President Donald Trump’s “One Big Beautiful Bill,” which became law on July 4, 2025, has significant implications for retirement planning. The new bill includes various tax changes at the federal level, with further guidance from the Treasury Department expected soon. As you consider your retirement planning in light of the new tax bill, here’s what your Pembroke Pines estate planning attorney at Kramer Green wants you to know.
Permanent Increases to the Standard Deduction
The standard deduction temporarily increased under the 2017 Tax Cuts & Jobs Act (TCJA) to $13,850 (single) and $27,700 (married) in 2023. Individuals and couples over age 65 received an additional deduction. However, these changes were due to expire at the end of 2025.
The new tax bill made increases to the standard deduction permanent, with rates now set at $15,750 (single) and $31,500 (married), plus an additional $2,000 for those 65 and older (single) and $1,600 per spouse (married).
The net result of these changes is that more taxpayers are likely to use the standard deduction than itemize their deductions. This choice may necessitate some individuals to shift their planning efforts to strategies that directly reduce their adjusted gross income (AGI) or reduce taxes regardless of itemization or use of the standard deduction.
The Extra Deduction for Retirees
Beginning with your 2025 tax returns, individuals who are 65 years or older can claim a $6,000 deduction ($12,000 for married couples) in addition to the existing standard deduction and extra standard deduction for seniors. The addition of this deduction creates substantial tax relief for retirees.
The new tax bill allows those Americans who are 65 and older to “stack” three tax deductions. In other words, a senior married couple who is filing jointly can use all three of the following tax deductions starting on their 2025 income tax returns:
- Existing standard deduction: $31,500
- Existing age 65+ deduction: $3,200
- New age 65+ bonus deduction: $12,000
TOTAL deduction for 65+ married couples filing jointly in 2025: $46,700
Nonetheless, these deductions are not free of income limitations. First, if your modified adjusted gross income (MAGI) is more than $75,000 for a single individual or $150,000 for married couples filing jointly, the bonus deduction begins to phase out. The deduction phases out completely for singles with MAGI of $175,000 or more and married couples with $250,000 or more. Seniors who receive partner distributions, consulting income, or large returns from investments should closely monitor their income limits to avoid losing the bonus deduction, if possible.
The Taxability of Social Security Benefits
Contrary to many reports, taxes on Social Security benefits still exist after the passage of the new federal tax bill. However, certain other tax changes mean that about 88% of retirees will pay zero federal income taxes on their Social Security Retirement benefits. Before the bill, about 64% paid no federal income taxes on their Social Security benefits.
More specifically, the combination of the increased standard deduction and the new senior bonus deduction create a situation in which an individual’s deductions exceed their taxable income. For individuals who have large retirement accounts but also qualify for Social Security benefits, the change could result in significant tax savings on at least a portion of their retirement income.
Expanded SALT Deduction
The new bill temporarily raises the state and local tax (SALT) deduction cap to $40,000 for married or single taxpayers in 2025. This cap will gradually rise by about 1% in future years, indexed to inflation, but it will revert to $10,000 in 2030 unless Congress acts to pass further legislation before that date.
The SALT deduction begins to phase out for joint filers with a modified adjusted gross income (MAGI) over $500,000 and for single filers over $250,000. The deduction is completely phased out for joint filers with a MAGI of $600,000 or more.
Tax Rates Remain Steady
The new tax bill makes the lower income tax brackets from the 2017 Tax Cuts & Jobs Act permanent. Without this change, those lower rates would have expired at the end of 2025, and many taxpayers would have faced higher brackets starting in 2026. The top marginal rate will also stay at 37%, instead of returning to the old 39.6%. Because this provision has no expiration date, you can now count on these rates for the long term.
This stability gives you more certainty in planning across many areas of your finances. Families can better anticipate their annual tax bills, business owners can make long-range growth and compensation decisions with more confidence, and retirees can fine-tune strategies for IRA and 401(k) withdrawals or Roth conversions. For example, under prior law, someone in the 24% bracket could have been bumped into the 32% bracket in 2026. Now, the brackets are locked in, making it easier to map out tax-efficient strategies for saving, spending, and investing—without worrying about sudden jumps in rates.
Frequently Asked Questions (FAQ)
How should retirees adjust their withdrawal strategies in light of the new tax bill?
Retirees may benefit from re-evaluating the timing and amount of withdrawals from IRAs, 401(k)s, or other retirement accounts. With higher standard deductions, the new senior bonus deduction, and favorable tax brackets, it may be possible to withdraw more in certain years while minimizing federal income taxes, creating a more tax-efficient retirement plan.
How do these changes impact planning for Roth conversions?
With lower effective tax rates locked in and additional deductions for seniors, many retirees may find it advantageous to convert traditional retirement accounts to Roth IRAs during years when their taxable income is lower. The combination of higher deductions and permanent tax brackets can make Roth conversions more cost-effective, potentially reducing future tax liability on withdrawals.
How do the new tax changes affect Social Security benefit taxation?
The combination of increased standard deductions and the senior bonus deduction means that most retirees may pay no federal income taxes on their Social Security benefits. Retirees can use this change to plan withdrawals and other income sources more strategically to maximize tax-free Social Security benefits.
Call Kramer Green for Retirement Planning Guidance
The new federal tax bill includes provisions that can have a lasting impact on your retirement strategy. An Aventura estate and tax planning lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can help you make informed decisions about managing retirement account withdrawals, Roth conversions, and long-term tax strategies—while also ensuring your estate plan is up to date. Our goal is to help you maximize your retirement income, protect and preserve your assets, and provide peace of mind for you and your family.
Our team is here to guide you through every stage of asset protection, retirement, and estate planning with clarity and confidence. Contact our office today at (954) 966-2112 or reach us online to schedule a time to meet with our Boca Raton estate planning attorneys.