to call the charity to make sure they are able to accept donated shares. Most can. It’s a pretty easy process.

If you’ve worked up the guts to glance at your portfolio lately, you might be pleasantly surprised. It might even look like very little has happened this year. Of course, it has felt like a malfunctioning roller-coaster ride. In fact, 2025 resembles Lemony Snicket’s “A Series of Unfortunate Events.” It’s been one thing after another.

It all started when the new administration took office. The onslaught of executive orders, slash-and-burn DOGE tactics and abrupt policy reversals immediately shook investors and retirees, alike. To be honest, I’ve lost count of how many people have expressed worry over the future of Social Security. That part is particularly unfortunate.

Then came the tariffs. As we all know by now, in early April President Trump unveiled a tariff policy that was seemingly devised by a procrastinating, high-school student relying on ChatGPT. To put it nicely, it made no sense. In response, the stock market plunged nearly 15% in a matter of days. Succumbing to Wall Street’s pressure, President Trump tweeted out a 90-day “pause.” The market then spiked 10% in the span of just an hour.

Since cooler heads appear to have prevailed, the stock market has clawed its way to within spitting distance of its all-time high set in mid-February. But, we aren’t out of the woods. The new tariffs and their inflationary and economic pressure remain a focus. The Fed’s path is very murky, to put it mildly. In classic economist-speak, on one hand the economy is slowing. But, on the other hand, tariffs are inflationary. I’m pretty sure derogatory jabs by President Trump are not making things any easier for the Fed.

The promised avalanche of big trade deals to come has yet to materialize. The fact that the April tariffs might soon be ruled as illegal could explain the slow progress. Why negotiate with a policy that might vanish on its own? Instead, we’ve only seen a few vague announcements of “frameworks.” Nevertheless, the markets seem to believe level-headed adults have taken things over. It’s not hard to imagine this as wishful thinking.

Adding to the mix of uncertainty, extending the 2018 tax cuts is now in jeopardy. If the massive tax and spending bill fails under its own weight, taxes could rise for almost every household. Some insist on sweeping spending cuts. Others refuse to budge on more tax breaks. It’s a game of legislative whack-a-mole. We shall see.

If you’ve found yourself mirroring the wild market moves with similar emotional swings, this recent recovery might offer a rare shot at a review and reset of your portfolio’s risk. This might mean raising some cash and trimming your stock market exposure. 

This is not a prediction of doom-and-gloom ahead. As I’ve learned over the years, everything should be done with a deep sense of humility. After all, nobody can predict markets with much consistency. All things in moderation is a sound guiding principle, especially in an environment seemingly devoid of it.