Summer is in the air, you recently may have paid your 2^nd quarter estimated payments, received your child’s upcoming college tuition bill, or even just scheduled a future vacation. But you can already smell of barbeques on the grill for July 4^th weekend with close ones. Hard to believe the halfway point of the year already, we can’t stop time from moving on but now is a great opportunity to take a moment to reflect – how did the first six months go this year, and what should you keep in mind for the next six months?

• Are you holding yourself accountable from your new years resolutions? Besides potentially setting new goals with fitness and other routines, are you following your goals and your ideal vision if everything went according to plan? The word planning means nothing unless you know what you are building towards. Creating a plan and sticking to it while focusing on what you can control is what drives long term success. Take a quick step back and reflect – “am I following my own advice?” Also it is time to consider new goals for this upcoming 2^nd half of 2025.

• The value of tax planning, a mid year wakeup call. Lighthouse will be your “smoke alarm” all year round – not waiting until April 15^th before its too late. At the midway point, there are many opportunities to legally and strategically take from “Uncle Sam” to put back in your pocket.
  • What is my total income now vs expected by year end
    • Whether you are a business owner, valued employee, or enjoying your financial independence – essential to pay in the “safe harbor” amount of your taxes. “Safe harbor”: Penalty free zone depending on your income, calculated as 100% of the prior year’s tax (110% if adjusted gross income is above $150,000) or 90% of taxes due for the current year. Those who are self-employed or who do not pay tax throughout the year typically need to make quarterly estimated payments.
    • Capital Loss harvesting: while nobody wants to see any “red” securities in investment accounts, there could be an opportunity to sell holdings at a loss to benefit your taxes. Individuals can take -$3,000 of losses in brokerage accounts to offset their ordinary income or larger losses can be used to offset investment gains.
  • Gifting goals to those closest to you – is there anyone special that you are considering helping financially?
    • Annual gift exclusion is $19,000 per person per year in 2025
      Consider gifting shares of appreciated stock to children to have taxed under their name for considerably less tax. If shares are sold as a student, they could be entitled to college credits to heavily reduce their income tax
  • Charitable giving strategies Focus on charity from the goodness of your heart, not just for deductions. Where do your charitable goals stand today? Items to consider:
    • Qualified Charitable Distributions (QCD’s): at age 70½ individuals can send a portion of their IRA accounts directly to a charity. You don’t get an itemized deduction, but the distribution is not taxable while going towards satisfying your required minimum distribution (RMD) for the current year.
    • Donor Advised Fund: a “billpay” account to use for charity typically funded by appreciated stock securities to use towards your itemized deductions.

• Proposed future tax law updates to think about. Nothing confirmed, all speculation
  • While nobody has a “crystal ball” and there is no confirmed legislation – it is important to think about how these potential changes could relate to you.
    • Extension of current tax code implemented since 2017 Tax Cuts & Jobs Act. Currently with no extension, the tax code was sunset and revert to previous tax code.
    • State and Local Tax (SALT) Federal deduction: currently capped at $10,000, this is being proposed to increase potentially as high as $40,000. This could significantly increase the amount of tax payers that would now itemize their deductions over the standard deduction
      • This and the future of the Pass Through Entity Tax (PTE) will largely depend on the final decisions made on the SALT cap
    • Increased child tax credit from $2,000 for dependents under 17 through 2028
    • Potential reduction in tax on tips & overtime
    • Estate Tax Increase from $13.99 million to $15 million filing single ($30 million joint filers)

Whether you’re on track or need to adapt, the steps you take today can make a significant impact by year-end and beyond. Consider having a “board of directors meeting” in your household – and build out your “ideal vision”, a fun but important exercise. At Lighthouse Financial Advisors, we’re here to help you stay focused, make informed decisions, and adjust your plan as needed so you can move confidently toward your goals no matter what the rest of the year brings.