The “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025, combines permanent provisions with new tax rules that will impact many taxpayers. The following considerations outline key tax planning opportunities — within the broader context of your overall financial plan — for two groups poised to benefit the most from the tax law changes: 65+ seniors/retirees and high earners.
65+ Seniors and Retirees
Christmas came early in OBBBA for taxpayers aged 65 or older with moderate income. The higher standard deduction amounts have been made permanent and increased for 2025, including the “extra standard deduction” for those 65 and older, which rose by $50 per individual. But drawing more attention is the new temporary $6,000 additional deduction for taxpayers 65+, available for tax years 2025–2028.
Here's an example: A married couple, both over 65 and filing jointly, could deduct as much as $46,700 ($31,500 Standard Deduction + $3,200 extra age-65 deduction + $12,000 new temporary deduction) from their taxable income in 2025 as long as their modified adjusted gross income (MAGI) does not exceed $150,000 for taxpayers married filing jointly. The income threshold for all other filers is $75,000. The new senior deduction starts to phase out at those income thresholds.
For taxpayers age 70½ or older, IRA qualified charitable distributions (QCDs) remain a powerful tool — allowing an IRA owner to donate up to $108,000 directly to charity in 2025 without generating taxable income.
These enhanced deductions create opportunities for strategic tax and retirement planning, such as:
- Coordinating Social Security filing strategies.
- Managing Medicare Income-Related Monthly Adjustment Amount (IRMAA) brackets.
- Executing Roth conversions.
- Harvesting investment gains in taxable brokerage accounts.
High Earners
High earners also benefited from the enactment of OBBBA, which made the lower tax brackets introduced under the 2017 Tax Cuts and Jobs Act permanent, thus avoiding the higher rates that would have taken effect in 2026.
For homeowners, the mortgage interest deduction remains capped at $750,000 of eligible mortgage principal. For those in high-tax states and cities, the longstanding $10,000 cap on the state and local tax (SALT) deduction has been temporarily increased under the Big Beautiful Bill to $40,000 for both married couples and individuals for tax years 2025–2029, reverting to the lower cap in 2030.
With the boosted SALT deduction, be mindful of the limits: The $40,000 cap is reduced by 30% of modified adjusted gross income (MAGI) above $500,000 (single/married filing jointly) or $250,000 (married filing separately). Both the deduction and phaseout income thresholds will increase by 1% annually through 2029.
Charitably inclined taxpayers should be aware that 2025 is the final year to deduct cash or appreciated asset gifts to qualified charities under the current rules before new deduction floors and limits under OBBBA arrive in tax year 2026.
With permanent lower rates and increased deductions, high earners have more room to build long-term wealth using tax-smart moves that may include:
- Maximizing contributions to tax-deferred employer retirement plans.
- Funding a deductible health savings account (HSA) if enrolled in a high-deductible health plan.
- Investing in a taxable brokerage account with a diversified and tax-efficient exchange-traded fund (ETF) portfolio.
- Fund a child’s education via a 529 college savings account.
Partnering with a CERTIFIED FINANCIAL PLANNER® professional — working in tandem with your tax advisor — can help you identify the most relevant strategies, avoid costly missteps and maximize the long-term benefits of the new rules provided by the Big Beautiful Bill. Find your CFP® professional today.
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