10 Things Retirees and Pre-Retirees Need to Know About the Big Beautiful Bill
The One Big Beautiful Bill became law in 2025, and it’s already changing the rules for taxes, deductions, and retirement planning. For retirees and those nearing retirement, this new law presents fresh opportunities and looming deadlines. Here are 10 key takeaways to help you make the most of it before key provisions expire in 2028.
1. Bigger Standard Deductions for Retirees If you're 65 or older and earn less than $75K (single) or $150K (married), you may qualify for an additional $6,000–$12,000 deduction through 2028. This stacks with other credits and can reduce or even eliminate taxes on Social Security income.
2. Potentially Lower Taxes on Social Security Thanks to that new deduction, many retirees will see lower federal tax on Social Security benefits. Now is the time to reassess how your IRA withdrawals, pensions, and other income streams are taxed.
3. Tax Relief for Tip and Overtime Income Workers in hospitality, healthcare, or service fields can deduct up to $25K in tip income and up to $25K in overtime pay (married filing jointly). These benefits phase out after $150K/$300K of income and expire in 2028.
4. Expanded SALT Deduction The cap on state and local tax deductions jumps to $40,000 (from $10,000) for households earning under $500K. This could be a major break for people living in high-tax states like NY, NJ, or CA.
5. A Larger Child Tax Credit The Child Tax Credit rises to $2,500 per child, now indexed to inflation. For grandparents supporting grandchildren, this could mean significant tax savings through 2028.
6. A New Deduction Strategy for Givers Even if you don’t itemize, you can now deduct up to $2,000 in charitable donations (married). Starting in 2026, itemized donations will need to exceed 0.5% of your AGI, so timing your giving may matter more than ever.
7. Estate Tax Exemption Boosted High-net-worth families can now exclude up to $30 million from estate tax, starting in 2026. This change is permanent and indexed to inflation, a big win for multigenerational wealth planning.
8. The Return of the “Trump Child Account” For children born between 2025 and 2028, the federal government will contribute $1,000 into a new account. While not as flexible as a Roth or 529, it’s still a valuable head start for future generations.
9. Pease Limitation Repealed (But With a Catch) The law eliminates the Pease limitation, which previously reduced deductions for high earners. But now, the benefit of deductions is capped at 35% for top-bracket taxpayers.
10. Deadlines and Phaseouts Are Coming Fast Many of these tax breaks expire after 2028. Income thresholds apply to most benefits. And certain gifting or charitable strategies may be less effective after 2025 or 2026. Now is the time to act.
The Big Beautiful Bill opens the door to strategic tax savings, but only for those who plan ahead. Whether you're retired or approaching it, these updates could reshape your financial picture. Investing involves risk, including the potential loss of principal. The information provided is for general educational and informational purposes only and is not intended to serve as specific financial, investment, or tax advice. Individual circumstances vary, and you should consult with a qualified financial or tax professional before making any financial decisions.
Investing involves risk, including the potential loss of principal. The information provided is for general educational and informational purposes only and is not intended to serve as specific financial, investment, or tax advice. Individual circumstances vary, and you should consult with a qualified financial or tax professional before making any financial decisions.
