Retirement Planning Under the One Big Beautiful Bill
Retirement Planning Under the One Big Beautiful Bill
Retirement isn’t the end of financial planning. In many ways, it’s the beginning of an entirely new chapter. After years of saving, building, and preparing, the decisions you make in retirement determine not just how long your money lasts, but how you maximize what you’ve worked so hard to build.
The new One Big Beautiful Bill has created both opportunities and complexities for retirees. While it may feel like Congress intended to simplify things, the reality is that the bill introduces plenty of wrinkles that require thoughtful planning. For retirees, however, there are several notable wins worth understanding and taking advantage of.
The Importance of Locked-In Tax Brackets
One of the most meaningful changes for retirees is the permanence of tax brackets under this bill. Knowing with some certainty where you fall gives you clarity for planning strategies such as Roth conversions, withdrawal sequencing, and tax bucketing.
For retirees, this stability reduces the guesswork. You can more confidently decide whether to accelerate income, shift assets into a Roth, or adjust the timing of withdrawals. In an environment where market returns and interest rates remain unpredictable, having a known tax structure is a valuable anchor.
The Expanded Senior Deduction
If you are 65 or older, you now qualify for an additional standard deduction of $6,000 for individuals and $12,000 for couples filing jointly through 2028. When you add this to the regular standard deduction, a married couple over 65 can deduct $43,500 before owing any federal income tax.
This provision is particularly significant because it does not require itemizing. Most retirees no longer have enough deductions to make itemizing worthwhile, so this “bonus” deduction provides a clear benefit without extra complexity.
The catch, however, is that the deduction begins to phase out once your modified adjusted gross income (MAGI) exceeds $75,000 for individuals or $150,000 for couples. The phase-out can be steep, especially if Social Security and required minimum distributions (RMDs) push your income higher. Strategic planning is required to make sure you qualify.
Roth Conversions: A Critical Tool
Roth conversions remain one of the most effective retirement planning strategies. The One Big Beautiful Bill reinforces their importance because Roth conversions increase taxable income but do not count toward your modified adjusted gross income for purposes of the expanded senior deduction.
This distinction creates an opportunity: you can still pursue Roth conversions to minimize future RMDs and long-term tax liability without jeopardizing your eligibility for the expanded deduction. The key lies in managing how much to convert each year, balancing tax brackets, and protecting your Social Security and Medicare thresholds.
Estate and Gifting Benefits
The bill also locks in a historically high estate tax exemption of $15 million for individuals, effectively eliminating estate tax exposure for the vast majority of retirees. For married couples, that figure can be doubled through proper planning.
In addition, annual gift exclusions receive modest increases, allowing retirees to transfer wealth to children and grandchildren more efficiently. Many retirees view gifting not just as a tax strategy but as a way to witness the impact of their generosity during their lifetime. This bill makes those transfers easier.
New Vehicle Deduction Considerations
Another under-the-radar benefit is the vehicle interest deduction. If you purchase a new vehicle assembled in the United States, you may qualify for a deduction. For retirees with lower income levels, this deduction could provide meaningful tax savings.
The limitation here is twofold: the vehicle must be new, not used, and your adjusted gross income must remain under $100,000 for individuals or $200,000 for couples. Exceeding those thresholds quickly erodes the deduction.
Withdrawal Sequencing in Retirement
Tax planning in retirement is not simply about minimizing today’s bill—it’s about maximizing after-tax returns over your lifetime. That requires a careful sequence of withdrawals from taxable, tax-deferred, and tax-free accounts.
Some years it may make sense to pull from a Roth. Other years it may be better to draw from a traditional IRA or a taxable brokerage account. The goal is to smooth income, manage bracket exposure, and avoid creating tax spikes that ripple into Social Security or Medicare costs.
The One Big Beautiful Bill doesn’t remove this complexity. In fact, with its various phase-outs and time-limited provisions, sequencing is even more critical.
Healthcare Funding in Retirement
Healthcare remains one of the largest and most unpredictable expenses in retirement. Medicare provides a baseline, but premiums, Medigap policies, and out-of-pocket costs can still add up quickly.
The bill doesn’t overhaul Medicare, but it does reinforce the importance of planning around healthcare expenses. Understanding how income affects Medicare premiums and ensuring that you have funding strategies in place is a foundational step in successful retirement planning.
Charitable Giving Strategies
For charitably inclined retirees, the bill offers two distinct advantages. First, it establishes a universal charitable deduction—up to $2,000 for married couples and $1,000 for single filers—even if you do not itemize.
Second, donor-advised funds remain a powerful planning tool. By “bunching” multiple years of charitable contributions into one year, retirees can potentially itemize in that year, creating a larger tax benefit. For example, instead of giving $5,000 annually, consider a $10,000 contribution every other year.
Charitable strategies not only reduce tax liability but also allow retirees to align their wealth with their values.
Estate Planning Still Matters
Even with the $15 million estate exemption, estate planning is not something retirees should ignore. From ensuring assets are titled correctly, to updating beneficiary designations, to considering the use of trusts, estate planning creates clarity and reduces the risk of costly mistakes.
The bill makes estate taxes less of a threat for most families, but it doesn’t remove the need for careful planning. Regular reviews remain essential.
Turning Policy into Action
For retirees, the One Big Beautiful Bill provides more positives than negatives. The challenge lies in navigating the timing, thresholds, and interplay of deductions and income limits.
Here are the key planning actions to consider:
Review Roth conversion opportunities annually.
Monitor your MAGI to maximize the expanded senior deduction.
Sequence withdrawals strategically to smooth tax exposure.
Revisit estate and gifting plans in light of the permanent exemption.
Evaluate charitable giving strategies, including donor-advised funds.
Stay proactive with healthcare cost planning.
Retirement planning is not a one-time event. It requires ongoing adjustments as your circumstances, markets, and legislation evolve.
At TAMMA Capital, my goal is to help retirees and their families build a strategy that maximizes after-tax income, protects wealth, and creates peace of mind for generations.