Trump's 2017 tax act, the Tax Cuts and Jobs Act, was the largest federal tax overhaul since 1986: it lowered corporate and individual rates, added a 20% deduction for pass-through business income, and paid for part of that by capping the state and local tax deduction at $10,000 per return as enacted.
A business owner in a high-tax state saw a lower top bracket in 2018 and, often, a tax bill that barely moved. The same law that cut the rate also capped the state and local tax (SALT) deduction, so income and property taxes that used to come off the top stopped coming off above the cap. The act did not eliminate the SALT deduction, as is often repeated. It capped it, and for many high earners the cap offset part of the rate cut.
That is the part of the 2017 act most commentary skips. It is usually discussed as a single number: a tax cut, a deficit, a win or a giveaway. For an individual business owner or investor, the law was a set of trades. Some rates went down. Some deductions got smaller or disappeared. Several provisions were written to expire, then rewritten again by Congress in 2025.
The lesson of the 2017 act is that the headline rate is not your rate, and no tax code holds still long enough to build a multi-decade capital plan on it. Deductions can be capped by one bill and expanded by the next. A plan that only works under one set of rules is a bet on Congress.
At BetterWealth, we have structured more than 2,000 whole life policies across all 50 states, and tax law changes are one of the most common reasons business owners start asking how their capital is positioned. We cover tax legislation because the tax treatment at the moment you access capital is the variable Congress keeps changing. This piece covers what the 2017 act changed, whether it was just deficit spending, what the 2025 law kept, how tax treatment fits inside The And Asset, and where the whole life marketing around tax changes goes wrong.
- The 2017 act was the largest federal tax overhaul since 1986, cutting rates and limiting deductions in the same bill.
- It capped the state and local tax deduction at $10,000 per return; it did not eliminate the deduction.
- The 2025 reconciliation law made the individual rate structure and the pass-through deduction permanent and raised the SALT cap temporarily.
- High earners in high-tax states often saw the SALT cap offset part of their rate cut, so their effective savings were smaller.
- Under current law, a loan from a non-MEC whole life policy is not taxable income while the policy stays in force.
- The And Asset rule holds regardless of tax law: only borrow when the deployed return beats the carrier's loan rate.
01 / The changesWhat Did Trump's 2017 Tax Act Actually Change?
Trump's 2017 tax act lowered tax rates for corporations and most individuals and paid for part of the cost by limiting deductions. The formal name is the Tax Cuts and Jobs Act, and it was the largest rewrite of the federal tax code since 1986.
For businesses, the headline was the corporate rate, cut from 35% to 21% on a permanent basis. For owners of pass-through businesses (S corporations, partnerships, sole proprietors), the act added the Section 199A deduction of up to 20% of qualified business income, with limits for high earners in specified service fields such as health, law and consulting. For individuals, brackets came down, the standard deduction roughly doubled, and personal exemptions were suspended through 2025, a change the 2025 law made permanent.
The offsets hit high earners hardest. The SALT deduction was capped at $10,000 per return. The deduction for home-equity interest was suspended unless the debt was used to buy, build or substantially improve the home, a limit made permanent in 2025. Many individual provisions were written to expire after 2025, which set up the next round of legislation.
Lower rates. Smaller deductions. Both in one bill.
02 / The debateWas the 2017 Tax Act Just Deficit Spending?
No. The 2017 act added to the deficit, but it was not only deficit spending, because a large share of its cost was offset by revenue-raising changes inside the same bill. The Joint Committee on Taxation's official estimate put the net ten-year cost at roughly $1.5 trillion before economic feedback. That is the net figure after the offsets, not the gross cost of the cuts.
The SALT cap was one of the largest of those offsets. Limiting the home-equity interest deduction, suspending personal exemptions and changing how some business losses and interest could be deducted all brought in revenue that partly paid for the rate cuts. The law changed who paid. It also changed how much.
For a reader managing capital, the useful question is who absorbed the offsets. A W-2 earner in a low-tax state with few itemized deductions got most of the rate cut. A business owner in a high-tax state with large income and property tax bills gave a portion of it back through the SALT cap.
A tax cut is an average. Your tax bill is not. The 2017 act lowered rates and raised the after-tax cost of state and local taxes for high earners in the same stroke.
03 / Who it hitWhy Did the SALT Cap Matter So Much for Business Owners and High Earners?
The SALT cap mattered because high earners in high-tax states used to deduct their full state income and property taxes (unless they were already paying the alternative minimum tax, which disallowed the deduction), and the cap limited that deduction to $10,000 regardless of how large those taxes were. A household paying $61,000 a year in state income and property tax went from deducting all of it to deducting $10,000 for 2018 through 2024.
Pass-through owners felt it more. Their business income flowed to their personal return, so state tax on that income ran into the same cap. Many states responded with elective pass-through entity taxes that let the business pay state tax at the entity level, where it can be deducted as a business expense. Whether that election helps depends on the state, the entity and the owner's income, which is a question for a CPA.
Home equity changed too. The home-equity interest deduction was suspended by the 2017 act and made permanent in 2025 for debt not used on the home. Interest on a HELOC used for a business or a rental can still be deductible as business or investment interest under the interest-tracing rules, but only if the funds are traced properly, so confirm it with a tax advisor before counting on it.
What the 2025 Law Kept and Changed
The 2025 reconciliation law (Public Law 119-21) made the 2017 individual rate structure and the Section 199A deduction permanent. It raised the SALT cap to $40,000 for most filers for 2025, with small annual increases through 2029. The higher cap phases down once modified AGI exceeds $500,000, reaching a floor of $10,000, and the cap returns to $10,000 for everyone in 2030.
Read that closely if you earn well above $500,000. The higher cap may never reach you. And the whole increase is scheduled to end in 2030.
Temporary relief is still temporary.
04 / The lessonWhy Should a Capital Plan Never Depend on One Tax Code?
A capital plan should never depend on one tax code because tax law changes on a timeline far shorter than the life of the plan. The 2017 act was the broadest rewrite since 1986. Eight years later, Congress rewrote parts of it again. A business owner building a 25-year plan should expect several more rewrites before it is done.
The practical move is to know how each bucket of capital is taxed when you access it, and how exposed each bucket is to a rule change. A 401(k) is taxed as ordinary income at withdrawal, at whatever rates apply in that year. A brokerage account is taxed on dividends each year and on gains when you sell, under whatever capital gains rules apply then. A plan that leans on a single deduction can lose its edge when that deduction is capped.
Whole life insurance has its own set of rules under IRC Section 7702, and those rules can change too. No structure is immune to Congress. The goal is diversification of tax treatment, so a single bill cannot rewrite the economics of your entire balance sheet.
05 / The frameworkWhere Does The And Asset Fit in a Tax-Aware Capital Plan?
The And Asset fits as a capital base with a distinct tax treatment, not as a tax shelter. Under current law, cash value growth in a policy that meets Section 7702 is tax-deferred.
Where IBC Ends and The And Asset Begins
IBC says you can use a whole life policy as a personal banking system for any purchase. The And Asset says you only deploy capital from the policy when the borrowed dollars will produce a return greater than the carrier's loan cost, because anything less is an expensive way to spend money. Tax treatment does not change that test. A loan that is not taxable income, spent on a depreciating purchase, is still a loan that costs more than it earns.
Nelson Nash pioneered the idea of using whole life insurance as a personal banking system in Becoming Your Own Banker. His core insight holds: you either lose money paying interest to outside lenders, or you lose it to the opportunity cost of capital sitting idle. The And Asset shares roots with IBC but operates on different principles.
Many IBC marketers say you are paying yourself interest. You are not. The interest goes to the carrier. Your return is what the deployed capital earns elsewhere while the policy keeps compounding at the dividend rate net of mortality and expense charges.
The math has to work. Taxes do not fix bad math.
The tax treatment of a policy supports the case for the right person. It cannot make the case alone. If the deployed return does not beat the loan rate, the tax treatment does not rescue it. You have paid the carrier to lose money.
06 / How it worksHow to Build a Capital Plan That Survives Tax Law Changes
A capital plan survives tax law changes when you know how every bucket is taxed at access and hold part of your capital under a different set of rules. Here is the sequence we use with clients.
- Map how each bucket is taxed at access. List where your capital sits: retirement accounts, brokerage, real estate equity, business reserves. Write down how each is taxed when you pull money out, not only while it grows.
- Flag every deduction the plan depends on. Mark any part of the plan that only works because of a specific deduction, rate or cap. The 2017 act showed a deduction can be capped by a single bill.
- Structure a policy for cash value. Design with a minimal base premium and a heavy paid-up additions rider, blended with term if needed to stay under the MEC limit. Staying under that limit is what keeps policy loans outside taxable income.
- Fund consistently and let it capitalize. Cash value trails contributions in the early years. Break-even typically arrives in year 5 or later for a healthy insured. Any illustration showing a year-two break-even is marketing.
- Borrow only when the return beats the loan rate. Take a policy loan only for an activity whose return exceeds the carrier's loan cost, and repay from the cash flow that activity produces. If no such use exists, do not borrow.
This Fits a Specific Person Doing Specific Things.
It Fits You If
- You run a business or invest actively and deploy capital
- You have a 10+ year horizon for the capital
- You can name uses for capital that beat the loan cost
- You want capital under a different set of tax rules
It Does Not Fit You If
- You want a tax shelter and nothing else
- You need the cash back within a few years
- You carry high-interest debt looking for a quick fix
- You cannot identify a productive use for borrowed dollars
If you are in the first column, a 30-minute conversation will tell you whether a policy belongs in your plan. If you are in the second, we will tell you that too.
Book a Discovery Call07 / The mathDoes the Deployed Return Clear the Loan Rate?
The return on whatever you deploy must exceed the carrier's loan rate, or you should not borrow. That test sits above every tax consideration. Loan rates vary by carrier and rate environment. At the time of writing many carriers fall in the 5 to 6% range, but treat any specific number as a variable to verify with the carrier.
The structure is simple. You borrow at the loan rate. The policy keeps compounding on its full cash value, subject to the carrier's recognition method. Your deployed capital earns its own return. If that return is higher than the loan cost, the same dollar has done two jobs. If it is lower, you have borrowed money to lose money slowly.
Leave any interest deduction out of the model. If a deal only clears the loan rate with the deduction, it does not clear the loan rate.
If the deal does not clear the loan rate, do not borrow.
08 / The pitchWhere Do People Get Tax Changes and Whole Life Wrong?
People get it wrong when they treat whole life as a response to a tax headline rather than a capital decision. Every major tax change brings a wave of "taxes are going up, buy whole life" pitches, and most of them oversell.
The first error is the phrase "tax-free returns" with no structure behind it. Policy loans are not taxable income only while the policy is in force and not a MEC. Surrender a policy with loans outstanding, or let it lapse, and gains above your basis can become taxable. The second error is selling the tax treatment to someone who has no use for the capital. The third is ignoring the early years: cash value does not catch up to contributions before year 4, and usually not before year 5.
Marketers have ruined the way this should be explained. A policy is not a way to beat Congress. It is a capital base with a known set of rules under current law, and it earns its place only if you deploy the capital well.
If someone sells you whole life because of a tax headline, ask what you will do with the capital. If neither of you has an answer, it is the wrong purchase.
The Frameworks Behind Our Policy Designs, in One Place.
The And Asset Vault holds the calculators, design frameworks and structuring decisions we use when we model a policy against a client's existing capital. Free and email-gated.
Open the Vault09 / The tradeoffsBenefits and Real Tradeoffs
A properly structured policy gives you capital under a separate set of tax rules, but it costs time, early liquidity and discipline. Both sides belong on the table.
On the benefit side: under current law, cash value grows tax-deferred, non-MEC loans are not taxable income while the policy is in force, the carrier cannot call the loan as long as the loan balance stays below the cash value, and the policy compounds on its full value while capital is deployed elsewhere, subject to the carrier's recognition method (direct or non-direct). Unlike a HELOC, no lender can freeze access in a downturn.
On the cost side: early cash value runs below premiums paid for the first several years. The policy carries mortality and expense charges that a brokerage account does not. Loan interest goes to the carrier. The tax treatment is set by Congress and can change. And the policy only pays off if you fund it for years and deploy the capital into something that out-earns the loan.
The policy pays off for the owner who funds it for years and borrows only when the math works.
10 / Head to HeadHow the Main Capital Buckets Are Taxed at Access
The table compares four places a business owner keeps capital, using an illustrative $100,000 of access and an illustrative 6% borrowing rate. Rates and limits change, so confirm current figures with a tax advisor.
| Dimension | The And Asset Policy Loan | Traditional 401(k) | Taxable Brokerage | HELOC |
|---|---|---|---|---|
| Tax on Accessing $100,000 | $0 while in force and not a MEC | Taxed as ordinary income; before 59½, generally plus a 10% penalty. A 401(k) loan avoids the tax, but it is usually capped at $50,000, must be repaid, and the loaned amount stops growing | Tax on the gain portion only, at capital gains rates if held over a year | $0 (it is debt) |
| Annual Cost on $100,000 | About $6,000 interest to the carrier; policy keeps compounding | No interest, but the withdrawn $100,000 stops growing | No interest, but the sold $100,000 stops growing | About $6,000 interest to the lender; rate usually variable |
| Interest Deductibility | Narrow; depends on how funds are used and traced | Not applicable | Not applicable | Narrowed after 2017; see section 03 |
| Exposure to Rule Changes | Section 7702 rules set by Congress | Future ordinary income rates | Capital gains rates each year | Lender terms and deduction rules |
Tax on access. The policy loan and the HELOC are both debt, so neither triggers income tax. A 401(k) withdrawal is taxed at the rates in effect that year, which is exactly the variable the 2017 and 2025 laws kept changing.
Cost. On $100,000 at an illustrative 6%, the policy loan and the HELOC cost roughly the same $6,000 a year. The difference is that the policy's cash value keeps compounding while the loan is out, and the carrier cannot freeze or call it.
Rule exposure. Every bucket depends on Congress. Holding capital across buckets with different rules is the hedge; no single bucket is.
A Composite: The Contractor Who Stopped Planning Around Deductions
Consider a 46-year-old owner of a commercial HVAC contracting company, structured as an S corporation in a high-tax state. This is a representative composite with illustrative figures, not a single named client. After the 2017 act, the SALT cap offset part of her rate cut, and even once her CPA made the state's pass-through entity tax election, her property and personal state taxes still ran into the cap. The same CPA told her the 2025 increase to the cap would phase down to $10,000 at her income. She decided to stop building her long-term capital plan around deductions and to hold a portion of her reserves under different rules.
The policy replaced her long-term capital reserve, not her near-term equipment financing. She funds $52,800 a year on a 15/85 base/PUA design: $7,920 of base premium and $44,880 of paid-up additions, blended with a term rider to stay under the MEC limit.
Through year three, cash value trails contributions: $149,960 against $158,400 paid in. At year five, cash value crosses contributions for the first time. By year seven, with $369,600 contributed, cash value sits near $391,270.
In year seven, a retiring competitor offers to sell his book of recurring commercial maintenance contracts for $163,900. She borrows the full amount against the policy at an illustrative 5.5% loan rate, or about $9,015 of interest in the first year. The contracts produce about $27,340 of net cash flow in the first year because they are existing, renewing customers her crews can service from the same trucks. She repays the loan on an 84-month schedule, about $28,260 a year, covering nearly all of it from that cash flow and the small balance from business cash flow. She and her CPA did not count on deducting the loan interest; if tracing supports it, that is upside.
The tax treatment made the structure efficient. The $27,340 return against a $9,015 loan cost made it worth doing.
An Honest 30 Minutes on Whether This Fits You.
We have seen this strategy work exactly as designed, and we have seen it fail. On a discovery call, we look at your capital, how each piece is taxed, and whether a policy belongs in your plan at all. We will give you the honest answer either way. If you would rather learn first, The And Asset YouTube channel and the BetterWealth YouTube channel go deep on the math, and The And Asset book lays out the full framework.
Book a Discovery CallFAQTrump's 2017 Tax Act Questions
What was Trump's 2017 tax act?
Trump's 2017 tax act is the Tax Cuts and Jobs Act, the largest federal tax overhaul since 1986. It cut the corporate rate from 35% to 21%, lowered individual brackets, roughly doubled the standard deduction, added a deduction of up to 20% for pass-through business income, and capped the state and local tax deduction at $10,000 per return as enacted.
Did the 2017 tax act eliminate the state and local tax deduction?
No. The 2017 act capped the state and local tax deduction at $10,000 per return ($5,000 married filing separately); it did not eliminate it. The 2025 reconciliation law raised the cap to $40,000 for most filers for 2025, indexed up about 1% a year through 2029 ($40,400 in 2026), phasing down above $500,000 of modified AGI and returning to $10,000 in 2030.
Was the 2017 tax act just deficit spending?
No. The act added to the deficit, with the Joint Committee on Taxation estimating a net ten-year cost of roughly $1.5 trillion before economic feedback, but that is the net figure after large offsets such as the SALT cap and the loss of personal exemptions. The bill shifted who paid as well as how much.
Are the 2017 tax cuts permanent?
Most are now. The corporate rate cut was permanent from the start, and the 2025 reconciliation law (Public Law 119-21) made the individual rate structure and the Section 199A pass-through deduction permanent. Its higher SALT cap is temporary and returns to $10,000 in 2030, and Congress can change any of these rules again.
Is HELOC interest still deductible after the 2017 tax act?
Only in narrower cases. The 2017 act suspended the deduction for home-equity interest unless the debt was used to buy, build or substantially improve the home (a limit made permanent in 2025), but interest-tracing rules can let HELOC interest on funds used for a business or rental count as business or investment interest. Confirm tracing with a tax advisor before counting on it.
How are whole life policy loans taxed?
Under current law, a loan from a whole life policy that is not a modified endowment contract is not taxable income while the policy stays in force. If the policy lapses or is surrendered with loans outstanding, gains above your basis can become taxable, so the loan must be managed, not ignored.
Can I deduct the interest on a policy loan?
Do not assume you can. Deductibility depends on how the borrowed funds are used and traced, and the rules are narrow, so build your math without the deduction and treat anything your tax advisor confirms as upside.
Does whole life insurance protect me from future tax law changes?
No structure is immune to Congress. A whole life policy holds capital under Section 7702 rules, which differ from the rules for retirement and brokerage accounts, so it diversifies your tax exposure rather than eliminating it.
What is The And Asset?
The And Asset is BetterWealth's framework for using a properly structured whole life policy as a capital base, built on Nelson Nash's foundation but operating on different principles. You only borrow against it for an activity that returns more than the carrier's loan cost, so your dollars do two jobs at once: the policy keeps compounding while the deployed capital earns its own return.
How is The And Asset different from infinite banking?
IBC, built on Nelson Nash's work, is often taught as a personal banking system for any purchase. The And Asset says you only deploy borrowed capital when the return clears the carrier's loan cost, and if you cannot name that use, you do not borrow. The policy is the capital base, not the destination.
Do you pay yourself interest on a policy loan?
No. The interest on a policy loan goes to the insurance carrier, not to you. Your return comes from what the borrowed capital earns elsewhere while the policy keeps compounding at the dividend rate net of mortality and expense charges.
When does whole life cash value exceed the premiums paid?
For a healthy insured on a well-designed policy, cash value typically catches up to cumulative premiums in year 5 or later, and not before year 4. Any illustration showing break-even in year one or two is not realistic.
- H.R. 1, 115th Congress (Congress.gov): the text and history of the 2017 Tax Cuts and Jobs Act.
- Joint Committee on Taxation, JCX-67-17: the estimated budget effects of the conference agreement for H.R. 1, including the net ten-year cost.
- Congressional Research Service, Tax Provisions in P.L. 119-21: the 2025 reconciliation law's changes to the SALT cap, individual rates and Section 199A.
- IRS, One, Big, Beautiful Bill Provisions: IRS guidance on the 2025 law's individual and business provisions.
- IRC Section 164 (Cornell Law): the deduction for state and local taxes and its limits.
- IRC Section 7702 (Cornell Law): the definition of life insurance behind the tax treatment of cash value and policy loans.
- Nelson Nash, Becoming Your Own Banker: the origin of the infinite banking concept.
- BetterWealth resources: The And Asset book, The And Asset YouTube channel, and the BetterWealth YouTube channel.
I founded BetterWealth to treat life insurance as a capital tool, not the product most people get sold. Our team has structured more than 2,000 policies across all 50 states. I wrote The And Asset and host the BetterWealth and The And Asset YouTube channels. If you want an honest read on how your capital is positioned for the next tax change, book a discovery call. We will tell you if a policy does not fit.