Good morning, happy Monday, and happy Veteran’s Day!
A huge thank you to all the men & women who serve and have served in our miliary … we are free because of you! THANK YOU!!!
Today I have 2 announcements and 1 offer.
But first, my weekly quote …
“I believe we should all pay our taxes with a smile. I tried, but they wanted cash.”
– Anonymous
Well, we made it through election day! I told you the world would not come to an end 😊.
Congratulations to President-elect Donald Trump. There are a lot of important matters to address … I can only imagine the level of stress he carries on his shoulders. I’m glad I don’t have that job!!!
On to other news … things will directly impact you.
Today I have a couple of announcements that occurred over the last couple of weeks that I wanted to make sure to keep you updated on:
- Social Security has announced their annual cost of living adjustment (COLA) for 2025. Starting in January those receiving Social Security benefits will see an increase of 2.50%. That’s a $25 raise for every $1,000 of Social Security you were receiving. Example: if your 2024 Social Security benefit was $2,000, your 2025 benefit will be $2,050.
- The IRS has announced the tax brackets for 2025. Here is a chart comparing the current 2024 brackets to the upcoming 2025 brackets:
| Tax rate | Single 2024 income | Single 2025 income | Married 2024 income | Married 2025 income |
| 0% – standard deduction | 1st $14,600 | 1st $15,000 | 1st $29,200 | 1st $30,000 |
| 10% | $0 – $11,600 | $0 – $11,925 | $0 – $23,200 | $0 – $23,850 |
| 12% | $11,600 – $47,150 | $11,925 – $48,475 | $23,200 – $94,300 | $23,850 – $96,950 |
| 22% | $47,150 – $100,525 | $48,475 – $103,350 | $94,300 – $201,050 | $96,950 – $206,700 |
| 24% | $100,525 – $191,950 | $103,350 – $197,300 | $201,050 – $383,900 | $206,700 – $394,600 |
| 32% | $191,950 – $243,725 | $197,300 – $250,525 | $383,900 – $487,450 | $394,600 – $501,050 |
| 35% | $243,725 – $609,350 | $250,525 – $626,350 | $487,450 – $731,200 | $501,050 – $751,600 |
| 37% | $609,350 + | $626,350 + | $731,200 + | $751,600 + |
I plan to send you the full tax guide sheet once it’s available, but I wanted to provide you with a timely update on this recently released news.
The way taxes work is a bit tricky (maybe a lot tricky!) I’ll try to briefly explain here using an example.
Let’s say a married couple makes $250,000 in 2025, here’s how it plays out:
- The first $30,000 is tax free (the standard deduction)
- Note: this could be higher if you itemize
- So, we take $250,000 – $30,000 and get $220,000 of taxable income
- The next block of $23,850 is taxed at 10%
- That means tax on that block of income is $2,385 (10% of $23,850)
- The next block of income is $73,100 (the 12% tax bracket is income between $23,850-$96,950 so that is $73,100 of income taxed at this level)
- That means tax on that block of income is $8,772 (12% of $73,100)
- The next block of income is $109,750 (the 12% tax bracket is income between $96,950 – $206,700 so that is $109,750 of income taxed at this level)
- That means tax on that block of income is $24,145 (22% of $109,750)
- In this specific example the last block of income to be taxed is the income from $206,700 – $220,000 ($13,300 of income taxed at this level)
- That means tax on that block of income is $3,192 (24% of $13,300)
- Now we add together each of the taxes from each bracket:
- $2,385 from 10% bracket
- $8,772 from 12% bracket
- $24,145 from 22% bracket
- $3,192 from 24% bracket
- This equals a total tax of $38,494 on a joint income of $250,000 (that equals about 15.4% of income in this example is paid in federal income tax)
Ok, if this is enough to make your head hurt, I have some good news. 😊 Here is the offer I mentioned earlier:
We at Intentional Wealth have signed up for a tax planning software that can evaluate your tax return and provide not just a summary like that breakdown listed above in the example scenario, but also things that you can do to potentially maximize your tax situation in 2024. This is a complementary service we are offering our clients this year and if the feedback we receive from our client base is positive, we will plan to renew our subscription going forward.
To participate I simply need a PDF of your 2023 tax return. If you are interested, please provide me with your 2023 personal tax return with all the schedules. Email, fax, or physical copy is fine (feel free to ask your CPA to email directly to me if preferred). We plan on using the next month or so to dive deep into our client’s tax situations to provide opportunities for various tax strategies as we approach the end of the year.
I know that was a ton of information this morning. Thanks for hanging in there with me.
We are constantly looking for ways to provide more and more value to you as our clients and hope you find this tax planning software a useful tool.
Thank you for allowing us to be a part of your journey … as we enter the holiday season (and my wife starts watching an abundance of Hallmark Christmas movies), I hope you know how much we value and appreciate you as our client. Please reach out if there are any ways we can serve you better.
Make it a great week ahead!