The Propeller - What Your Future Self Wants You to Read Today - 8-3-2025

Life: When Man Controlled Nature: The Niagara Diversion of 1969

In the summer of 1969, engineers undertook an extraordinary and ambitious project at one of the world’s most iconic natural landmarks, Niagara Falls. Specifically, the American Falls section was “turned off” for several months in a daring attempt to study and stabilize the geological foundation beneath the powerful cascade. Using a cofferdam, a temporary barrier made of 27,800 tons of rock, engineers successfully diverted the flow of the Niagara River, redirecting water entirely to the adjacent Horseshoe Falls. For the first time in living memory, the roaring torrent of the American Falls was silenced, revealing a dry riverbed strewn with centuries’ worth of accumulated boulders and debris.

The primary goal of this operation was to investigate the long-term stability of the falls. Over time, rockfalls and natural erosion had altered the appearance and flow of the American Falls, reducing its height and changing its profile. Engineers, geologists, and environmental scientists took advantage of the rare opportunity to inspect the exposed rock face, assess structural integrity, and explore methods to manage or remove the buildup of debris. While there were discussions about clearing the rocks to restore the falls’ original shape, public opinion ultimately favored preserving the natural appearance. Still, the dry falls offered a haunting and surreal landscape, photographs from the time show tourists walking near the brink where thunderous water once flowed.

When the cofferdam was removed and water returned in November 1969, the revival of the American Falls was met with awe and celebration. The temporary shutdown had not only allowed for crucial scientific study but also served as a powerful reminder of the delicate balance between natural wonder and human intervention. Though no major structural changes were made, the project left a lasting impression. It marked a moment when humans quite literally stepped into the path of a mighty waterfall, not to conquer it, but to better understand and preserve its majesty for generations to come.

Finance: Charitable Tax Planning

The new tax bill made some changes to charitable deductions that are worth discussing.

My goal is to focus on the tax strategy impact of the law so that you can plan accordingly and hopefully save some money on taxes.

Now, many people donate without caring for the tax deduction, but I still want to educate you on the strategies.

Non-itemizers charitable deduction

Section 70424 of OBBBA permanently restores the charitable deduction for non-itemizers starting in 2026 to $1,000 for single filers and $2,000 for married filing jointly.

This is a great change because ~90% of people were taking the standard deduction. Since you had to itemize your deductions (instead of taking the standard) to get the charitable deduction (prior to this law), most people were donating without getting any tax benefit.

Tax Planning Move #1: John wants to donate $1,000 to charity in 2025. He has a 22% marginal tax rate. He is taking the standard deduction in 2025.

John would be better off waiting until 1/1/2026 to make this donation, which will save him ~$220 on taxes that year vs. $0 saved in 2025. This is because the new tax change is enacted as of 2026.

Importantly, the charitable contribution must be in cash (no stocks donated or DAF) for the purposes of the $1,000/$2,000 deduction.

Charitable contributions Floor

Section 70425 of OBBBA also created a floor on the deductions of charitable contributions equal to 0.5% of Adjusted Gross Income (AGI, Line 11 of your 1040) starting in 2026, if you itemize.

This means that your charitable deduction is only allowed if it exceeds 0.5% of your AGI.

Tax Planning Move #2: John makes $1,000,000 of AGI per year. He is itemizing his deductions in 2025. John donates $10,000 per year to charity. John is in the 37% tax bracket.

If John donates $10,000 in 2025, he can take the entire $10,000 deduction (since he is itemizing).

If John donates $10,000 in 2026, he can only take $10,000 – $1,000,000 * 0.5% = $5,000 deduction due to the new 0.5% AGI floor. His $5,000 deduction is “wasted” and doesn’t save ~$1,850 on taxes.

John would be better off donating $20,000 in 2025 and skipping the $10,000 deduction in 2026 to save ~$1,850 on taxes. A Donor Advised Fund (DAF) can be a great choice in this situation.

It would allow him to donate $20k and split $10k in Y1 and $10k in Y2, but get the full $20K deduction in Y1.

Tax Planning Move #3: John makes $200,000 per year from his business net (24% marginal tax rate). He donates $5,000 per year to a 501(c)(3) non-profit entity. He itemizes his deductions.

Next year, John is expecting to sell his business. He is expecting to sell it for ~$500,000 based on a broker’s valuation. This means that John would be in a 37% tax bracket next year.

John would be better off skipping the 2025 donation and donating an increased amount in 2026, even with the 0.5% floor, because of such a rapid growth in income.

Math:

$5,000 * 24% = $1,200 tax savings (Y1);

$5,000 is reduced to $2,500 ($500,000 * 0.5%) * 37% = $925 tax savings (Y2), for a total of $2,125

VS

Skipping Y1 donation, donating $10,000 in Y2.

$10,000 is reduced to $7,500 ($500,000 * 0.5% is the floor) * 37% = $2,775 tax savings

You also might know that the maximum deduction you can take on a charitable deduction depends on the type of donation.

Stocks = Maximum 30% of AGI

Cash = Maximum 60% of AGI

Now, if a charitable deduction exceeds the above AGI limits, then the 0.5% AGI floor is carried over along with the part of the deduction that exceeds the limit.

Tax Planning Move #4: John received an inheritance and wants to donate to an organization that is deeply close to his heart. His AGI is $150,000 and he donates $50,000 in stock to such organizations.

0.5% floor = $750

Allowed donation deduction = $50,000 – $750 = $49,250

Maximum deduction based on 30% AGI = $45,000 ($150,000 * 30%)

So, the $49,250 – $45,000 = $4,250 will be carried forward AND the $750 floor, for a total of $5,000 carryforward.

The tax planning move could be that if you are close to the upper AGI limit, contributing more that year could help you “save” on the 0.5% AGI floor.

I hope this helps you understand some of the changes and how you can plan for them.

Quote of the Week

“Do not save what is left after spending, but spend what is left after saving.”
— Warren Buffett

This quote flips the typical mindset most people have about money. Instead of spending first and saving what’s leftover, Buffett encourages us to save first, automatically and intentionally, and then use what’s left for expenses. It’s a timeless principle of financial discipline. For readers of The Propeller, especially those navigating both tech and personal finance, it’s a reminder that consistent saving builds long-term stability and freedom, without requiring risky decisions or complex strategies. Small habits like automating savings or contributing to retirement early can lead to big wins over time.

Stay sharp, stay weird, and don’t forget to charge everything, especially yourself.

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