Note: This post refers to the 2025 federal legislation, the One Big Beautiful Bill Act—not a personal finance strategy.

A New Tax Reality for Retirees

Your monthly Social Security check might look different next year. So might your tax bill. And if you’ve been putting off estate planning, that conversation just changed, too.

The One Big Beautiful Bill Act became law this summer. Whether you’re collecting benefits or still planning your exit from the workforce, this law touches areas of your retirement life that weren’t even part of the conversation six months ago.

The question retirees are asking:
“What does this mean for my monthly income and the money I’m leaving my kids?”

Let’s break it down.

Why This Law Hits Retirees Hardest

When you’re living on a fixed income, tax changes matter more. You’re coordinating Social Security, required withdrawals, and part-time income—without the option to just “work more” to cover surprise tax hikes.

This law brings real relief in some areas—but also complexity that can catch retirees off guard.

The Changes That Could Impact Your Wallet

1. Social Security Gets Partial Tax Relief

Roughly 88% of Social Security recipients will no longer pay taxes on their benefits under the new law. But if you’re in the other 12%—especially those with higher investment income—you’ll face more complicated tax rules, not fewer.

The law raises the income thresholds where benefits become taxable, rather than eliminating Social Security taxation entirely.

2. 2017 Tax Cuts Become Permanent

The tax brackets and standard deductions from the Tax Cuts and Jobs Act (TCJA) are now permanent:

• $15,000 for single filers
  
• $30,000 for married couples filing jointly (2025)

This gives retirees long-term clarity. If you’ve been delaying Roth conversions or timing your withdrawals due to uncertainty, now you can plan with more confidence.

3. Estate Tax Exemption Increases in 2026

The exemption rises to:

• $15 million for individuals
  
• $30 million for couples
  

Most families will now avoid estate taxes—but that doesn’t mean you can skip estate planning. Without a plan, your heirs could still face unnecessary costs, taxes, or probate issues.

4. SALT Deduction Expanded (Temporarily)

If you itemize and live in a high-tax state:

• You can now deduct up to $40,000 in state and local taxes (up from $10,000)
  
• Applies through 2029
  
• Only for incomes under $500,000

After 2029, the cap reverts—so it’s a temporary planning window.

5. New Savings Tools Add Options—and Confusion

The law introduces “Trump Accounts,” a new type of savings account with strict conditions. While marketed as helpful, they overlap with existing accounts like:

• IRAs
  
• 529 plans
  
• HSAs

This creates more paperwork and planning decisions—not less.

The Hidden Risks Retirees Should Know

1. Future Program Cuts May Come Sooner

The bill increases the federal deficit. According to projections:

• Social Security’s trust fund depletion moves to late 2032
  
• Medicare’s Hospital Insurance fund could become insolvent by 2030
  

Your benefits won’t vanish overnight—but Congress will need to act sooner, which could mean future tax increases or reduced benefits.

2. More Rules, More Mistakes

Despite making some tax cuts permanent, this law adds new deductions, credits, and conditions. If you file jointly, gift assets, or help adult children, you’ll likely need more professional guidance to avoid errors or missed opportunities.

What Retirees Should Do Right Now

Reassess Your Withdrawal Strategy

Use permanent brackets to your advantage. Consider:

• Roth conversions
  
• Coordinated IRA/taxable account withdrawals
  
• Avoiding unnecessary RMD-related bracket jumps

Update Your Estate Plan

Even with the new exemption, plan ahead to protect your legacy and minimize future complications for your family.

Time Deductions and Charitable Giving

If you itemize, especially in a high-tax state, coordinate deductions to maximize the temporary SALT relief before it expires in 2029.

Stay Informed About Social Security and Medicare

These programs may face structural changes in the near future. Stay proactive—not reactive—about your future income and coverage.

Get Professional Help

This bill is nearly 1,000 pages long. There are too many moving parts to rely on general advice. Work with someone who understands how tax law intersects with real retirement life.

Bottom Line

The One Big Beautiful Bill Act brings real benefits for most retirees—but also introduces new risks and responsibilities. The choices you make now with your income, estate, and tax strategy will determine whether you capitalize on the opportunities or fall behind the curve.

Call Barb Swiatek at 719.597.2179 to review your personal plan and make sure you’re ready for what’s changed—and what’s still coming.

Your retirement deserves a plan that works with the new rules, not against them.