The High Ground: Why AI Will Never Replace Human Financial Planners

Introductory Note: I was inspired to write this based on a recent rant by one of the fathers of the financial planning profession and author of “Inside Information”, Bob Veres. I’ve used his rant (with his express written permission) to expand on this topic.

Every few months, the same headline resurfaces—“Artificial intelligence (AI) won’t replace human financial planners.” It’s meant to reassure, but perhaps we should also ask: why does this declaration keep needing to be made?

These forecasts of inevitable obsolescence have circulated through our profession for decades. We heard them when the first planning programs rolled out in the early 1980s. We heard them again in the 2010s, when “robo‑advisors” promised efficient algorithms would do the same work for a fraction of the cost. Today, with artificial intelligence reshaping industries from law to logistics, we’re told—yet again—that technology will soon do it all… but “not yet.”

My position is simpler: not ever.

Am I being naive or perhaps ignorant of where AI is headed? Perhaps.

Many don’t know this, but the roots of the “geek” in my financial planning moniker, “themoneygeek,” stem from my strong interest and decades-long professional background and expertise working in technology as a software product manager, technology consultant, and educator.

I got my start in the financial planning profession by first consulting with other financial planners on their technology architecture needs to get that proverbial foot in the door. So, as a self-declared technogeek since the 1980s, I have some credibility when making this statement.

What Technology Really Does Best

Let’s be clear—technology is not the enemy of good advice. It’s an amplifier. AI‑driven tools can already integrate real‑time market data, automate rebalancing, flag tax‑loss harvesting opportunities, model cash flow across multiple scenarios, and surface insights about spending or risk that would take hours to identify manually.​

A fee‑only fiduciary who embraces these tools can deliver faster answers, cleaner reporting, and deeper analytics. In that sense, technology actually gives human advisors more leverage to serve their clients—just as earlier innovations like portfolio management and financial planning software once did.​

But algorithms can’t build trust, navigate life events, or calm a shaken client during a market shock. A spreadsheet doesn’t hear the fear in someone’s voice. A chatbot doesn’t see a spouse’s expression at the thought of retiring early or funding a child’s education.

The True Frontier of Advice

The maturation of our profession has always followed an upward path—from product sales, to planning, to personalized professional advice. The next step is coaching: helping clients clarify what they truly want from this one precious life they’ve been given.

That process involves conversations about purpose, family, trade‑offs, and meaning—topics that no predictive model can quantify. Many clients, given the tools, still won’t set priorities or pursue their deeper goals without a trusted nudge from a human advisor. They’ll plan for others before they plan for themselves. And that’s where the real value of our work lies: helping people live their money, not just manage it.​

Where the “High Ground” Lies

The safest territory from automation is not in number‑crunching but in connection—the human partnership that turns goals into action.

Technology can see patterns. Only people can see you.

Artificial intelligence will make planners faster, smarter, and more efficient—but never replace the relationship that gives planning its meaning.

So rather than defending our values against technology, let’s stand firmly on higher ground:

Empathy. Context. Coaching. Accountability.

Those are the edges no algorithm can reach.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

2026 Open Enrollment Guide: Essential Tips for Employee Benefits Selection

As we approach the annual open enrollment period for most employers (typically October through November 2025), now is the perfect time to review your employee benefits and make informed decisions that will impact your financial well-being throughout 2026.

Why Open Enrollment Matters More Than Ever

Open enrollment is your once-a-year opportunity to make changes to your employer-sponsored benefits. Outside of qualifying life events (marriage, divorce, birth of a child, etc.), this is likely your only chance to:

• Switch health insurance plans or carriers

• Adjust life and disability insurance coverage amounts

• Modify flexible spending account (FSA) elections

• Review and update beneficiary information

• Evaluate supplemental benefits like vision, dental, or critical illness coverage

Key Areas to Review During Open Enrollment

Health Insurance

Health insurance, especially catastrophic health insurance, is not optional for anyone, as healthcare and hospitalization costs continue to skyrocket.

• Compare your plan options carefully: Don’t automatically re-enroll in your current plan. Premiums, deductibles, and covered providers may have changed.

• Consider your 2026 healthcare needs: Are you planning any major medical procedures? Do you have ongoing prescriptions? Select a plan that matches your anticipated usage.

• Network providers: Verify that your preferred doctors and hospitals are still in-network for your chosen plan.

• Supplemental Insurance: Analyze the real total cost of dental and eye care insurance by comparing total out-of-pocket costs with and without insurance. With meager benefits, limited payments, and high co-pays or co-insurance, the premiums may not be worth the coverage provided, and you therefore may want to forego coverage.

• Total cost analysis: Look beyond monthly premiums to include deductibles, co-pays, and out-of-pocket maximums. Are you a good candidate for a high-deductible health plan (i.e., you’re generally in good health and have minimal consumption of healthcare), which makes you eligible for a health savings account (HSA)?

Life and Disability Insurance

• Life insurance: Review your current coverage amount. Has your income increased? Do you have new dependents? Consider whether your current coverage adequately protects your family’s financial needs. Consider whether you really need accidental death and disability insurance and whether it’s worth the extra cost.

• Disability insurance: Evaluate both short-term and long-term disability options. Your income is likely your most valuable asset—protect it accordingly. For most people, maximizing available disability insurance coverage is a great idea.

• Supplemental coverage: Group rates through your employer are often more affordable than individual policies purchased elsewhere.

Flexible Spending Accounts (FSAs)

• Healthcare FSA: Estimate your out-of-pocket medical expenses for 2026, including prescriptions, dental work, and vision care.

• Dependent Care FSA: If you have qualifying childcare or eldercare expenses, this pre-tax benefit can provide significant savings.

• Remember the “use it or lose it” rule: Most FSAs have limited carryover provisions (some plans require you to use all amounts by December 31; others give you a few extra months), so plan and understand your elections carefully.

Smart Decision-Making Tips

1. Gather last year’s data: Review your 2024-2025 healthcare spending, insurance claims, and FSA usage to inform your 2026 decisions.

2. Calculate total annual costs: Don’t focus solely on monthly premiums. Add up premiums, deductibles, and expected out-of-pocket expenses for a comprehensive view.

3. Consider your family situation: Changes in marital status, number of dependents, or family health conditions should influence your benefit selections. Compare benefits and costs if both spouses work, and make choices that fit your family’s needs.

4. Think ahead: Are you planning a family addition, major surgery, or a career change in 2026? Factor these into your benefit choices.

5. Update beneficiaries: Use this time to ensure your beneficiary information is current for all accounts (e.g., 401(k), 403(b), 457, 401a plans) and insurance policies.

6. Ask questions: Don’t hesitate to attend employer benefit sessions or contact HR for clarification on plan details.

We’re Here to Help

Navigating open enrollment can feel overwhelming, but you don’t have to do it alone. We are available to consult with you on your benefit elections and help you make informed decisions that align with your financial goals and family needs.

To ensure we can provide timely guidance and help you meet enrollment deadlines, please contact us before your employer’s enrollment period closes. Many companies have strict deadlines in late October or November, and missing these dates could mean waiting until next year to make changes.

Take Action Now

• Mark your calendar: Note your employer’s specific open enrollment dates

• Gather your information: Collect recent medical bills, current benefit summaries, and family health information.

• Don’t procrastinate: The best benefit choices require careful consideration—start planning now.

Your employee benefits are a significant part of your total compensation package. Making thoughtful, informed decisions during open enrollment can save you money and provide better protection for you and your family throughout 2026.

Sam H. Fawaz is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other tax or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

U.S. Government Shutdown 2025: What It Means and How Long It Could Last

The federal government officially shut down many of its operations at 12:01 a.m. on October 1, 2025. (1) This is the 15th government shutdown since 1980. Most were short, lasting one to three days. The longest lasted 34 full days, from December 2018 to January 2019. (2)

It’s impossible to predict how long the current shutdown might last, but it may be helpful to know more about why it happened and what you can expect if it continues.

Zero out of 12 appropriations bills

The federal fiscal year begins on October 1, and under normal procedures, twelve appropriations bills for various government sectors are expected to be passed by that date to fund activities ranging from federal employee salaries to national park operations and food safety inspections.

These appropriations are considered discretionary spending, meaning that Congress has the flexibility to set the amounts. Obviously, it would be helpful for federal agencies to know their operating budgets in advance of the fiscal year, but all 12 appropriations bills have not been passed before October 1 (or any time during the year) since FY 1997. (3)

In 2018–19, five of the twelve appropriations bills had passed prior to the shutdown, which helped limit the damage. (4) This year, no appropriations bills have been passed. However, some agencies — primarily in the Department of Defense and Department of Homeland Security — received new funding from the One Big Beautiful Bill Act passed this summer, which may allow certain programs and functions to continue. (5)

Continuing resolutions and omnibus spending bills

To buy time for further negotiations, Congress typically passes a continuing resolution, which extends federal spending to a specific date, generally at or based on the level of the previous year. These bills are essentially placeholders that keep the government open until full-year spending legislation is enacted.

Even with the extensions provided by continuing resolutions, Congress seldom passes individual appropriations bills. Instead, they are often combined into massive omnibus spending bills that may include other provisions unrelated to funding.

The current situation

The U.S. Constitution gives the House of Representatives sole power to initiate revenue bills, so the House typically passes funding legislation and sends it to the Senate. Whereas the House can pass legislation with a simple majority, the Senate generally requires 60 votes to pass legislation due to the filibuster rule. This, in turn, typically requires cooperation from both political parties.

The House approved a continuing resolution that would extend funding for seven weeks at current levels of spending. Senate Republicans, with one exception, voted for the bill late on the night of September 30, joined by three Democrats for a total of 55 votes, five votes short of the 60 votes needed to pass. Earlier in the evening, a Democrat-sponsored continuing resolution also failed to pass. (6)

Although a larger group of Senate Democrats provided support for a similar continuing resolution in March, they have refused to support this resolution unless it includes an extension of Affordable Care Act (ACA) health insurance subsidies that are scheduled to expire on December 31, 2025.

Allowing the ACA subsidies to lapse could significantly raise health insurance premiums for many Americans, and Republican leadership has expressed a willingness to consider extending them, but not as part of the continuing resolution. Democrats also seek to reverse spending cuts to Medicaid. (7)

Effects of the shutdown

According to the law, the U.S. Treasury cannot spend money that has not been approved by Congress. Therefore, agencies that rely on discretionary spending cannot pay their employees or maintain essential services.

Each agency has its own shutdown plan. Certain “essential services” — primarily related to public safety — will continue and be funded retroactively after funding has been authorized. Here are the potential effects on some key services. (8–12)

· Mail will continue to be delivered because the U.S. Postal Service is self-funded.

· Social Security, Medicare, and Medicaid will continue to make payments because the funds for these programs do not require annual appropriations. However, other services, such as benefit verifications and application processing, may cease.

· Interest on Treasury securities will continue to be paid.

· Federal workers will not be paid. Workers considered “essential” will be required to work without pay, while others would typically be furloughed. However, the Trump administration has issued instructions that agencies should use the shutdown as an opportunity to reduce their workforces, an action that has not occurred during previous shutdowns. Lost wages for essential and furloughed employees will be reimbursed after funding is approved.

· Unlike federal employees, private contractors who often work side-by-side with federal employees are not guaranteed to be paid.

· Air travel could be affected. In 2019, high absenteeism among Transportation Security Administration (TSA) workers, who were required to work without pay, resulted in long lines, delays, and gate closures at some airports.

· Environmental and food inspections could stop.

· “Accessible areas” of national parks, such as roads, trails, and open-air memorials, will remain open, as will locations and services supported directly by visitor fees. Other areas may be closed, and visitor services may be unavailable.

· The Internal Revenue Service has special funding that will allow it to maintain operations for the first five business days of the shutdown. It’s unclear what would happen after that, but if a large number of workers are furloughed, the IRS would be unable to perform verifications for income and Social Security numbers, which could delay mortgage and other loan applications. Tax refunds could also be delayed.

· Key economic reports, like the monthly jobs report, may be delayed, making it more difficult for the Federal Reserve to gauge economic activity when making decisions.

· The National Flood Insurance Program will stop issuing policies or renewals.

· Federal student loan disbursements and grants to local school districts should continue, along with processing the Free Application for Federal Student Aid (FAFSA). However, an extended shutdown could cause delays in processing and support activities, and schools located on federal land, such as Indian reservations or military bases, could temporarily lose funding.

· The Supplemental Nutrition Assistance Program (SNAP or food stamps) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) will continue for now, but it is unclear how long they can be sustained.

While any shutdown causes hardship for federal workers and the citizens they serve, a brief shutdown typically has a minimal effect on the broader U.S. economy, because lost payments are generally made up after spending is authorized. However, an extended shutdown can be costly.

The Congressional Budget Office estimated that the 2018–19 shutdown reduced gross domestic product (GDP) by $11 billion, including $3 billion that was never recovered. Even so, this was a tiny fraction of GDP. (13)

Previous shutdowns have generally not significantly impacted global markets, except for some moderate short-term volatility. However, a prolonged shutdown could have a greater temporary impact. (14)

If the shutdown continues, be sure to check the status of federal agencies and services that may directly affect you.

Shutdown effects on markets and the debt ceiling

The current shutdown has sparked little more than a yawn among investors. On the first two days of the shutdown, the S&P 500 index closed higher, suggesting that many people are barely aware of what is happening or the potential ramifications.

Although the current debate is not directly related to the debt ceiling, we will likely confront that issue again in January.

The debt ceiling was temporarily suspended in August 2023 through December 31, 2024. However, once the suspension expired, the debt ceiling was reinstated to approximately $36.1 trillion to account for obligations incurred during the suspension period.

Congress raised the statutory debt ceiling by $5 trillion in July 2025, increasing the limit from $36.1 trillion to $41.1 trillion. Interestingly, the national debt is projected to surpass $39.4 trillion by January 1, 2026.

While it appears that markets are largely ignoring this current shutdown, if it drags on, it could become a bigger problem than most expect. The longer this issue continues, the closer we come to facing the same situation with the debt ceiling at the start of 2026.

Note: Projections are based on current conditions, are subject to change, and may not materialize as expected.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

Footnotes: 1) The Hill, October 1, 2025; 2, 5, 13) CBS News, September 29, 2025; 3) The New York Times, September 29, 2025; 4, 10) Committee for a Responsible Federal Budget, September 16, 2025; 6) The New York Times, September 30, 2025; 7) Associated Press, September 29, 2025, and October 1, 2025; 8) The Wall Street Journal, October 1, 2025; 9, 14) CNBC, October 1, 2025; 11) The New York Times, October 1, 2025; 12) ABC News, October 1, 2025

2025 College Funding Changes: What You Need to Know

Back-to-school season is here, making it the perfect time to unpack sweeping changes to college funding, student loans, and new ways families can maximize college savings. As students prepare for a new academic year, parents, grandparents, and graduates alike should take note—these updates will shape how education is funded and financed in the years ahead. So grab your pencils and notebooks: class is in session, and the new rules are set to make a major impact.

The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, includes multiple provisions that affect higher education. The number and magnitude of the college funding changes could have been the subject of a standalone bill. Even if you’re past your college years (or college funding years), the provisions of the bill could still have an impact on your finances for years to come.

Key changes in the bill include new borrowing limits for students and parents under federal loan programs, streamlined student loan repayment plans, stricter rules on the ability of borrowers to pause student loan repayment, the promotion of workforce training programs, expanded qualified expenses for 529 plans, and an increased endowment tax on wealthy colleges and universities, among other items.

New borrowing limits under federal loan programs

The legislation imposes new borrowing caps on Parent PLUS Loans and Direct Loans and eliminates the Grad PLUS Loan program. These changes take effect July 1, 2026, unless otherwise noted.

Parent PLUS Loans

Currently, parents can borrow up to the full cost of their child's undergraduate education, minus any financial aid received. Under the new law, Parent PLUS Loans will have an annual limit of $20,000 and a total limit of $65,000 per dependent student.

There is a three-year grace period on the new borrowing limits for parents who have borrowed under this program before June 30, 2026 — essentially allowing parents of current undergraduate students to continue borrowing up to the full cost of college if they need to.

Grad PLUS Loans

The Grad PLUS Loan program, which allows graduate students to borrow up to the full cost of their education (minus any aid received), has been eliminated.

It will be replaced with graduate loans under the existing federal Direct Loan program, but with new loan limits: $20,500 per year and $100,000 total for graduate students and $50,000 per year and $200,000 total for professional students (e.g., medicine, law). These new limits do not include undergraduate loans (current graduate student Direct Loan limits are $20,500 per year and $138,000 total).

The new law allows current graduate and professional students to continue borrowing under the current Grad PLUS Loan program during their remaining schooling or for three years, whichever is less, provided they are enrolled in a graduate or professional program as of June 30, 2026, and they have received at least one loan under the Grad PLUS program.

Direct Loans

There is a new lifetime student loan borrowing cap of $257,500 — this limit applies to undergraduate and graduate loans, not Parent PLUS Loans.

Loan Planning Tips

Review New Loan Limits

Carefully project borrowing needs, as Parent PLUS and new Direct Loan limits are much stricter; plan for out-of-pocket costs to avoid surprises.

Time Borrowing Strategically

If eligible, use the three-year grace period to maximize old borrowing rules before caps take effect, especially for parents or graduate/professional students already in school.

New student loan repayment plans and hardship rules

The legislation significantly alters the landscape of federal student loan repayment programs. The Saving on a Valuable Education (SAVE) Repayment Plan, the Pay As You Earn (PAYE) Repayment Plan, and the Income Contingent Repayment (ICR) Plan will be phased out and eliminated by July 1, 2028. Borrowers currently enrolled in one of these plans must transition to a new repayment plan by July 1, 2028, as described below.

Additionally, as of July 1, 2026, the legislation introduces two new repayment plans: the Standard Repayment Plan and the Repayment Assistance Plan.

Standard Repayment Plan

Under this plan, borrowers pay a fixed amount each month over a specified period. Before July 1, 2026, payments were made over a 10-year period. Under the Standard Repayment Plan, the amount of time a borrower has to repay a student loan depends on the loan balance:

· Less than $25,000 — 10 years

· $25,000 to less than $50,000 — 15 years

· $50,000 to less than $100,000 — 20 years

· $100,000 and over — 25 years

There is no prepayment penalty; borrowers can pay off their loans early without incurring any additional fees or penalties.

Repayment Assistance Plan

The Repayment Assistance Plan (RAP) is a new income-based repayment plan that bases monthly loan payments on a borrower's adjusted gross income (AGI). This plan is only available to undergraduate and graduate students, not parents. Under RAP, a borrower's monthly payment will be set as follows based on AGI:

· $10,000 or less — flat payment of $10 per month ($120 per year)

· $10,001 to $20,000 — 1%

· $20,001 to $30,000 — 2%

· $30,001 to $40,000 — 3%

· $40,001 to $50,000 — 4%

· $50,001 to $60,000 — 5%

· $60,001 to $70,000 — 6%

· $70,001 to $80,000 — 7%

· $80,001 to $90,000 — 8%

· $90,001 to $100,000 — 9%

· $100,001 and over — 10%

Payments are applied first to interest, then to fees, and then to principal. If the required payment is less than the accrued interest, the additional interest is waived. After 30 years of on-time payments, all remaining debt is forgiven (current income-based plans forgive remaining debt after 20 or 25 years).

For single borrowers, only the borrower's AGI is used to determine the monthly payment. For married borrowers, joint AGI is used if the couple files a joint federal income tax return; otherwise, for married borrowers who file separate income tax returns, only the borrower's AGI is used. For borrowers with dependents, the monthly payment will be reduced by $50 for each dependent listed on a borrower's federal income tax return.

Payments made under RAP qualify for the federal Public Service Loan Forgiveness (PSLF) program.

Which repayment plan applies?

Borrowers who obtain new loans on or after July 1, 2026, will repay them under either the new Standard Repayment Plan or the Repayment Assistance Plan.

Existing borrowers who are currently enrolled in the SAVE, PAYE, or ICR Plan must transition to a new repayment plan by July 1, 2028. They can choose either the federal government's remaining income-driven plan, called the Income-Based Repayment (IBR) Plan, or the new Repayment Assistance Plan. More information is expected to be available from the Department of Education in the coming months.

Repayment Planning Tips

Repayment Selection Preparation

Existing borrowers in SAVE, PAYE, or ICR should evaluate future repayment plan options and anticipate being switched to the new Repayment Assistance or Income-Based Repayment plan by 2028.

Income and Dependent Planning

Use the RAP’s dependent deduction ($50/month per dependent) and joint AGI strategies to lower student loan payments for families

Changes to deferment and forbearance rules

The new law tightens the ability of borrowers to pause repayment on their federal student loans.

· New deferment rule: Starting July 1, 2027, the economic hardship deferment and the unemployment deferment will be eliminated.

· New forbearance rule: For new loans issued July 1, 2027, and later, a forbearance (a payment pause due to short-term financial difficulty) will be limited to a single nine-month pause every 24 months.

Expanded workforce training focus

The legislation seeks to encourage non-traditional post-secondary education paths in two ways.

Workforce Pell Grant

Starting with the 2026–2027 school year, a new Workforce Pell Grant will be available to students enrolled in accredited, short-term (8–15 weeks in duration) job-focused programs, such as certificate programs at community colleges. Funding will be pro-rated based on the program's length, meaning a Workforce Pell Grant will be less than a standard Pell Grant (the maximum standard Pell Grant for the 2025–2026 year is $7,395).

Planning Tip

Consider Workforce Programs

Take advantage of new Workforce Pell Grants for short-term, career-focused programs; these may offer a quicker return on investment versus traditional degrees.

Expanded qualified expenses for 529 plans

Starting with the 2026 tax year, the new law expands the list of qualified 529 plan expenses to include tuition, fees, books, and expenses for workforce credentialing programs (as defined in the law as a "recognized post-secondary credential program"). This includes programs that may not have fit under the existing vocational or apprenticeship allowed use cases.

In addition, starting in 2026, the limit on K-12 qualified expenses has been increased from $10,000 to $20,000 per year and additional expenses are now qualified at the K-12 level, including instructional materials (both hard copy and online), tuition for tutoring or educational classes outside of school, fees for dual enrollment at an institution of higher education, standardized test fees, and educational therapies for students with disabilities (e.g., occupational therapy, speech therapy).

The new law also permanently allows rollovers from a 529 plan to an ABLE account (a tax-advantaged savings account for individuals with disabilities).

Planning Tip

Plan your 529 withdrawals to cover expanded credentials, increased K-12 expenses, and rollovers to ABLE accounts for dependents with disabilities, starting in 2026.

Expanded endowment tax on wealthy colleges

The new law increases the excise tax on the endowments of wealthier colleges and universities. Currently, private schools with at least 500 tuition-paying students and an endowment of at least $500,000 per student are subject to a 1.4% excise tax on net investment income from their endowments. This tax was enacted as part of the Tax Cuts and Jobs Act of 2017.

Under the new law, starting in tax year 2026, colleges with more than 3,000 tuition-paying students will pay excise tax on net investment income from their endowments based on an "endowment dollars per student" model as follows:

· $500,000 to $750,000 endowment per student — 1.4%

· $750,001 to $2,000,000 endowment per student — 4%

· Over $2,000,000 endowment per student — 8%

Why should you care? Because many colleges rely on income from their endowments to fund student financial aid programs, colleges and universities impacted by this new endowment tax could potentially reduce their aid under these programs.

Planning Tip

Watch for changes to college financial aid at well-endowed institutions; review or ask how new taxes could affect grants and scholarships at target schools.

Miscellaneous provisions

The legislation includes several other education-related provisions, including:

· Pell Grant eligibility: The new law adjusts the way Pell Grant eligibility is determined based on the Student Aid Index calculation in the FAFSA (Free Application for Federal Student Aid) and on the amount of private full-ride scholarships received, which is expected to result in fewer students qualifying for a traditional Pell Grant. This adjustment takes effect starting with the 2026–2027 school year.

· FAFSA changes on small businesses and family farms: Starting July 1, 2026, the FAFSA will no longer count the net worth of small businesses (100 employees or fewer), family farms, and commercial fishing businesses when calculating aid eligibility. This change will take effect with the 2026–2027 school year.

· Employer-provided student loan repayment assistance: The legislation permanently extends the $5,250 tax-free employer-provided student loan repayment assistance starting with the 2026 tax year. The $5,250 threshold will be indexed for inflation starting in 2027.

· Claiming the American Opportunity Tax Credit and Lifetime Learning Credit: Starting with the 2026 tax year, taxpayers who claim either of these education tax credits on their federal income tax return must include their Social Security number and, where applicable, the college's employer identification number (EIN).

Planning Tips

FAFSA Strategy for Families with Small Businesses/Farms

Beginning 2026-27, families with small businesses or farms may see more favorable federal aid calculations—you may want to revisit FAFSA filings to optimize eligibility.

Employer Loan Repayment

Seek employers offering tuition or student loan repayment benefits, with up to $5,250 annually now tax-free and indexed for inflation.

Track New Documentation Needs

Prepare to provide Social Security numbers and college EINs when claiming education credits starting in 2026.

Conclusion

There’s no doubt that the sweeping changes to college funding will affect most families and students returning to school, as well as some of those already out of school. Understanding and adopting the included tips will help families and students adjust to the tax law’s new rules, prepare for several less generous provisions, and take advantage of other expanded education benefits.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client's financial plan and investment objectives are unique.

New Tax Bill Requires Updated Planning Approach

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.

The OBBBA makes permanent most of the 2017 Tax Cuts and Jobs Act (TCJA) tax provisions that were set to expire at the end of this year, while delivering several new deductions and changes.

Many of the new and modified provisions seem simple on the surface, but will require new approaches to tax planning to optimize the benefits of various tax breaks.

On behalf of all CPA’s and accountants, and before delving into the various provisions below, I want to thank Congress for renewing the “CPA Full Employment Act,” also known as GOFA (Guaranteed Overtime for Accountants), proving once again that while tax breaks may expire, job security for tax professionals is eternal.

TCJA Expiring provisions that are now permanent

Rates and structure

The TCJA reduced the applicable tax rates for most brackets from 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 amounts

The TCJA established larger standard deduction amounts. The OBBBA includes an additional increase, and for 2025, the 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 TCJA eliminated the deduction for personal exemptions. The last year it was available was 2017 at $4,050 per exemption. This deduction 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 OBBBA increases the child tax credit to $2,200 for each qualifying child starting in 2025.

Mortgage interest deduction

The TCJA imposed a limit of $750,000 ($375,000 for married filing separately) on qualifying mortgage debt for purposes of the mortgage interest deduction. It also made interest on home equity indebtedness nondeductible. Both provisions are now permanent.

The OBBBA reinstates the previously expired provision allowing for the deduction of mortgage insurance premiums as interest (subject to income limitations), beginning in 2026.

Estate and gift tax exemption

The TCJA implemented a larger estate and gift tax exemption amount (essentially doubled it). The OBBBA increases it to $15 million in 2026 ($30 million for married couples), and it will be indexed for inflation in subsequent years.

Alternative minimum tax (AMT)

The TCJA implemented significantly increased AMT exemption amounts and exemption income phase-out thresholds. The OBBBA makes them permanent.

Itemized deduction limit

The OBBBA replaces the previously suspended (from 2018 to 2025) overall limit on itemized deductions. This was known as the "Pease limitation."

For taxpayers with adjusted gross income (AGI) above a specified threshold (for example, in 2017, $254,200 for single filers and $305,050 for married filing jointly), the Pease limitation reduced total itemized deductions by 3% of the amount by which AGI exceeded the threshold. The haircut could not exceed 80% of the total itemized deductions.

The Pease limitation is now replaced with a percentage reduction that applies to individuals in the highest tax bracket (37%), effectively capping the value of each $1.00 of itemized deductions at $0.35.

Most taxpayers will find the new limitation more generous, as the cap only affects the highest earners.

Qualified business income deduction (Section 199A)

The TCJA created the deduction for qualified business income. The OBBBA additionally increases the phase-in thresholds for the deduction limit. A new minimum deduction of $400 is now available for specific individuals with at least $1,000 in qualified business income.

TCJA Existing provisions with material changes

The One Big Beautiful Bill Act also makes significant changes to other provisions, some of which are temporary, while others are permanent. Two of the changes that received substantial coverage leading up to passage and enactment include a temporary increase in the limit on allowable state and local tax deductions and the rollback of existing energy tax incentives.

State and local tax deduction (SALT)

The new legislation temporarily increases the cap on the SALT deduction from $10,000 to $40,000 through 2029. This increased cap is retroactively effective for the entire year 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 (AGI) exceeding $500,000 (tax year 2025, adjusted for inflation in subsequent years), but the limit is never reduced below $10,000. In 2030, the SALT deduction cap will return to $10,000.

Careful income and deduction planning for taxpayers around the $500,000 AGI level will be critical going forward.

Repeal and phase-out of clean energy credits

The new legislation significantly rolls back energy-related tax incentives. Provisions include:

• The Clean Vehicle Credit (Internal Revenue Code or 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 (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

Before 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 in the year of acquisition. 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 of acquisitions (indexed for inflation) to $2.5 million, and it increases the phase-out threshold from $2.5 million (indexed for inflation) to $4 million.

OBBBA New provisions

The One Big Beautiful Bill Act includes several new tax deductions intended to represent a step toward fulfilling campaign promises that eliminate taxes on Social Security, tips, and overtime. Some of these new deductions are temporary, others 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, AKA "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 before 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 claim a deduction of 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, AKA "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 through 2028.

Investment accounts for children, AKA "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, employers, and certain tax-exempt, nonprofit, and government organizations are eligible to 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 before the account holder reaches 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 and 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.

For itemizers, the legislation introduces a “haircut” to charitable contributions, equivalent to 0.5% of adjusted gross income, similar to the 7.5% haircut for medical expenses.

These provisions possibly make donor-advised funds and qualified charitable distributions (from IRAs for those age 70.5 or older) more critical than ever to incorporate into charitable giving strategies and planning.

Car loan interest deduction, AKA "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 annual interest on a qualifying loan.

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).

529 Education Savings Plans

Section 529 college savings accounts are expanded in three critical ways:

First, you can withdraw up to $20,000 per year tax-free for K-12 schooling beginning in 2026, an increase of $10,000 from the current annual cap. As always, there is no limit on the amount of tax-free withdrawals that can be used to pay for college.

Second, more K-12 expenses are covered. It used to be that distributions for K-12 education were tax-free only if used to cover tuition. Now covered are costs of tuition, materials for curricula and online studying, books, educational tutoring, fees for taking an advanced placement test or any exam related to college admission, and educational therapies provided by a licensed provider to students with disabilities. This easing begins with distributions from 529 accounts made after July 4, 2025.

Third, certain post-high school credentialing program costs are eligible for payment via 529 plans. This expansion supports individuals pursuing alternative educational and career pathways outside of traditional degree programs. Eligible costs typically include:

• Tuition, books, and required fees for credentialing and licensing programs.

• Testing fees to obtain or maintain a professional certification or license.

• Continuing education costs needed to renew or maintain specific credentials.

• Supplies and equipment required for a recognized credentialing program.

1099 Reporting

A 2021 law required third-party settlement networks to send 1099-Ks to payees who were paid more than $600 for goods and services. The OBBBA repeals this change and restores the prior reporting rule. Third-party networks are now required to send 1099-Ks only to payees with over 200 transactions who were paid more than $20,000 in a calendar year.

The filing threshold for 1099-MISC and 1099-NEC forms increases from $600 to $2,000, effective with forms sent out in 2027 for tax year 2026. This figure will be indexed for inflation. The $600 reporting threshold has not changed since 1954, even though prices have increased by about 1095% since then.

But wait….there's more …

The One Big Beautiful Bill Act includes broad and sweeping changes that will have a profound impact on tax planning. The legislation is over 800 pages long, and we have only scratched the surface here.

While income and estate tax provisions are highlighted in this summary, the legislation also makes fundamental changes that impact areas such as healthcare, immigration, and border security, as well as additional tax changes. Further information and details will be forthcoming in the coming weeks and months. There are numerous unanswered questions that will be addressed through Congressional technical corrections, IRS Bulletins, and upcoming regulations.

As always, if you have questions about how these changes affect your specific situation, please don't hesitate to contact us. Although I expect a jump in my overtime this year as a result of this tax bill, the no-tax-on-overtime provision does not apply to yours truly. I guess that’s the price to pay for having a job for life.

Sam H. Fawaz is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other tax or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client's financial plan and investment objectives are unique.