Market Update, July 2025
I hope everyone enjoyed a wonderful Independence Day weekend. Since the last July 4th, the S&P 500 has risen nearly 15%, the Nasdaq by nearly 14%, and international stocks by more than 16%.
As recently as April 8th, the S&P 500 marked its low for the year, having fallen more than 15% year-to-date amid concerns over tariff-related headlines. Since that low point, the recovery has been swift, with all three major indices setting fresh all-time highs.
Ask Cale
Q: I’ve heard that the recently passed tax bill includes new deductions for seniors. Is there anything else I should be paying attention to?
A: Quite a bit, actually. The new tax and spending bill, signed into law on July 4th, is packed with provisions likely to impact many of our clients. I’ll focus here on the changes most relevant to our readers.
The bill’s focus is the permanent extension of many of the provisions from the 2017 tax law that were set to expire in 2025. But there are several notable additions worth highlighting.
If you’re over 65, there’s now a new $6,000 “bonus deduction” per person. This replaces the proposed “no tax on Social Security” provision, which didn’t make it into the final bill. The bonus deduction applies whether you take the standard deduction or choose to itemize. So, a qualifying couple over 65 could see a total deduction of $46,700. The bonus portion begins to phase out for joint filers earning over $150,000.
The cap on the state and local tax (SALT) deduction has also been raised — now up to $40,000, phasing out at $500,000 of income. In a surprise addition, a new car loan interest deduction of up to $10,000 was introduced for vehicles that had their final assembly done in the U.S. (Check your VIN — some car models, like the Toyota RAV4, may have been assembled in the U.S., Canada, or Japan. Yikes).
Several items will finally be indexed to inflation. The standard deduction rises to $15,750 per individual ($31,500 per married couple), and the child tax credit increases to $2,200. Both will adjust with inflation going forward. The estate tax exemption will also climb modestly to $15 million per individual (or $30 million per married couple) in 2026 and will likewise be indexed.
A somewhat intriguing addition: the new child savings account. This allows up to $5,000 per year in non-deductible contributions from anyone, which then converts to a traditional IRA for the child at age 18. While we still prefer Roth IRAs for young savers, this new option could benefit children who can’t meet the Roth’s earned income requirement. For children born between 2025 and 2028, the account will even be seeded with a $1,000 contribution from Uncle Sam.
There’s much more in the legislation than we can cover here. If you’d like to dig deeper, please don’t hesitate to reach out. I’m happy to help — and we’ll all be waiting patiently for the IRS to provide further guidance, whenever they decide the time is right.
