Understanding the New Trump Accounts
With the enactment of the One Big Beautiful Bill Act in July 2025, Congress introduced a new class of tax-advantaged savings vehicles for minors known as Trump accounts. Here’s a breakdown of the key features.
What are they?
Trump accounts are custodial savings and investment accounts that can be established for U.S. children under age 18 to encourage long-term financial security. Contributions are made on an after-tax basis, and investments grow tax deferred until withdrawn. Withdrawals are generally prohibited until the year the child reaches age 18. These accounts are specifically targeted toward children.
Who is eligible?
Beginning July 2026, Trump accounts can be established for children who are U.S. citizens, have a valid Social Security number, and are under age 18. In addition, the new law creates a pilot program in which qualified account holders born between January 1, 2025, and December 31, 2028, are eligible for a one-time government contribution of $1,000. The Department of the Treasury may automatically enroll these children into the program. Children born outside of the 2025–2028 window, but who are still under age 18, qualify for a Trump account, though they will not receive the $1,000 seed grant. Trump accounts do not have income limits or restrictions.
What are the contribution limits?
Parents, relatives, and others may contribute up to $5,000 per child annually. The $5,000 cap will be adjusted for inflation in future years. Contributions are made with after-tax dollars.
Employers can set up plans under which contributions may be made to employees’ Trump accounts or the Trump accounts of employees’ dependents. Up to $2,500 may be contributed annually for each employee. Contributions made by an employer to a Trump account on behalf of an employee under such a plan are not included in the employee’s gross income.
Charities and governmental entities may also make contributions to Trump accounts under certain conditions. No such contributions by charities and governmental entities do not count toward the $5,000 annual limit. Also, the $1,000 federal seed contribution is excluded from the $5,000 annual contribution limit.
What is the tax treatment for these accounts?
Contributions from individuals are made with after-tax dollars, meaning they are not deductible but will eventually be able to be withdrawn tax-free. Employer, charitable, and government contributions, as well as the $1,000 seed grant, are not considered income at the time the contribution is made but will be included in income upon distribution.
Earnings on all contributions grow tax deferred. When the account holder reaches age 18 and is able to take distributions, the account may contain amounts that are not taxable upon distribution (amounts contributed by parents and relatives) as well as amounts that are taxable upon distribution (earnings, and any contributions made by an employer, charitable or governmental entity, or as a result of the $1,000 seed grant). The same general rules that apply to IRAs apply to Trump accounts, including:
- If there are non-taxable parent or individual contributions in the account, any distribution is considered to consist of a proportionate share of taxable and non-taxable amounts.
- Taxable distributions are taxed at ordinary income rates, and a 10% additional penalty tax applies if a distribution is made prior to age 59½ unless an exception applies.
- Exceptions to the 10% penalty include withdrawals for higher education costs and up to $10,000 for a first-time home purchase.
How are the funds invested?
Trump account funds are automatically invested in a mutual fund or exchange-traded fund that tracks the returns of a qualified index, such as one tracking the S&P 500. Account holders cannot choose between multiple funds or adjust the investment mix, and the allocation is fixed and limited to U.S. equities. Funds must have annual fees no higher than 0.1%.
What’s next?
The IRS is expected to issue additional regulations and guidance that clarify the administrative details of the new law.
All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.
Mutual funds and exchange-traded funds are sold by prospectus. Consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional.
The performance of an unmanaged index is not indicative of the performance of any specific security. Individuals cannot invest directly in any index. Past performance has no guarantee of future results. Actual results will vary.
Social Security and Medicare 2025 Trustees Reports: It’s Time to Address Funding Concerns
Each year, the Trustees of the Social Security and Medicare trust funds provide detailed reports to Congress that track the programs’ current financial condition and projected financial outlook. These reports have warned for years that the trust funds would be depleted in the not-too-distant future, and the most recent reports, released on June 18, 2025, show that Social Security and Medicare continue to face significant financial challenges.
The Trustees of both programs continue to urge Congress to address these financial shortfalls soon, so that solutions will be less drastic and may be implemented gradually. Americans agree — in a survey conducted last year, 87% of those polled said that Congress should act now to address Social Security’s funding shortfall, rather than waiting years to find a solution.1
Despite the challenges, it’s important to keep in mind that neither of these programs is in danger of collapsing completely. The question is what changes will be required to rescue them.
More retirees and fewer workers
The fundamental problem facing both programs is the aging of the American population. Today’s workers pay taxes to fund benefits received by today’s retirees, and with lower birth rates and longer life spans, there are fewer workers paying into the programs and more retirees receiving benefits for a longer period. In 1960, there were 5.1 workers for each Social Security beneficiary; in 2025, there are 2.7, a number that is projected to drop to 2.2 by 2045.
Dwindling trust funds
Payroll taxes from today’s workers, along with income taxes on Social Security benefits, go into interest-bearing trust funds. During times when payroll taxes and other income exceeded benefit payments, these funds built up reserve assets. But now the reserves are being depleted as they are used to supplement payroll taxes and other income to meet scheduled benefit payments.
Social Security outlook
Social Security consists of two programs, each with its own trust fund. Retired workers and their families and survivors receive monthly benefits under the Old-Age and Survivors Insurance (OASI) program; disabled workers and their families receive monthly benefits under the Disability Insurance (DI) program.
The OASI Trust Fund reserves are projected to be depleted in 2033, unchanged from last year’s report, at which time incoming revenue would pay only 77% of scheduled benefits. Reserves in the much smaller DI Trust Fund, which is on stronger footing, are not projected to be depleted during the 75-year period ending in 2099.
Under current law, these two trust funds cannot be combined, but the Trustees also provide an estimate for the hypothetical combined program, referred to as OASDI. This would extend full benefits to 2034, a year earlier than last year’s report, at which time, incoming revenue would pay only 81% of scheduled benefits.
This year’s report states that the January 2025 enactment of the Social Security Fairness Act of 2023 is projected to have a substantial effect on Social Security’s financial status. This law repealed the Windfall Elimination Provision and Government Pension Offset, and consequently, increased Social Security benefits for some people who worked in jobs not covered by Social Security.
Medicare outlook
Medicare also has two trust funds. The Hospital Insurance (HI) Trust Fund pays for inpatient and hospital care under Medicare Part A. The Supplementary Medical Insurance (SMI) Trust Fund comprises two accounts: one for Medicare Part B physician and outpatient costs and the other for Medicare Part D prescription drug costs.
The HI Trust Fund will contain surplus income through 2027 but is projected to be depleted in 2033, three years earlier than in last year’s report. At that time, revenue would pay only 89% of the program’s costs. Overall, projections of Medicare costs are highly uncertain.
The SMI Trust Fund accounts for Medicare Parts B and D are expected to have sufficient funding because they are automatically balanced through premiums and revenue from the federal government’s general fund, but financing will need to increase faster than the economy to cover expected expenditure growth.
Note: The One Big Beautiful Bill Act, signed into law on July 4, 2025, may impact the Social Security and Medicare programs by reducing the income taxes on Social Security benefits that flow into the OASI and HI trust funds. Although the law did not change the rules for taxing Social Security benefits, the new senior deduction ($6,000 for single filers, $12,000 for joint filers) is likely to reduce the number of people who pay taxes on their benefits and reduce the marginal tax rate for those who do pay taxes. One estimate suggests that this could move the expiration dates for the OASI and HI trust funds up to 2032.2
Possible fixes
If Congress does not take action, Social Security beneficiaries might face a benefit cut after the trust funds are depleted, based on this year’s report. Any permanent fix to Social Security would likely require a combination of changes, including some of these.
- Raise the Social Security payroll tax rate (currently 12.4%, half paid by the employee and half by the employer). An immediate and permanent payroll tax increase to 16.05% would be necessary to address the long-range revenue shortfall (or to 16.67% if the increase started in 2034).
- Raise the ceiling on wages subject to Social Security payroll taxes ($176,100 in 2025).
- Raise the full retirement age (currently 67 for anyone born in 1960 or later).
- Change the benefit calculation formula.
- Use a different index to calculate the annual cost-of-living adjustment.
- Tax a higher percentage of benefits for higher-income beneficiaries.
Addressing the Medicare shortfall might necessitate a combination of spending cuts, tax increases, and cost-cutting through program modifications.
Based on past changes to these programs, it’s likely that any future changes would primarily affect future beneficiaries and have a relatively small effect on those already receiving benefits. While neither Social Security nor Medicare is in danger of disappearing, it would be wise to maintain a strong retirement savings strategy to prepare for potential changes that may affect you in the future.
You can view a combined summary of the 2025 Social Security and Medicare Trustees Reports and a full copy of the Social Security report at ssa.gov. You can find the full Medicare report at cms.gov.
All projections are based on current conditions, subject to change, and may not happen.
1) National Institute on Retirement Security, 2024
2) Committee for a Responsible Federal Budget, June 27, 2025
Tax and Spending Bill Signed into Law
President Trump signed into law the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, after months of deliberation in the House and Senate. The legislation includes multiple tax provisions that will guide individuals, business owners, and investors in planning their finances for many years to come. It makes permanent most of the 2017 Tax Cuts and Jobs Act (TCJA) tax provisions that were set to expire this year, while delivering some new deductions and changes.
Expiring provisions that are now permanent
| Tax brackets | The TCJA reduced the applicable tax rates for most brackets for the years 2018 through 2025, while increasing the income range covered by each bracket. The new legislation makes the TCJA rates and structure permanent. Individual marginal income tax brackets will remain at 10%, 12%, 22%, 24%, 32%, 35%, and 37%. |
| Standard deduction | The new legislation makes permanent the larger standard deduction amounts established by TCJA, with an additional increase. For 2025, standard deduction amounts are: $31,500 for married filing jointly $23,625 for head of household $15,750 for single and married filing separately |
| Personal exemptions | The deduction for personal exemptions ($4,050 per exemption in 2017, the last year it was available) is now permanently eliminated. |
| Child tax credit | Prior temporary increases to the child tax credit, the refundable portion of the credit, and income phase-out ranges are made permanent. The child tax credit is increased to $2,200 for each qualifying child starting in 2025. |
| Mortgage interest deduction | The $750,000 ($375,000 for married filing separately) limit on qualifying mortgage debt for purposes of the mortgage interest deduction is made permanent. Interest on home equity indebtedness is now permanently nondeductible. A previously expired provision allowing for the deduction of mortgage insurance premiums as interest is reinstated and made permanent (subject to income limitations), beginning in 2026. |
| Estate and gift tax exemption | The larger estate and gift tax exemption amount (essentially doubled) implemented by the TCJA is made permanent, increased to $15 million in 2026 ($30 million for married couples), and will be indexed for inflation in subsequent years. |
| Alternative minimum tax (AMT) | The significantly increased AMT exemption amounts and exemption income phase-out thresholds implemented by TCJA are made permanent. |
| Itemized deduction limit | The overall limit on itemized deductions (the “Pease limitation”), previously suspended for 2018-2025, is now permanently replaced with a percentage reduction that applies to individuals in the highest tax bracket (37%) that effectively caps the value of each dollar of itemized deductions at $0.35. |
| Qualified business income deduction (Section 199A) | The new legislation permanently extends the deduction for qualified business income created by the TCJA and increases the phase-in thresholds for the deduction limit. A new minimum deduction of $400 is now available for certain individuals with at least $1,000 in qualified business income. |
Existing provisions with material changes
The One Big Beautiful Bill Act also makes some significant changes to other provisions, some temporary but others permanent. Two of the changes that received significant coverage leading up to passage and enactment include a temporary increase in the limit on allowable state and local tax (SALT) deductions and the rollback of existing energy tax incentives.
State and local tax (SALT) deduction
The new legislation temporarily increases the cap on the state and local tax deduction from $10,000 to $40,000. This increased cap is retroactively effective for 2025. The $40,000 cap will increase to $40,400 in 2026 and by 1% for each of the following three years.
The cap is reduced for those with modified adjusted gross incomes exceeding $500,000 (tax year 2025, adjusted for inflation in subsequent years), but the limit is never reduced below $10,000.
In 2030, the cap will return to $10,000.
Repeal and phase-out of clean energy credits
The new legislation significantly rolls back energy-related tax incentives. Provisions include:
- The Clean Vehicle Credit (IRC Section 30D), the Previously Owned Clean Vehicle Credit (IRC Section 25E), and the Qualified Commercial Clean Vehicles Credit (IRC Section 45W) are eliminated effective for vehicles acquired after September 30, 2025.
- The Energy Efficient Home Improvement Credit (IRC Section 25C) and the Residential Clean Energy Credit (IRC Section 25D) are repealed for property placed in service after December 31, 2025.
- The New Energy Efficient Home Credit (IRC Section 45L) will expire on June 30, 2026; the credit cannot be claimed for homes acquired after that date.
- The Alternative Fuel Vehicle Refueling Property Credit (IRC Section 30C) will not be available for property placed in service after June 30, 2026.
Gambling losses
The new law changes the treatment of gambling losses, effective as of 2026. Before the legislation, individuals could deduct 100% of their gambling losses against winnings (the deduction could never exceed the amount of gambling winnings); now, a new cap limits deductions to 90%.
Bonus depreciation and Section 179 expensing
Prior to this legislation, the additional first-year “bonus” depreciation was being phased out, with the maximum deduction dropping to 40% by 2025. The new legislation permanently establishes a 100% additional first-year depreciation deduction for qualifying property, allowing businesses to deduct the full cost of such property immediately. The 100% additional first-year depreciation deduction is available for property acquired after January 19, 2025.
Effective for property placed in service in 2025, the legislation also increases the limit for expensing under IRC Section 179 from $1 million (indexed for inflation) to $2.5 million, and it increases the phase-out threshold from $2.5 million (indexed for inflation) to $4 million.
New provisions
The One Big Beautiful Bill Act also contains multiple new tax deductions that are intended to represent a step toward fulfilling campaign promises made to end taxes on Social Security, tips, and overtime. These new deductions are temporary, but other changes, like allowing individuals who do not itemize deductions to deduct some amount of qualifying charitable contributions, are permanent.
Deduction for seniors
Effective for tax years 2025–2028, the legislation creates a new $6,000 deduction for qualifying individuals who reach the age of 65 during the year. The deduction begins to phase out when modified adjusted gross income exceeds $75,000 ($150,000 for married filing jointly).
Tip income deduction (“no tax on tips”)
Effective for tax years 2025–2028, for the first time, tip-based workers can deduct a portion of their cash tips for federal income tax purposes. Individuals who receive qualified cash tips in occupations that customarily received tips prior to January 1, 2025, may exclude up to $25,000 in reported tip income from their federal taxable income. A married couple filing a joint return may each deduct up to $25,000. The deduction phases out at a modified adjusted gross income of $150,000 for single filers and $300,000 for joint filers. This provision applies to a broad range of service occupations, including restaurant staff, hairstylists, and hospitality workers.
Overtime deduction (“no tax on overtime”)
A new temporary deduction of up to $12,500 ($25,000 if married filing jointly) is established for qualified overtime compensation. The deduction is phased out for individuals with a modified adjusted gross income of over $150,000 ($300,000 if married filing jointly). The deduction is reduced by $100 for each $1,000 of modified adjusted gross income exceeding the threshold. To claim the deduction, a Social Security number must be provided. The deduction is available for tax years 2025–2028.
Investment accounts for children (“Trump accounts”)
A new tax-deferred account for children under the age of 18 is created, effective January 1, 2026. With limited exceptions, up to $5,000 in total can be contributed to an account annually (the $5,000 amount is indexed for inflation). Parents, relatives, and employers, as well as certain taxable, nonprofit, and government organizations, may make contributions. Contributions are not tax-deductible. For children born between 2025 and 2028, the federal government will contribute $1,000 per child into eligible accounts. Distributions generally cannot be made from the account prior to the account holder reaching the age of 18, and there are restrictions, limitations, and tax consequences that govern how and when account funds can be used. To have an account, a child must be a U.S. citizen and have a Social Security number.
Charitable deduction for non-itemizers
The legislation reinstates a tax provision that was previously effective for tax year 2021. A deduction for qualifying charitable contributions is now permanently established for individuals who do not itemize deductions. The deduction is capped at $1,000 ($2,000 for married filing jointly). Contributions must be made in cash to a public charity and meet other specific requirements. This deduction is available starting in tax year 2026.
Car loan interest deduction (“no tax on car loan interest”)
For tax years 2025–2028, interest paid on car loans is now deductible for certain buyers. Beginning in 2025, taxpayers who purchase qualifying new vehicles assembled in the United States for personal use may deduct up to $10,000 in loan interest annually. The deduction is phased out at higher incomes, starting at a modified adjusted gross income of $100,000 (single filers) or $200,000 (joint filers).
There’s more …
The One Big Beautiful Bill Act includes broad and sweeping changes that will have a profound impact. While income and estate tax provisions are highlighted here, the legislation also makes fundamental changes impacting areas such as health care, immigration, and border security. There are also additional tax changes made by the legislation that are not mentioned in this summary. Additional information and details will be available in the coming weeks and months. As always, if you have questions about how these changes affect your specific situation, consider consulting a tax professional.
Online Shoppers May Be in Store for Surprises in the Tariff Era
On April 2, 2025, President Trump issued an executive order eliminating the de minimis exemption for low-value imports from China, which previously allowed U.S. consumers to buy goods worth up to $800 directly from online marketplaces based outside of the United States without paying duties. Since the order took effect on May 2, some U.S. shoppers have been surprised by notices from shipping carriers requesting duties that in some cases surpassed the value of the items that were ordered.1
A tariff is a tax on imported goods that the Trump administration has imposed to help protect domestic industries from foreign competition, raise revenue, and use as a bargaining chip in trade negotiations. The term “duty” refers more broadly to multiple types of fees that must be paid by importers when goods are shipped across borders. Depending on the type of product and where it originated, this amount might include tariffs, customs brokerage fees, excise taxes, and/or other miscellaneous charges.
U.S. lawmakers raised the de minimis exemption from $200 to $800 in 2015. As a result, many Americans have become accustomed to shopping for low-value goods such as clothing and housewares without considering where their purchases are shipped from or the prospect of duties. Many other countries, including members of the European Union and Canada, have lower thresholds, so the consumers who live there may already expect to pay duties when goods are ordered from e-commerce sites outside of their home country.2
Critics of the de minimis exemption believe that it disadvantages U.S. manufacturers and retailers and creates a loophole for dangerous and illegal products such as fentanyl and counterfeit luxury goods to enter the United States with less scrutiny.3
Tax rates in flux
Effective May 14, goods valued at $800 or less that are shipped through the U.S. Postal Service to the United States from China or Hong Kong are subject to a tariff rate of 54% of their value or an optional flat rate of $100 per package. Chinese goods shipped by commercial carriers are assessed the default 30% tariff rate, even for low-value packages.4
Back in early May, the tariff on low-value Chinese goods sent through international mail was a punishing 120%, and the default tariff rate that applied to commercial carriers was even higher (145%), until a round of positive trade negotiations resulted in the de-escalation of tensions between the two nations.
While President Trump’s executive order only applies to goods from China, it appears to be just a first step toward ending duty-free de minimis privileges entirely. In fact, a provision in the Big Beautiful Bill passed by Congress and signed by the president on July 4 eliminates de minimis entries from all countries beginning July 1, 2027.5 As a result, shopping internationally could get even trickier, especially if Trump’s threatened reciprocal tariffs, which vary by specific trade partner, are still in the picture.
On May 28, the U.S. Court of International Trade ruled that President Trump had exceeded his authority under the International Emergency Economic Powers Act (IEEPA) when he imposed broad tariffs on goods from nearly every country, including China. This decision likely extended to the status of the de minimis exemption, but the case was appealed to a higher court that granted a temporary stay, so for the time being the president’s IEEPA tariffs and related trade policies remain in effect.6 Regardless of the outcome for tariffs, the fate of the de minimis exemption itself probably won’t be decided in the courts now that Congress has passed a law that settles the issue.
Shopping online? Take a closer look before you click
When you shop on a U.S.-based e-commerce site, whether it’s a small business or a behemoth like Amazon, the duties on imported Chinese goods have already been paid and are likely to be reflected in the item’s price. Some portion of the tariffs paid by the retailers is typically passed along to consumers, so the potential for higher prices across the board — especially for big-ticket purchases such as cars, electronics, and appliances — might be one of your top concerns.
It’s also worth considering that you could unknowingly trigger exorbitant duties for relatively inexpensive online purchases if you respond to a targeted ad or come across a product offered by an unfamiliar online marketplace. One complicating factor is that the duties apply to goods that originate in China, even if they are sold online and shipped to the United States by a company based in a different country (like Canada or the United Kingdom). Before placing an order, check the website or ask customer service where the product ships from. If the order won’t be fulfilled in the United States, go a step further to determine where the product was made (the country of origin).
When U.S. duties apply to an item in your online shopping cart, the best you can hope for is transparency from the seller, so you can make an informed decision before completing the sale. You might see a reference to delivered duty paid (DDP) shipping, which typically means the duties will be included in your charges during the checkout process and paid by the shipper. Delivered duty unpaid (DDU) or tax unpaid shipping means you should expect to receive a bill from the carrier.
If you are caught off guard by duties for an online order, you could choose to pay the duty or refuse the package. Keep in mind that depending on the company’s return policies, you might be charged for return shipping or may not receive any refund at all. Unexpected duties may become less frequent in time as international sellers and carriers refine their policies and procedures in response to shifting trade rules. But unfortunately for consumers, the higher costs that tend to follow the imposition of steep tariffs might be here to stay.
1) The New York Times, June 12, 2025
2) New York Magazine, April 24, 2025
3) The New York Times, May 1, 2025
4) Time Magazine, May 14, 2025
5) The Wall Street Journal, July 2, 2025
6) The Wall Street Journal, June 11, 2025
What tax legislation is in the works?
The One Big Beautiful Bill Act
H.R. 1, the One Big Beautiful Bill Act, narrowly passed the House of Representatives on May 22, 2025. The legislation is now being deliberated in the Senate, after the Senate Committee on Finance released its own version of proposed tax provisions on June 16, 2025.
This legislation is being proposed and considered as part of a process known as budget reconciliation, which is generally limited to tax and spending matters, as well as the debt limit. The budget reconciliation process limits debate, preventing the use of the filibuster to delay or prevent passage. Whereas 60 votes are required to break a filibuster and pass most legislation, budget reconciliation requires only 51 votes in the Senate. The following are some of the act’s provisions that could affect income taxes for individuals and businesses.
Tax Cuts and Jobs Act provisions made permanent
The legislation would make permanent many provisions implemented by the 2017 Tax Cuts and Jobs Act, which are scheduled to expire at the end of this year. These include:
- Lower marginal income tax rates, with a top marginal tax rate of 37%
- Increased standard deduction amounts
- Elimination of deduction for personal exemptions
- Increased Child Tax Credit (some additional changes proposed)
- Limits on mortgage interest deductions and interest on home equity debt
- Higher estate and gift tax exemption
- Alternative Minimum Tax (AMT) exemption and phaseout thresholds
- Changes relating to itemized deductions
- Section 199A Qualified Business Income Deduction
Other changes
The legislation includes a host of additional tax provisions, such as:
- Raising the U.S. debt limit
- Additional deduction for seniors for years 2025–2028, phased out at higher incomes
- New tax-exempt investment accounts (“Trump Accounts”) for children
- State and Local Tax (SALT) deduction; while the House version would significantly increase the cap, the Senate version appears to retain the current $10,000 cap
- New deduction for qualified tips
- New deduction for qualified overtime compensation
- New deduction for personal interest on car loans (2025–2028, U.S.-assembled passenger vehicles)
- New charitable deduction for individuals who do not itemize deductions
- Repeal of energy tax credits created by the Inflation Reduction Act
- Bonus depreciation increased to 100% and Section 179 expense limit increased
What happens next?
The Senate Committee on Finance report already reflects some departures from the House version, including differences relating to the SALT deduction mentioned above, as well as the tax treatment of tips and overtime. The legislation is subject to review by the Senate parliamentarian for compliance with reconciliation rules, and the final Senate version of the legislation must be debated on the Senate floor. If the Senate passes its version of the legislation, the House will need to vote again since the Senate version will include changes.
REAL ID Deadline Almost Here
After years of numerous delays, the REAL ID enforcement deadline is scheduled for May 7, 2025. 1
What is a REAL ID?
A REAL ID is a type of enhanced identification card that is signified by a star marking in the upper top portion of the card. The REAL ID Act, passed by Congress in 2005, set minimum security standards for state-issued driver’s licenses and identification cards. Everyone who is at least 18 years old will need a REAL ID-compliant driver’s license or identification card or another form of identification that is accepted by the Transportation Security Administration (TSA) for domestic air travel and to enter certain federal facilities.
Other TSA-acceptable documents are active passports, passport cards, or Global Entry cards. While standard driver’s licenses will no longer be a valid identification for TSA purposes, enhanced driver’s licenses from certain states are TSA-acceptable alternatives.
Although the TSA has announced that federal agencies are allowed to phase in their enforcement of the REAL ID requirement, travelers who don’t have a REAL ID by the May 7 deadline will face additional screening measures and possible delays at airport security checkpoints. You can visit the TSA website at tsa.gov for updates and information.
Finally, when traveling internationally, you will still need your passport for identification purposes, including travel to Canada or Mexico.
How do you get a REAL ID?
The U.S. Department of Homeland Security (DHS) oversees the enforcement and implementation of the REAL ID Act, but each state’s driver’s licensing agency has its own process for issuing REAL ID-compliant licenses/identification cards.
To obtain a REAL ID, you will need to provide documentation that shows your:
- Full legal name, date of birth, proof of lawful presence (e.g., U.S. passport, birth certificate)
- Social Security number (some states may not require physical documentation of your Social Security number)
- Two proofs of address of principal residence (e.g., driver’s license, utility bill)
If you have had a name change (e.g., marriage, divorce, or court order), you will also need to bring in documentation that demonstrates proof of your name change. States may impose additional requirements, so be sure to contact your state’s driver’s licensing agency for more information.
1) U.S. Department of Homeland Security, 2025
New Social Security Identity Verification Rule: Are You Affected?
The Social Security Administration (SSA) has announced that effective April 14, some individuals who want to claim Social Security benefits or change their direct deposit account information will need to visit a local Social Security field office to prove their identity in person.
According to the SSA, stronger identity verification procedures are needed to prevent fraud. The new rule is already causing confusion, in part because of its hasty rollout, so here are answers to some common questions and links to official SSA information.
Who will need to visit a Social Security office to verify their identity?
This new rule only affects people who don’t have or can’t use their personal my Social Security account. If you already have a my Social Security account, you can continue to file new benefit claims, set up direct deposit, or make direct deposit changes online — you will not need to visit an office.
You must visit an office to verify your identity if you do not have a my Social Security account and you are:
- Applying for retirement, survivor, spousal, or dependent child benefits
- Changing direct deposit information for any type of benefit
- Receiving benefit payments by paper check and need to change your mailing address
You don’t need to visit an office to verify your identity if you are applying for Medicare, Social Security disability benefits, or Supplemental Security Income (SSI) benefits — these are exempt from the new rule, and you can complete the process by phone.
If you’re already receiving benefits and don’t need to change direct deposit information, you will not have to contact the SSA either online or in person to verify your identity. According to the SSA, “People will continue to receive their benefits and on schedule to the bank account information in Social Security’s records without needing to prove identity.”1 There’s also no need to visit an office to verify your identity if you are not yet receiving benefits.
The SSA also announced that requests for direct deposit changes (whether made online or in person) will be processed within one business day. Prior to this, online direct deposit changes were held for 30 days.
What if you don’t have a my Social Security account?
You can create an account at any time on the SSA website, ssa.gov/myaccount. A my Social Security account is free and gives you online access to SSA tools and services. For example, you can request a replacement Social Security card, view your Social Security statement that includes your earnings record and future benefit estimates, apply for new benefits and set up direct deposit, or manage your current benefits and change your direct deposit instructions.
To start the sign-up process, you will be prompted to create an account with one of two credential service providers, Login.gov or ID.me. These services meet the U.S. government’s identity proofing and authentication requirements and help the SSA securely verify your identity online, so you won’t need to prove your identity at an SSA office. You can also use your existing Login.gov or ID.me credentials if you have already signed up with one of these providers elsewhere.
If you’re unable or unwilling to create a my Social Security account, you can call the SSA and start a benefits claim; however, if you’re filing an application for retirement, survivor, spousal, or dependent child benefits, your request can’t be completed until your identity is verified in person. You may also start a direct deposit change by phone and then visit an office to complete the identity verification step. You can find your local SSA office by using the Social Security Office Locator at ssa.gov.
To complete your transaction in one step, the SSA recommends scheduling an in-person appointment by calling the SSA at (800) 772-1213. However, you may face delays. According to SSA data (through February), only 44% of benefit claim appointments are scheduled within 28 days, and the average time you’ll wait on hold to speak to a representative (in English) is 1 hour and 28 minutes, though you can request a callback (74% of callers do).2 These wait times will vary, but are likely to get worse as the influx of calls increases and the SSA experiences staffing cuts.
What if your Social Security account was created before September 18, 2021?
Last July, the SSA announced that anyone who created a my Social Security account with a username and password before September 18, 2021, would need to begin using either Login.gov or ID.me to continue to access a my Social Security account. If you haven’t already completed the transition, you can find instructions at ssa.gov/myaccount.
How can you help protect yourself against scams?
Scammers may take advantage of confusion over this new rule by posing as SSA representatives and asking individuals to verify their identity to continue receiving benefits. Be extremely careful if you receive an unsolicited call, text, email, or social media message claiming to be from the SSA or the Office of the Inspector General.
Although SSA representatives may occasionally contact beneficiaries by phone for legitimate business purposes, they will never contact you by text message or social media. Representatives will never threaten you, pressure you to take immediate action (including sharing personal information), ask you to send money, or say they need to suspend your Social Security number. Familiarize yourself with signs of a Social Security-related scam by visiting ssa.gov/scam.
1–2) SSA.gov, 2025
Tariffs: How They Work and Potential Economic Effects
President Trump authorized an additional 25% tariff on all goods entering the United States from Canada and Mexico (except for a lower 10% tariff on energy resources from Canada) and an additional 10% tariff on all goods, from China on February 1, 2025. Nine days later, Trump authorized a 25% tariff on steel and aluminum, effective March 12, which strengthened and elevated tariffs levied by the first Trump administration in 2018.1 These were the opening salvos in what promises to be a period of aggressive moves that is likely to shake up the global trade environment.
A tariff is a tax on a particular class of imported goods or services that is typically designed to help protect domestic industries from foreign competition. However, the Trump administration is also using tariffs as leverage for other goals. The tariffs on Mexico and Canada — our two largest trading partners — were suspended for a month after both countries promised major initiatives to secure their U.S. borders against the flow of fentanyl and illegal immigrants.2 Despite these efforts, the tariffs went into effect on March 4. Canada quickly retaliated with 25% tariffs on about $100 billion of U.S. goods, while Mexico promised to announce retaliation measures on March 9.3
On the other hand, China — which exports some of the chemicals used to manufacture fentanyl — immediately responded to the February 1 action by raising its tariffs on selected U.S. exports by 10% to 15%.4 Trump added another 10% tariff on all Chinese goods, which also went into effect on March 4, and China shot back with new 10%–15% tariffs on U.S. agricultural goods as well as restrictions on certain U.S. companies.5
Background
Although the U.S. Constitution specifically grants Congress the power to levy tariffs (also called duties), Congress has delegated much of that authority to the President over the last 90 years. This has led to numerous trade agreements that have created a low-tariff, rules-based global trading structure, with tariffs applied on selected products. Over the past 70 years, tariffs have seldom accounted for more than 2% of federal revenue and were just 1.57% in FY 2024. Prior to the recent actions, about 70% of all foreign goods entered the United States duty-free.6
Who pays for tariffs?
Tariffs are collected by U.S. Customs and Border Protection at U.S. ports of entry. The tariff is paid by the U.S. company or individual who imports the goods. Put simply, if a U.S. company imports $1 million of foreign steel with a 25% tariff, that steel costs the company an additional $250,000 for a total of $1.25 million.
The U.S. company might then absorb all or part of the additional cost or pass it to consumers who buy products made from the steel. Alternately, the foreign steel exporter might lower its prices to maintain access to the U.S. market, in which case the U.S. company would still pay the 25% tariff, but the total price would not rise by the full 25% over the pre-tariff price.
The other factor in this equation, which is the traditional purpose of tariffs, is that the U.S. importer might buy steel from a U.S. manufacturer, thus avoiding the extra tax. The questions then are: 1) Will the U.S. manufacturer raise its price because it no longer must compete with cheaper imports? 2) Will there be enough U.S.-manufactured steel to meet demand?
Lessons from round one
There have been numerous studies of the 2018-19 tariffs, which were not as restrictive as the new program but offer some possible answers to these questions. Almost all the steel and aluminum tariff costs were passed directly to U.S. companies in the form of prices that rose by about 22% and 8%, respectively. However, many foreign producers received exemptions from the tariffs, and U.S. steel and aluminum production — which represented more than two-thirds of the U.S. market before the tariffs — grew moderately to meet demand, rising by an annual average of $2.8 billion over the period from 2018 to 2021. Even so, companies that had depended on cheaper imported metal struggled, and overall production of goods that use steel and aluminum decreased by an annual average of $3.4 billion.7
U.S. importers also bore near the full cost of the broader tariffs on Chinese goods but generally passed only part of the costs to consumers.8 However, a separate tariff on washing machines added $86 to the retail price of a washing machine and $92 to the price of a dryer, ultimately costing consumers over $1.5 billion.9 Broadly, a 2024 analysis found that the 2018–19 tariffs (many continued by the Biden administration), combined with retaliatory tariffs by other countries, reduced U.S. gross domestic product by a little more than 0.2% and cost about 169,000 full-time jobs.10
Reciprocal tariffs and de minimis suspension
Trump has also ordered a study of reciprocal tariffs, which would set tariffs based dollar-for-dollar on the tariffs each country charges on U.S. goods, as well as nontariff trade barriers. As with most issues related to tariffs, there are differing opinions on this. At best, reciprocal tariffs could lead to negotiating lower tariffs and removing barriers that prevent U.S. businesses from operating in a foreign country. At worst, they could lead to a global trade war, with ever-increasing tariffs and barriers.11
Along with the 10% tariff on Chinese goods, Trump excluded China from the de minimis provision of U.S. customs law that exempts goods valued at less than $800. This would make cheap goods from Chinese online retailers, which are often shipped directly to consumers, subject to existing tariffs plus the new 10% tariff. The exclusion was suspended on February 7 to give the U.S. Postal Service and Customs and Border Protection time to develop a plan to collect the tariffs.12 It’s unclear how this change will affect consumer prices, but processing could slow delivery times.13
Inflation
Most economists believe that tariffs cause inflation, and President Trump admitted there might be short-term price increases. The potential for tariff-driven inflation is of particular concern in the current economy; two recent surveys show a significant decline in consumer confidence due to inflation fears.14–15 The full economic impact will depend on how the tariff program plays out — how much is intended as a negotiating tool and how much turns into long-term policy. For now, it would be wise to maintain a steady course and keep an eye on further developments.
1) The White House, February 1 and 11, 2025
2) CBS News, February 3, 2025
3, 5) CNN Business, March 5, 2025
4) AP News, February 4, 2025
6) Congressional Research Service, January 31, 2025
7) U.S. International Trade Commission, May 2023
8) National Bureau of Economic Research, October 2019
9) University of Chicago, April 2019
10) Tax Foundation, February 13, 2025
11, 14) The Wall Street Journal, February 13, 2025
12) CNBC, February 7, 2025
13) AP News, February 5, 2025
15) CNN Business, February 25, 2025
Federal 2024 Tax Filing Season Began January 27
IRS began accepting and processing 2024 tax-year returns on Monday, January 27, 2025.
Tips for making filing easier
To speed a potential tax refund and help with tax filing, the IRS suggests the following:
- Make sure you have received Form W-2 and other earnings information, such as Form 1099, from employers and payers. The dates for furnishing such information to recipients vary by form, but they are generally not required before February 1, 2025. You may need to allow additional time for mail delivery.
- Go to irs.gov to find the federal individual income tax returns, Form 1040 and Form 1040-SR (available for seniors born before January 2, 1960), and their instructions.
- File electronically and use direct deposit.
- Check irs.gov for the latest tax information.
Key filing dates
Here are several important dates to keep in mind:
- January 10. IRS Free File opened. IRS Free File Guided Tax Software, available only at irs.gov, allows participating software companies to accept completed tax returns of any taxpayer or family with an adjusted gross income of $84,000 or less in 2024 and hold them until they can be electronically filed with the IRS starting January 27. Also beginning January 27, Free File Fillable forms were available to taxpayers of any income level to fill out and e-file themselves at no cost.
- January 27. IRS began accepting and processing individual tax returns. Also, Direct File (a web-based service that works on mobile phones, laptops, tablets, or desktop computers) opened to eligible taxpayers (check at irs.gov; not all tax situations are covered) in 25 states to file their taxes directly with the IRS for free.
- April 15. Deadline for filing 2024 tax returns (or requesting an extension) for most taxpayers.
- October 15. Deadline to file for those who requested an extension on their 2024 tax returns.
Tax refunds
The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. The IRS expects to issue most tax refunds within 21 days of their receiving a tax return if the return is filed electronically, the tax refund is delivered through direct deposit, and there are no issues with the tax return. To minimize delays in processing, the IRS encourages people to avoid paper tax returns whenever possible.
Act Increases Benefits for Millions The Social Security Fairness
Under the Social Security Fairness Act signed by President Biden on January 5, 2025, almost 3 million Americans will receive a boost to their Social Security benefits.1 This bill, which had bipartisan support, restores full Social Security benefits to some public-sector employees, including teachers, law enforcement officers, firefighters, and others who have been affected by two provisions of current federal law — the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).
Although the increased benefit amount for individuals will vary, the Congressional Budget Office (CBO) has estimated that eliminating the GPO will increase monthly benefits for 380,000 impacted spouses by $700 on average and by $1,190 on average for 390,000 impacted surviving spouses. Eliminating the WEP will increase monthly benefits for approximately 2.1 million impacted individuals by $360 on average. 2
Those affected will be entitled to higher benefits starting in January 2025. Individuals who received benefits in 2024 will also be entitled to back payments equal to the difference between what they received in 2024 and what they would have received without a GPO or WEP reduction.
Some background
Both the GPO and the WEP were originally intended to equalize benefits for those who receive Social Security benefits based on a job where they contributed to Social Security through payroll taxes (covered employment) and a pension from a job where Social Security payroll taxes were not withheld (noncovered employment). For decades, advocates for reform have been trying to change or repeal these provisions, arguing that they are unfair and cause financial hardship.
Enacted in 1977, the GPO has affected spouses and surviving spouses who receive pensions from a federal, state, or local government or non-U.S. employer based on noncovered employment and who also qualify for Social Security benefits based on their spouses’ work histories in covered employment. The GPO reduces Social Security spousal or widow(er) benefits by two-thirds of the amount of the pension. The reduction was intended to help ensure that the spousal and widow(er) benefits of those with covered or noncovered lifetime earnings would be about equal.
Enacted in 1983, the WEP has affected individuals who receive Social Security retirement or disability benefits based on their own covered employment (if fewer than 30 years) and a pension from noncovered employment. The Social Security benefit formula is progressive, meaning it replaces a greater share of career-average earnings for lower-paid workers than for higher-paid workers. The WEP was passed so that workers receiving pensions from noncovered employment would not receive higher benefits because the Social Security benefit formula did not count their noncovered earnings, making it appear as if they were lower-paid workers. A modified formula was implemented to figure benefits for those affected by the WEP, resulting in lower monthly Social Security benefits; the reduction was limited to half of the amount of the pension.
While advocates of the bill are cheering, opponents of the bill are concerned that repealing the GPO and the WEP will worsen the outlook for the combined Social Security trust funds. According to a CBO cost estimate, the depletion date for the combined Old-Age, Survivors, and Disability Insurance (OASDI) trust funds could be pushed forward about six months, potentially leading to a substantial reduction in Social Security benefits for all beneficiaries even sooner than expected, unless Congress acts to address the impending trust fund shortfall.3
What happens next?
If you’re among those affected, be aware that implementing benefit changes may take some time, according to a message from the Social Security Administration:
“At this time, the Social Security Administration is evaluating the law and how to implement it. We will provide more information on our website, ssa.gov as soon as it is available. If you are already entitled, you do not need to take any action at this time except to verify that we have your current mailing address and direct deposit information. If you are receiving a public pension and are now interested in filing for benefits, you may file online at ssa.gov or schedule an appointment.”4
The SSA notes that you can verify your current mailing address and direct deposit information online without calling or visiting a Social Security office by signing in to a personal my Social Security account or creating one on the SSA website.
1–3) Congressional Budget Office, September 2024
4) Social Security Administration, December 2024
