MAJOR Changes To Your Money (Roth IRAs, Tax Cuts, & US Economy)

Hi, my name is Andrei Jikh. Hope you're doing well. Come for the finance and stay for the big, beautiful bill. Now, this is one of the most important pieces of legislation of Mr. Trump's entire presidency. And it just passed both the House and the Senate. And today, July 4th, it's going to be signed by the president. And this new law will have major changes to things like taxes, health care, student loans, energy, retirement accounts like the Roth IRA and the entire economy. Now, there's a lot of confusions about it. It's controversial, it's big, and it affects almost everyone. So in today's video, I'm going to break down the bill by explaining the big changes that affect almost everyone. And as I get closer to the end of the video, I'll sort of expand into the wider economy and how this will have huge effects for investors. First, there is no federal taxes on tip income and overtime pay, at least up to a certain amount. Now, you can pause the video and look at this yourself. But remember the Trump tax cuts from 2017? They were originally set to expire at the end of this year. But with this bill, they're now going to be permanent from 2025 through 2028. This bill will add a few new short term tax breaks that could make a difference depending on how you make your money. If you work in a service job, for example, or you put in extra hours, that's more money that you're going to get to keep. But the benefit phases out once you make more than 150K a year or $300,000 as a couple. Next up, if you're in the market to buy a new car, there's some major changes. There's going to be a new deduction for interest paid on car loans, but only for new cars that were assembled here in the US. Now, we all know no car is 100% made in the US. So the bill defines this as the final assembly, meaning the car can have parts sourced from all over the world. It can even be assembled in another country. But as long as the final assembly is here in the US, it will qualify for that deduction. And the deduction is up to $10,000 per year. And that sounds like a nice win. And it is. But according to analysts, the actual savings work out to less than $500 per year for most people. So it's definitely helpful, but it's not going to be life changing. But now let's talk about student loans. The way this bill is trying to help students is not by pardoning the debt. Instead, it's trying to help by controlling it. And that's because the big, beautiful bill puts new caps on how much students can borrow. $100,000 for graduate students and $200,000 for medical and law students. Now, the official reason behind why these changes are in place is to control what lawmakers are calling unlimited and unsustainable borrowing. Because right now, under something called the Graduate Plus Loan Program, there's technically no cap on how much students can borrow to go to school as long as a school certifies the cost, which, of course, they love to do. The government will lend for it. And that's led to some pretty eye popping student loan levels. And this is a way to control that spending. And I actually really like this idea. Now, if you have kids, here is another important change. The child tax credit is getting a small bump from $2,000 per child to $2,200. And starting in 2026, it'll adjust for inflation each year by about two to 3% or so. It's not as much as the House originally wanted, which was $2,500. But it's still an increase. But there's also one catch. Not every family qualifies for the full amount. If you're a low income family, the credit doesn't just show up. You have to earn above a certain threshold to get it. And it's estimated that about 17 million kids won't see the full benefit because those families don't make enough. Now let's move on to health care, because this is one of the most controversial parts of the entire bill. The Big Beautiful Bill cuts about $800 billion from Medicaid over the next 10 years. Now, to be clear, that doesn't mean the program is going away, but it does mean that the rules are going to get stricter. For example, if you have no children, you'll need to work at least 80 hours a month just to stay enrolled. And you'll also have to prove your income and residency twice a year instead of once. And if you miss that paperwork deadline, even if by accident, you could lose coverage. Now, the reason why the government is doing this is because they want to lower government spending and encourage more people to come to work, which is good. But the Congressional Budget Office also estimates that up to 12 million Americans could lose access to health care because of these changes. So if you've got older parents or if you're in between jobs or you're working part time, this could make things a little more complicated. So just be aware of that. Now, obviously, this bill has been getting a lot of attention, but depending on where you get your news, the stories look completely different. And that's why, while I was researching for this video, I actually used a tool called Ground News, which is also the sponsor of today's video. Ground News pulled together over 130 articles from across the political spectrum. And just look at the difference. Left leaning sources frame this bill as harmful to seniors, children and the poor. Now, the center mostly focused on the three point three trillion dollar price tag and how narrow the vote was. And right leaning outlets called it a massive win for tax reform and government efficiency. Ground News actually shows you all of this side by side so you can compare the coverage, the bias, the framing without falling into an echo chamber. And that helped me a lot when writing this breakdown. So if you're someone who wants to see all the angles and form your own opinion, you can check them out at Ground News forward slash JIC or just hit the link in the description below to get 40 percent off the same vantage plan I use myself. Let's talk about food prices, because the bill also changes something called SNAP, which is the food assistance program that used to be called food stamps. Now, if you've never used it, you might not think it matters, but SNAP helps feed over 40 million Americans. So any changes here will affect the economy in a big way. And under this new bill, the benefits will now adjust more slowly for inflation. Just like Medicaid, there's now going to be a work requirement. If you're an adult between 18 and 55 and you have no children, you'll need to work at least 80 hours a month to qualify. Now, critics argue that this could kick millions of people off the program. But supporters say it's about encouraging people to find work and be less reliant on the system for support. Now let's talk about energy. If you've noticed your utility bill going up lately, you're probably not alone. And this bill is going to have a lot to do with it, because the bill shifts a lot of money away from the green energy programs and puts it into oil, gas and nuclear power. Now, supporters say that in the longer term, this will lower our energy prices because it will boost U.S. production and cut back on government subsidies. But it also means less tax credits for things like solar panels and energy efficient upgrades, which could make those things more expensive. The bill also gives the state the option to charge us extra fees on utility bills if our electricity use goes above a certain monthly limit. It's kind of a stealth tax for people who like to run the AC a lot. And as someone who lives in Las Vegas, that's not good for me. Now, this bill also has some major changes to the Roth IRA by 2026. And this is super important right now. You know that if you make too much money to contribute to a Roth IRA, there is a loophole. You can just contribute to a traditional IRA and then convert it to a Roth. A lot of people I know do this, and it's totally legal, but not for a lot longer. Because starting in 2026, this bill will get rid of the backdoor Roth IRA strategy completely. That means no more after tax IRA conversions. If you've been doing that trick every year to build tax free income in retirement with a backdoor or even a mega backdoor Roth IRA, you might want to start looking at other options right now. And there's two reasons why they're doing this. First, it raises tax revenue. And second, lawmakers say that this loophole mainly benefits wealthy people and wasn't really what Roth IRAs were intended for in the first place. But the government hopes instead you're going to use a new retirement account to replace the Roth IRA. And that's something called the Trump Retirement and Savings Accounts or TRSAs. These are basically a new kind of tax advantaged savings account or basket, as some people like to call it. And it's designed to replace Roth IRAs over time. Here's how it's going to work. There will be no income limits to contribute to this account. And the federal government will contribute one thousand dollars to an investment account for every American baby born between January 1st, 2025 and December 31st, 2028. You'll also be able to contribute up to five thousand dollars in after tax income per year to this account. And the catch is that the money can only be invested in index funds that track the overall U.S. stock market, which is pretty awesome. They're trying to encourage people to invest in the U.S. economy and a one thousand dollar investment, for example, at the time of your birth at an average yearly return of eight percent would turn into about four thousand dollars by the time you turn 18. It'll turn into more than ten thousand dollars by the age of 30 and over one hundred forty eight thousand dollars by age 65. Now, you've also probably heard that this bill will help the rich. And here's how it's going to do that. If someone makes over a million dollars a year, this bill will give them an average three percent boost in after tax income, which works out to about seventy five thousand dollars in savings per year, according to the Tax Policy Center. And there's a few ways that's going to happen. The SALT deduction cap, which goes up, the limit is on screen. There's also some changes to itemized charitable deductions with wealthier households seeing slightly reduced benefits, while middle income earners can now claim up to two thousand dollars in charitable deductions without itemizing at all. Now, there's a lot more to this bill that I left out. There's hundreds and hundreds of pages to this. But I think the bigger question is, how are we going to actually pay for this? This bill is extremely expensive. According to the Congressional Budget Office, the big beautiful bill is projected to add over three trillion dollars to the national deficit over the next 10 years. In fact, most of the bill is going to be paid for by borrowing more money. Now, if you're wondering, isn't this going to cause inflation? The answer is definitely asset inflation. The latest developments in these bills are fundamentally inflationary. We have a series of senators who have come on this program to talk about their concerns with the bill, including Ron Johnson and Rand Paul. Because when the government runs bigger and bigger deficits, especially in a high interest rate environment like we're in right now, it either has to raise taxes, which we won't do, cut government spending, which we just had the biggest opportunity of my lifetime to do. And we didn't let the system fail, which, of course, we won't either or borrow more money, print our way out of this. We know the answer because we've been doing it for as long as the Federal Reserve has been around and more money printing means nothing stops this train. The rich will get richer and the people without assets will most likely be left behind. This also kind of sets up the president and his family to really benefit from owning hard assets, especially assets like Bitcoin, because hard assets will go up much more in the long term as a result of all of this. I did an entire video about this. I'm sure I'll do one in the future. There's obviously a lot more changes to this bill that I probably missed. These are just my initial reactions and impressions. And they're the ones that stood out the most to me. And if you've made it this far, I'd love to hear your thoughts on what you think about all of this. In the meantime, I hope you have a wonderful rest of your day. Smash the like button. Subscribe if you haven't already. I'd love to see you back here next week. I'll see you soon. Bye bye.