Signed into law on July 4, 2025, the OBBB delivers notable tax relief for retirees—but also raises important cautions regarding healthcare access and long-term security.

Let’s break down the essentials:

1. Boosted Deductions—Lower Taxes on Social Security

• Senior Deduction: Starting with the 2025 tax year through 2028, individuals aged 65+ can claim an extra $6,000 deduction; married couples filing jointly get up to $12,000—on top of the standard deduction. This benefit phases out for higher incomes (around $75,000 single / $150,000 joint).

• Wide Impact: The deduction is expected to lift the majority of retirees out of federal income taxation on Social Security—coverage rises from 64% to about 88%.

• Financial Strategy Tip: Although not permanent, this window (2025–2028) is an opportunity—consider timing Roth conversions or adjusting withdrawal plans to maximize tax-efficiency.

2. Permanent Standard Deduction Increases

• The standard deduction is now set at $15,750 for singles and $31,500 for married couples—permanent and inflation-adjusted.

• For retirees, combining this with the senior deduction can substantially reduce taxable income—even $23,750 (single) or $46,700 (joint) in total deductions.

3. Higher SALT Deduction Cap

• State and local tax (SALT) deduction cap has jumped from $10,000 to $40,000 for households earning under $500,000. The cap starts lowering by about 1% annually and returns to $10,000 in 2030 unless extended.

• Particularly beneficial for retirees in high-tax states. In Georgia, for instance, 1.8 million seniors may benefit from this extended relief.

4. Estate Planning Perks

• The bill permanently raises the estate and lifetime gift tax exemption to $15 million per individual ($30M per couple), beginning in 2026, adjusted for inflation.

• Early planning can allow retirees to act now—especially those considering legacy goals or family gifting.

5. Medicaid & Healthcare Caution Flags

• Despite the tax benefits, the bill cuts Medicaid funding significantly and imposes work requirements and eligibility checks, increasing the risk of coverage loss for many low-income retirees.

• The Medicaid provider tax reduction threatens nursing home and long-term care support, which may impact access and quality of care.

6. Social Security Trust Fund Concerns

• Experts warn the senior deduction, while helpful, may accelerate Social Security insolvency by about one year—from 2033 to 2032—by reducing dedicated revenue.

• Though these projections are long-term, prudent retirees should stay informed as the law progresses.

Bottom Line for Retirees

The One Big Beautiful Bill offers tangible tax relief—especially for Social Security and estate planning—but it also introduces new risks, particularly around health care access and long-term financial stability. Consult with a trusted advisor now to adapt strategies for the 2025–2028 window and beyond.

There’s our quick take – hope you got through it in two minutes (or less). What questions do you have?

If you have questions about how any of this may apply to your personal situation, please send me a note and let’s talk.

Thanks for reading!

-Dwight