The Intelligent Investor's Almanac
Your Bi-Weekly Guide to Markets, Movements, & Money.
Presented By Ken Majmudar & Ridgewood Investments
Issue 10 • July 18 to July 31, 2025
Never miss another valuable edition of The Intelligent Investor's Almanac again.
Your TL;DR Institutional Intelligence
- Planning Insight:New tax changes give entrepreneurs, parents, and charitable families an opportunity to enhance tax efficiency while supporting long-term wealth creation.
- Action Step: Assess your business income, 529 contributions, and charitable strategy to capitalize on these expanded benefits before key thresholds reset.
Wealth Preservation: Strategic use of QBI, R&D, and SALT deductions can reduce tax drag and support long-term compounding.
- Strategic Response:Align tax planning with education, philanthropy, and reinvestment goals to stay ahead of evolving policy landscapes.
The Value Investor
Ken Majmudar, CFA & Founder of Ridgewood Investments
“Someone is sitting in the shade today because someone planted a tree a long time ago.”
~ Warren Buffett
The US Congress recently passed H.R. 1 – To provide for reconciliation pursuant to title II of H. Con. Res. 14, commonly referred to as the “One Big Beautiful Bill”, which includes changes across several areas: income deductions for business owners, expanded uses for 529 education savings plans, higher limits for charitable contributions, and a temporary increase in the state and local tax (SALT) deduction.
For business owners, the Qualified Business Income deduction may now apply to a wider range of eligible business owners. The ability to deduct 100% of eligible investments upfront is expected to continue. Savings for education may have more flexibility in how 529 plans are used. Charitable donors could see larger deductions, depending on how much they give. And those living in high-tax states may benefit from the increased SALT cap for the next few years.
These changes may not apply to everyone. But they reflect why it’s helpful to occasionally review how key parts of your financial planning are structured.
At Ridgewood, we continue to focus on the same goal: helping families stay organized, informed, and prepared to make well-informed financial decisions that support their long-term goals.
Qualified Business Income and Depreciation
The proposed legislation introduces several changes to enhance the tax efficiency of small business owners and entrepreneurs:
If you run a business, especially an LLC or S-Corp, you can now deduct more of your income and instantly write off business expenses like equipment, technology, or even office upgrades.
You may deduct 20% of your business income from your taxes, even if you earn more than before.
100% bonus depreciation is now permanent. That means you can immediately deduct the entire cost of big capital investment like real estate or business equipment in the same year you make them.
R&D (research & development) costs done in the U.S. can now be deducted right away again (rather than over 5 years).
Action Steps:
Planning to buy software, machinery, or tech? Buy before year-end and deduct it fully.
Revisit your business structure (LLC/S-Corp) to ensure you qualify for the expanded QBI deduction.
If you are engaged in product development or innovation, track your U.S. R&D expenses. They now provide bigger tax relief.
Together, these provisions may offer a valuable planning opportunity for business owners to manage their taxable income and reinvest more efficiently.
State and Local Tax Deduction (SALT)
The SALT deduction allows taxpayers to deduct certain state and local taxes, such as income or property taxes, on their federal tax return.
The limit on how much state and local tax (SALT) you can deduct has been raised to $40,000 through 2029 (from just $10,000 earlier). But it starts shrinking if you earn more than $500,000. If you live in states like NY, NJ, or CA, this is a huge opportunity to reduce your federal tax bill, but only for a few years.
Action Steps:
If your income is under $500k: Maximize property tax and state tax payments this year to maximize the benefit.
If you are near the income threshold: Plan your deductions wisely (charity + SALT together) in high-income years to maximize your overall tax benefit.
Mark your calendar: this benefit goes back down in 2030, so you have a limited time to take advantage.
529 Plan Expansion
The new law gives families much more flexibility in how they use 529 savings. Beyond college, 529 plans can now fund a wide range of career-focused training programs. You can also repurpose leftover funds for retirement, making 529s useful even if a traditional college path isn’t pursued.
Eligible for job-oriented programs like CDL training, coding bootcamps, and trade licenses.
Roth IRA rollovers are allowed, up to $35,000 lifetime limit per beneficiary.
Broader use for K–12 education (e.g., tutoring, curriculum, software, therapies).
Annual K–12 expense cap rises to $20,000 starting in 2026.
Many families today are exploring alternative education options, from data analytics certifications to advanced manufacturing training. These changes give families added flexibility to support those goals using a tax-advantaged account they may already be contributing to.
Action Steps:
Have unused 529 money? Convert to Roth IRA for your child’s future retirement (if they meet eligibility).
Children not pursuing college? Use 529s for career paths with real-world value, without losing the tax benefits.
Want to help with tutoring or test preparation? You are now eligible to get more tax-free additional flexibility for those expenses too.
Charitable Giving: Key Changes to Deduction Rules
The legislation introduces both new ways to deduct charitable giving and additional requirements for certain donors, particularly those who take the standard deduction or contribute smaller amounts.
Charitable deductions are now more accessible, even for people who take the standard deduction. But new minimum thresholds mean you will need to give a certain amount for it to count. The law encourages larger or bundled giving, especially for consistent givers and corporations.
Standard deduction filers can deduct up to $1,000 (single) or $2,000 (married).
Individuals must donate ≥ 0.5% of income for deductions to apply.
Corporations must give ≥ 1% of taxable income; 10% limit still applies.
Unused contributions may be carried forward, but only under specific conditions.
Smaller contributions may not be deductible unless they cross the required threshold
These requirements, such as meeting a minimum giving threshold or waiting to deduct excess contributions in future years, introduce more structure to the charitable deduction process.
Action Steps:
Plan your giving: If you fall below the threshold, Combine multiple charitable gifts in one tax year to ensure you meet the eligibility threshold.
Have a donor-advised fund? Use it to bunch gifts and time them for tax impact.
Businesses: Prioritize large donations in years with higher taxable income to maximize tax benefits.
Disclosure: Ridgewood Investments is a registered investment adviser. This newsletter is for informational purposes only and does not constitute personalized investment or legal advice. Tax-related matters discussed herein are general in nature and not meant as guidance. Please consult a qualified tax professional regarding your specific situation. Information is subject to change and may not apply to all investors.
Here’s to building lasting wealth,
Ken Majmudar, CFA
Founder & Chief Investment Officer Ridgewood Investments
P.S. If you’re ready to explore how our institutional-grade investment approach can work for your portfolio, let’s schedule a time to talk below.
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Building generational wealth requires institutional-grade thinking. Let’s discuss how our sophisticated approach can work for your family’s future.
Important Disclosure: Ridgewood Investments is a registered investment adviser. This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.
