RIA Washington Watch: An evolving economic landscape for advisors

What is RIA Washington Watch?

Every quarter, RIA Washington Watch brings you the most up-to-date information on registered investment advisor news and policy changes to help your firm make informed decisions.

This report is current as of August 18, 2025

Congress is on its annual summer break for the month of August, a welcome pause in what has often felt like a nonstop barrage of policy news since the beginning of the year. The "One Big Beautiful Bill," the recently passed massive tax and spending legislation, is now the law of the land. The first-ever cryptocurrency legislation has also been signed into law. Tariffs continue to dominate the economic discussion. An easing of regulations by the administration has already resulted in important news for advisors. Here's an update on some of the most important developments in Washington and what to watch for in the months ahead.

Welcome clarity for the tax landscape

The president signed the "One Big Beautiful Bill" into law on July 4, providing some certainty on the direction of taxes for the foreseeable future. The new law makes permanent all of the 2017 tax cuts that were set to expire at the end of 2025, most notably the lower individual income tax rates. The higher standard deduction and a higher child tax credit are also now permanent. From a financial and estate planning standpoint, perhaps the most important change is that the amount of assets that can be inherited without triggering the estate tax will be $15 million per person ($30 million for couples) beginning in 2026 and will be indexed to inflation in subsequent years.

The new law also includes several of the president's 2024 campaign proposals, including no tax on tip income, no tax on overtime hours, and making the interest on auto loans tax-deductible. Those provisions will be effective from 2025 through 2028, and each has income caps and other restrictions that apply. A fourth campaign promise, to end the taxation of Social Security benefits, was not permitted under the parliamentary rules by which the legislation was considered. Instead, Congress approved a $6,000 tax deduction for seniors 65 and over (subject to income limitations) for 2025 through 2028. While those provisions are set to expire in a few years, there is a good chance that they will prove popular with voters—and thus difficult for Congress to let expire in a presidential election year.

RIAs should take note of other tax provisions in the new law. For example, a number of green-energy tax credits will end. The $7,500 credit for the purchase of an electric vehicle ends on September 30, 2025, while the tax credit for energy-efficient home improvements ends on December 31, 2025.

There are also notable tax changes related to charitable giving. A new tax deduction of up to $1,000 ($2,000 for couples) for charitable contributions will be available to taxpayers who do not itemize their deductions beginning in 2026. But the law also creates a new "floor" for charitable contributions for those who do itemize. Beginning with tax year 2026, itemizing taxpayers can only claim a deduction for charitable contributions that exceed 0.5% of their adjusted gross income (AGI). For example, if a couple's AGI is $100,000 and they make $2,000 in charitable contributions during the year, they will only be able to deduct the amount that exceeds 0.5% of their income, or $500. So they would be able to deduct $1,500. This could require a rethinking of some clients' gifting strategies.

Higher tariffs effective in August

New tariffs on imports from about 70 countries kicked in on August 7. These are the so-called "reciprocal" tariffs that the president first announced in early April. They went into effect briefly on April 9, before a market meltdown caused the White House to pause the tariffs for 90 days, a delay eventually extended to early August. In the interim, framework trade deals were reached with several countries, including Japan, the Philippines, and South Korea, as well as the European Union. Most tariffs appear to be settling at 15% on imports from countries with which the United States has an agreement and higher for countries with no deal. Higher tariffs on Mexico have been delayed until late October as negotiations continue, but tariffs of 35% on imports from Canada took effect on August 1. New tariffs on copper imports kicked in on August 1 as well. Imports from China currently face a 30% tariff, though the two countries are engaged in talks about a longer-term deal.

The key question going forward is when companies will begin shifting the cost of tariffs to consumers in the form of higher prices. Inflation has ticked up a bit in recent months, though perhaps not as dramatically as some analysts expected. The new tariff rates could accelerate inflation, a critical data point for the Federal Reserve as it considers its timing for rate cuts. The president's willingness to pause, raise, or reduce tariffs has made it difficult for companies to plan. With the average effective tariff rate now at 18.6%, according to the Yale Budget Lab, the highest level since 1934, these duties are likely to have a more noticeable economic impact in the second half of the year.

Meanwhile, there are also numerous court cases challenging the tariffs. On July 31, the 11 judges on the DC–based Federal Circuit Court of Appeals seemed skeptical of the administration's arguments at an oral hearing on one of the key legal challenges. The U.S. Court of International Trade ruled in May that the emergency authority the president is using to impose tariffs is unconstitutional. The appeals court stayed that ruling while it considered the appeal. A decision on the appeal is expected in the coming weeks, and the case may end up at the Supreme Court. President Trump does have other means available to him for imposing tariffs, if the courts eventually rule against him. But the case is a reminder that the courts will continue to play a huge role in the fate of the administration's tariff plan.

Cryptocurrency on the front burner in Washington

July saw Congress pass its first-ever crypto legislation—the GENIUS Act. The new law sets up a regulatory structure for stablecoins, a type of cryptocurrency pegged to the dollar. Among other things, it would require issuers to hold one-for-one reserves in either dollars or other highly liquid assets. It's a big win for the crypto industry, which believes that clear rules of the road will allow for expanded issuance and mainstream usage of stablecoins. Notably, the bill passed the House with a strong bipartisan total of 308 votes, including 102 Democrats.

The House of Representatives also passed a second bill, the CLARITY Act, which creates a broader regulatory framework for cryptocurrencies beyond stablecoins. It clarifies that most cryptocurrencies will be treated as commodities and subject to regulation by the Commodity Futures Trading Commission (CFTC), with the SEC in a secondary role. It also includes disclosure and registration requirements, as well as consumer protections. It was also approved by a strong bipartisan margin—a vote that could boost support for the legislation in the Senate. Senate Banking Committee Chairman Tim Scott (R-SC) introduced his version of the bill in July, and the committee expects to consider it this fall.

Federal Reserve in the spotlight

At the end of July, the Fed held its baseline interest rate steady for the fifth consecutive meeting. But speculation is growing that a rate cut may be coming in September, particularly after a weak jobs report in early August. But the Fed has also been in the headlines because of the ongoing criticism by President Trump of Fed Chair Jerome Powell. While we think it unlikely that the president will fire Powell, expect the pressure campaign will continue to get the Fed to reduce rates.

Meanwhile, the president has an unexpected vacancy at the Fed to fill. Fed Governor Adriana Kugler resigned from the board on August 8, months before her term was scheduled to end in early 2026. The president's choice to fill that seat could be the person he intends to later nominate as chair to replace Powell, though the nominee would have to go through the Senate confirmation process twice—once as a regular Fed governor and a second time to become chair. Notably, Powell had not said whether he will step down as a regular governor when his term as chair ends next spring. His term as a governor runs until 2028. It would be highly unusual for Powell to stay on, but if he did so, the president would be forced to nominate a sitting governor, possibly Christopher Waller, as chair, since there would be no open seats.

Big regulatory decision for RIAs

On the regulatory front, the most important decision for advisors came in late July, when Treasury's Financial Crimes Enforcement Network (FinCEN) announced that it was delaying for two years the effective date of the new rule requiring RIAs to implement robust anti-money laundering (AML) programs. The rule, which was set to go into effect this coming January, will instead be delayed until January 1, 2028. The Treasury also said it would be reviewing the rule, opening up the possibility that the entire rule will be withdrawn and/or revised. For now, RIAs that were scrambling to comply with the new AML requirements by the end of this year have a two-year reprieve.

Finally, the fiduciary rule debate at the Department of Labor remains in limbo. The so-called "Retirement Security Rule" that was approved in 2024 during the previous administration was paused nationwide by two federal courts last year. Those cases remain ongoing, but it is widely expected that the rule will ultimately be vacated by the courts. Once that happens, the Labor Department will have to decide whether to write a new rule in the long effort to define who is a fiduciary in the retirement savings context.

What you can do next

• Register for the next Schwab Market Talk to hear the latest information on potential impacts to the market and regulatory changes.
• Tune in to Michael Townsend's biweekly podcast, WashingtonWise, for insights on the policies and politics impacting portfolios.
• If you don't yet work with Schwab, consider a custodian that is invested in your success. Contact us to learn more about the potential benefits of a custodial relationship with Schwab.