In this video, we're going to be talking about the Big Beautiful Bill and the tax benefits slash incentives that you get as an entrepreneur and an investor. I will say this, I'm not going to comment on my belief on the Big Beautiful Bill as it relates to helping America. My hope is that this is going to be doing great things for America. But the reality is, if you're an entrepreneur, if you're an investor, this Big Beautiful Bill helps you in some significant ways. And sometimes it's hard to know, like, how is this going to benefit me? We got Garrett, Rochetto. the person that's running Dereba, which is our tax arm at Better Wealth. We, by the way, help people pay less in taxes, get tax strategies, file their taxes. And so if you're interested in learning more about that, we'll have links down below. But I asked Garrett, who's new to this whole content game, to come on and give 10 of the top incentives and benefits that you need to be aware of and not just be aware of, but learn how you can apply this into your tax strategy. And so Garrett, welcome to the Better Wealth Show. and I'm excited, man, to... to learn about how we can take this bell and benefit our families. Amazing. You know, as Caleb mentioned, there's goods and bads with everything, and I'm really excited to talk about them. I'll also mention some of the trade-offs that this bill actually has as well that aren't necessarily as good. So there's a bunch of benefits, but also, you know, you can't have all good. So we'll talk about the bad as well. Okay. Yeah, that's kind of... Overall, though, I think the big talking point is... for business owners, lots of benefits. And then the real question is, are we going to be able to pay for this over a long period of time? And would the pitch be that you give incentives back to the value creators in the economy that the GDP will grow and be able to pay for it in the long run? Is that the overall pitch to why they're giving these benefits? Yeah, for sure. So the biggest critique of this bill is that it's a three... trillion dollar deficit increase. That's the biggest issue with it. And to be honest, when I heard about it, I was not a fan. And there's still things in it that I'm not a huge fan of. However, if we're talking about the business implications here, this is the biggest restructuring of business tax overhaul since 2017. And it's far more vast than even the 2017 changes. So from the business standpoint, great. We can talk again a little bit about if that's going to boost the economy to pay for that $3 trillion, but that's a little bit of a different conversation. So as we go into these top 10, Caleb, definitely ask me any questions you want. I'll kind of specify which ones I think are really huge for businesses, especially in kind of the realm that Better Wealth works in. But the first one is going to be the 100% bonus depreciation. This is one of the biggest, if not the biggest things in this bill because now business can immediately deduct their full cost of really anything of qualifying property. And that can be so many different things. It can be merchandise, equipment, computers, furniture. It can be when you're doing a remodel. Like I said, this is all in effect after January 20th, 2025. This includes certain non-residential structures as well, which is kind of crazy, but used in production. So What the... If you're a manufacturing business, this is one I've used in a few other conversations I've had with clients. When you spend $1 million on new equipment in 2025, under this bill, you can deduct that amount immediately rather than depreciating it over several years, many times over 15 to 30 years. And this means serious cash flow savings in the short term, money that you can either reinvest, money that you can use to... even build, you know, more in the company or just grow other parts of the business. But it just, whether that's hiring, right? It gives you a lot more capital instantly to do with as you please. So for example, some of the ways that this could apply is if you buy short-term rentals and you qualify as a, you know, real estate professional, you could potentially write off the entire cost of that house against your W-2 income. I know that's a strategy that I think is going to get potentially better with the big beautiful bill. You could write off qualifying purchases from cars if they're over 6,000 pounds. You correct me if I'm wrong. You're the tax professional, but it's like you potentially, if that's done for business, could write that off. There's people that are saying like from an airplane standpoint, if you buy an airplane in your business, buying machinery, if you buy machinery. And I also, as an investor, you may want to think about this because there's there's people out there that are saying hey invest your money in certain strategies get the cash flow get the appreciation but then also get the the uh the the tax benefit as well so you're getting appreciation which is hopefully growth getting cash flow which is beneficial but then At the same time, is it possible to get a tax benefit as well? And these are things that I'm seeing as an investor as opportunities. And so what did I say that you would add or like to subtract to some of the things that knowing that this is a thing that you should be aware of? Yeah, no, I really like that you brought up what you did. So one thing I would say is as far as the plane, the plane is still hard because you still have to this, as I said in it, it still has to be a qualifying. event, a qualifying purchase, right, or anything. A lot of times, planes, it's hard to make that a qualifying purchase. But as far as everything else you said, you're 100% correct. And this is where I think you want to make sure you're very honest with your CPA or who you're going to as well, because this is very new, right? I know for a fact most accountants already know about this 100% bonus depreciation. I also know that a big portion of them are not going to say, you know write that off all right now. They're not going to give you that advice. So make sure you're proactive in that way too. But no, Caleb, I think you nailed it on the head with everything you said. That's number one. What's the second thing on the list? Yeah. So immediate R&D expensing. So research and development. This, which I love that you already kind of brought it up, is huge in the investing world. So as a business, a lot of times at the end of the year, you may have, you know, you're looking at your tax liability. You may have $500,000 and you're like, what should I do with this, right? Are we investing it? Are we reinvesting into the business? Are we putting it into an investment account? Are we hiring more people? Like, what are we doing with that money? We don't normally want to just pay all the taxes on it. We want to do something with it, right? We probably wouldn't want to take a distribution for that amount. I mean, so you look at where that money goes. Well, R&D is getting a huge overhaul in Section 104 had previously required the amortization of R&D costs over five years. This bill, the big, beautiful bill, now full expense of domestic research and experimental expenses in the year. So current year, you can deduct everything. This is going to be humongous for biotech companies who invest heavily in lab research, although we don't like them medical companies, right? This is huge for some of these that can now, I mean, deduct everything. It's a huge win. for the innovative firms in our country. And as you know, a lot of stock is in the biotech. So you're saying that this should help when it comes to investing in some of these companies, but as a small business owner, how can we take advantage of this? Like if I'm thinking even like what we're doing with Better Wealth, I'm looking at potentially building out calculators and some AI stuff and all like, what do I need to do to be able to get some of these credits or or deductions. Yeah, so with tax, everything is based on documentation, documentation, documentation. So for your example, Caleb, that research and development cost, we can write off for better wealth now with this big, beautiful bill. And it can, instead of, you know, just taking it as sometimes some of that stuff didn't even qualify for a business expense, depending on what it is, we're, again, able to completely deduct that. And, and really any company, I would say, in the sphere of how we use it, it has to be research and development. That's a little bit more of a niche for some companies is they're not always researching or developing anything. The people who are again, huge benefit, but that's why I also bring up, think about this when you're actually looking in the investment realm as well, because as a business again, unless you're really cash strapped at the end of the year, you normally have some liquid cash, you don't want to pay taxes. directly on it, it's good to look potentially into some of these companies because I can guarantee you some of these biotech companies are going to explode. So I'm going to ask a dumb question, but that's why I'm here is, okay, so if I'm developing, let's say research and development, there's a lot, most cases I can write all of that off. I'm just thinking like developing an app or developing, you know, research and development, like all the expenses that go into that, I would imagine I could write off that. That's nothing new. The real question is, what other benefits? Are they bringing back credits? Are they actually creating an incentive to do research and development? And again, you talk about documentation, but how can small business owners actually take advantage of this? Yeah. So the reason you couldn't before is because if it was considered research and development, it had to be amortized over a five-year period. Oh, you couldn't write that whole thing off in that one year. No, no. And when you think about it, right, the reason this is a huge for innovation is because most of these kind of things happen pre-revenue. Businesses don't, even the big companies don't have $500 million or, and I know that's a big number, but these humongous amounts of change to go throw into research and developing. But now, again, it can, it doesn't have to be pre-revenue. It can be taken right away, which again, this is going to keep cycling. money through the business instead of them being cash strapped. I love it. Cool. Cool. Okay. Now, what's the next thing on the list? Yeah. So it's earnings before interest, tax depreciation, and amortization. So do you know anything about this, Caleb? It's like EBITDA-based interest deduction? Correct. This allows for highly leveraged and capital investment businesses such as real estate, which I know we have a big real estate following, but real estate manufacturing. and deduct more of their interest expenses. Interest is always a big pain point for people in the real estate game. So I mean, consider, for example, a construction firm considering a major project under the EBITBA rule, they can now deduct more interest expense. Now, this is a little confusing still, but they can deduct more interest expense critical for debt-heavy businesses managing large capital expenditures. This can be done in a smaller realm too. It doesn't just have to be large, but you can imagine, again, it's prolonging this process of giving the business more money to work with so they don't have to feel like they're pinching every penny just to get through. Yeah. I guess this is going to be like a follow-up question that I have every time. How do we apply that in our own life? What are the actual steps that we need to do to benefit from this? Yeah. So again, this is a little bit more of a niche one. We're going through the list here, but this is one of the ones that, again, you're looking more at from a standpoint of if we're investing, but then also in the real estate game, just some of the people that we work with, this is going to benefit them because they have a portfolio of 10 to 50 properties. and now they're going to be able to deduct more of that interest expense where previously you weren't able to actually deduct it. That was just hitting the expense. I understand. And yeah, it's a more opportunity on real estate though. And, and I don't know if this is on your list, but if you buy an American car and you finance it, there's interest deduction there. And then also with the salt cap increasing. that also helps. So you may be looking at this and say, hey, this doesn't affect me, but that same, I believe the same concept is being brought down to the consumer. Is that, is that same concept there? It is. And we'll talk about this. Because that's, again, I labeled it specifically as one of the important ones, because it is a huge one for a lot of everyday people. Cool. What's the next one on your list? So permanent section. 199A deductions. This is again a niche one that a lot of people don't know, but this is a very important one. I mean, this is huge. So this bill permanently extends the 20% QBI deduction for pass-through entities. If you don't know a pass-through entity is like a solo, a proprietorship, partnership, S-corp, anything like that. This is especially beneficial for small businesses and medium-sized businesses as they reduce their effective tax rate. So I mean, let's again, just use a real life example. If you're... a business that is earning $200,000, $150,000 a year, you can permanently now deduct 20% of that income under Section 199A. If you think about that 20%, that's $30,000 of potential tax-free income. I mean, that's huge. This is a huge tax planning scenario that people are going to hopefully be able to use, but it's going to be a huge benefit for really anyone in... in the business world. This isn't industry specific, right? This is for everyone. I love it. Love it. Are there people that come to you, Garrett, that qualify for this, that haven't been taking advantage of this? Or is this like, is this something that almost everybody's doing? Like, is there, I'm just curious who's not taking advantage of this, if they qualify? Yeah, no, I, you know, QBI is a little interesting. I would say it's about the people that come to us pre us working with them is probably about 50%. Really? Yeah, it's definitely because I mean, quite honestly, when someone starts out a business, they're not thinking of QBI. They're not thinking of anything like the qualified business income. They're just not. They're trying to make their business tick and work and it gets left in the dust. So I would say, again, it's probably about 50 percent. And the ones that do are because they've been in business for a while and are trying to enhance their financial situation. That'd be the number one thing. I think one of the biggest takeaways, if you're watching this, if you're running a business, pass your entity. Garrett, do you want to explain what a pass your entity is? Yeah. So like I said, it's something that hits your personal later on. So like a solo proprietorship, like a partnership where you have a 1065, but then that also goes to your personal. It's like your S corporations or C corp, right? So that's really what a pass through is. Okay, so most... Entities, if you're a business owner, most likely you have a pass-through. And if you're not taking advantage of the QBI. tax deduction, 199A, it's number one thing to ask your accountant, CPA team, and whether you work with someone like us or somebody else, just make sure that that's being addressed. All right, next one on the list. So the next one on the list is going to be the SALT cap raised, as you kind of alluded to, Caleb. So the state and local tax deduction cap has been raised from to 40,000. Previously, it was 10,000. That's a huge, I mean... $30,000 increase with the phase out for income over $500,000. But this eases, very much eases the tax burden on businesses in higher jurisdictions like New York and California. You can even think of other ones like Illinois or C. There's a couple areas, but the point is this could be huge. Again, for any sort of business, an example is a law firm in New York with 40,000. salt cap increase means big deductions for the state income and property taxes. More deduction expense at the end of the day, as your viewers probably know, equals less taxable income. So that's really the benefit there. And again, this is something that everyone can take advantage of. That is another way to reduce that taxable income because the goal, right, is to reduce tax liability throughout the year. Yeah. And I would say politically, I'm not a fan of this because you take certain states. that feel like we get more short end of the stick, like being in Tennessee. We don't have any income tax. And so now New York and California and Illinois, they get to charge higher income tax, state income tax, and then the federal government's essentially subsidizing it. So from a political standpoint, don't love that. But that is a way for Donald Trump to keep his promises across the board. Most people are going to be paying less in taxes, especially the ones that are business owners. And this is... a big win for the states that have high income tax. And so good on them. All right. The next one. Tips and overtime deductions. This again is an amazing- Has anyone, by the way, Garrett, asked already if they could change their compensation to take advantage of this? No one has asked yet. And it's funny because- Besides my own family, my family runs a retail store and they have already asked me multiple times when this goes into effect. But to talk about it a little bit, businesses can now deduct up to $25,000 in qualified tips and overtime wages. So think about it. This is not just benefiting the employee or the individual. This is benefiting the employer as well. This is encouraging employment. And really what it's going to do. This deduction is available through 2028 that helps small businesses manage rising labor costs. As we all know, I mean, it's employment for businesses is probably one of the hardest, if not the hardest thing. Nobody likes having running tons of interviews and trying to figure out who to hire, right? Especially just with how the grass is always greener somewhere else. You might earn a little bit more. But the point is now restaurants or really anyone with 25 employees in the service business. Anyone with 25 employees sees about $20,000 in reported tips. That's just a general USA average. And over time, monthly, this deduction means that direct reduction in tax income helps the small business owners cover rising wage costs. So again, the business owner is going to also be able to deduct some of that cost. So I get the benefit from the employee. You get tips. You get overtime. No tax on that. I get that. And I know that there's a, you can't, it's not going to qualify if you make over a certain, is it over 150? It starts phasing out? You know, that's a good question. I actually don't know the phase out. I think there is some type of income phase out for employees. And I know, again, majority of people that you work with are on the business owner side. But then on the business owner standpoint, over time, You're already getting a deduction for that. You're getting a deduction. And then tips, help me understand, are we talking like a coffee shop that gets, like when I tip, that goes to the coffee shop and then they give a portion of that to the baristas? And then is that the idea? So, you know, sometimes people on a restaurant will cash tip someone. In general, those type of tippings go right into the pocket of the server. But if you're thinking about a coffee shop or somewhere where you get the little screen, which is tip culture, 30%, 25%, 20%, right? 15, 18, whatever, all these numbers, it is talking about those that are going directly in like a pool of the tip. Cool. Okay. That's cool. I didn't know that. I knew that it was going to benefit the employee. I didn't know that was going to benefit the consumer. So, all right. That's good to know. And what's the next one? There's another big one for real estate. And it's funny. One of my coworkers is like, don't mention this one because it takes a lot to set this stuff up, but it's very beneficial. So we're going to talk about the real estate investment trusts. They can now invest up to 25% of their assets in taxable real estate investment trust subsidiaries, up to 20%. This provides greater structure, flexibility for RITs, and the diversity of revenue streams while preventing tax-effective treatments. So real estate investment trusts can now shift more operations. to taxable subsidiaries, allowing greater control over hotels, apartments, office development, without compromising their real estate investment trusts. This has already been beneficial for us as we work with a few individuals in the hotel industry that have are actually taken advantage of this already, but this is going to be huge for them because now it's up to 25%. percent. You'll have to speak in English here. This is, you're essentially creating trusts that own the real estate. Yep. And what, why does that give me a benefit? Because now you can invest up to 25%, which you can never do. You can never invest this, but you can invest up to 25% of their assets. So of the assets of the property that's in the trust, correct? Okay. Intaxable subsidiaries. So that would- Whereas before you couldn't put that money into- into taxable subsidiaries? Correct. Correct. And again, this is going to, hopefully, without compromising, the goal is for, because what happens, right? There's rules when you're setting up trusts specifically, but also just real estate investment trusts. You have to follow these rules. Now, this is allowing you to invest some of this without compromising the status. For example, if you did this before the bill, the IRS, if they would have caught that, they would have been like a big no, no slap on the wrist. You're paying all that tax back and what you tried to, to avoid, you know? So that's, that's the benefit here. Again, big for real estate. It really is mostly in the real estate game, but I know again, just a lot of people I specifically work with, this is going to be very beneficial for them. Awesome. Awesome. Okay. All right. Next, next, next one. How many, how many more do we have here? Three more, but we're going to go through these ones pretty fast. There's a reduction in global. Well, so this is one that's out of country. It's a very good thing. It's going to be huge for C-Corps and large companies. But it's the global intangible low taxed income. And what it's going to do is it's going to allow 40% deductions. This is much lower. The effective tax, it's going to lower their effective tax rate to 12.6%. This is something to keep in mind. probably not for it. necessarily the everyday person, but something to keep in mind for these global companies that are working all around the world, it's going to be a very big benefit to them, could explode some of these markets and would be a good option again for investing. For the everyday user, not necessarily the biggest thing, but again, for businesses in general, huge. Okay. Which again... could translate into if you're investing in the equities market that might there may be some type of benefit that other bigger companies get so that's that's that's what i'll say not investment advice but um that that could be the way that we benefit is maybe the assets that we own appreciate yep yep next one expensing factory buildings this is huge because it's already reshoring a lot of uh industrial capital and investments in the domestic production. What this does is it's a new category of qualified production property now includes structured components of manufacturing and processing facilities. So in a real life example, if in the Midwest, if a plastic plant in Wisconsin, we have a lot of plastic manufacturers, but if a plastic plant decides to build a $10 million factory thanks to the extended bonus depreciation They write it all off, all of it, off in one year. again, unlocking instant savings and lowering their effective cost of expansion. I mean, it's- Wait, so what if that same company buys a $10 million building? Is that same, or do they need to build it or can they buy it? So there are, I want to be careful how you answer because I'm not 100% sure, but there are stipulations there. I do believe it has to fit the stipulations, which part of it, if I'm not mistaken, is- It can't just be a renovation or something, which means it's probably not just buying a building. This is probably creating or reshoring from somewhere else, whether it was a factory in China or Taiwan or something, and reshoring it into the United States. So I don't think you can just buy a building and use this. I think it's specifically for building. Okay. Heard. Okay. The last one I'll... we can quickly go over is the QSBS, gain exclusion. And what this is, if you're an angel investor in a small tech startup, something like that, and your investment turns into a 5 million exit, because there are a lot of situations where, you know, an investment hits, you're going to be smoked with capital gains, something like that, right? You could potentially avoid taxes on the full gain if the company qualifies under the new $75 million cap. creating stronger incentives for new funds and new ventures. This again is huge for a company that's looking for investments. Because again, if you can qualify for this and the investor is guaranteed, you know, 100% instead of being taxed out of their mind, this could blow up some smaller companies that, you know, basically live on investing, investments. Yeah. Okay. Okay, that's really interesting. I think from a layman's terms, when I'm looking through the big, beautiful bill, I'm definitely seeing that the SALT deduction is big for the people that are in those high-paying states, obviously bringing back 100% depreciation in how we invest as business owners. There's a lot of interesting things there, research and development, that could be powerful. I also believe that they did lower the top tax bracket. They brought that down slightly, which could have a benefit. Anything in here that's negative from a financial standpoint or almost everything in this big, beautiful bill is actually going to help our clients? I'll add one more thing just to the important ones, as you mentioned. I would very much focus and ask your accountant or come to Doreba for the 100% depreciation. Very important. Permanent section 199A deduction. Yep. Yep. The SALT cap. And then also I would throw in the real estate investment trust in there for people in real estate because that's huge. Now you asked about the negatives. Sadly, there's always trade-offs. So I'll mention the few that I've noticed are more negative. So clean energy credits. are gone, right? Solar, EV, green building credits are gone. This is a major loss, quite honestly, for sustainable businesses. I understand why it's gone, but it is a negative. That's going to affect a lot of businesses that heavily invested. I know a few individuals personally that heavily invested in solar for their business, and that's going to affect them quite significantly. The sunset provisions, I don't know if you know anything about these, Caleb, but sunset provisions are also gone. So benefits like overtime, tips, deductions, and bonus depreciation phases out in 2028. That's a good thing, but it phases out in 2028. So there's a specific time frame that we can take. So the depreciation and bonus depreciation, we're not going to have this permanently? It's not everything. Yeah. And the biggest thing is the $3 trillion deficit. Critics will argue, right, that this is going to lead to future tax cuts or tax hikes, which is possible. My personal thoughts on this are a little, I don't even know where I fully stand. I love a lot of what's in this bill. I also think it's very expensive, which is a bummer. So really only time will tell. I really hope that this really, I guess, jumpstarts the economy and it can boom. Small businesses can boom because of this. But that is something to be determined. Yeah, and just like everything, there's a lot of moving pieces. And so make sure that you're working with someone that can better understand your situation. And Garrett, I know that one of the things that you have and what you do is you. talk to people individually and do like a tax assessment. And so if that's something that resonates with you, it is for business owners. And so if you're someone who's not a business owner, it may not be as relevant. But if you're someone who runs a big, medium or small business, and you want a second opinion about your tax situation, we'll have a link down below on the best way to get in touch with Garrett. And then Garrett, I would say, I'm excited for you to do more content. I know that this is the first of many, many pieces, but I just want you to know if anything is exciting, if there's anything that you're like, hey, the Better Wealth audience needs to hear about this, if this is a way to help keep more money, that's one of the things that we're very passionate as a company is how can we help people keep, protect, and grow their wealth more intentionally, more efficiently, and obviously not overpaying the government. is a great way to keep more of your money. And so with that, very grateful that you're on. I don't know if there's any parting words or shots that you have before we end this video. No, Caleb, I appreciate the invite. I'm excited for people to take advantage of this and just make sure that you do ask whoever you're working with about this because it could be huge for you. Awesome. Thanks, Garrett.

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