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There’s been a lot of noise around the One Big Beautiful Bill Act (OBBBA), an 887-page piece of legislation that just reshaped key elements of the tax code. But what does it actually mean for your retirement?

In this episode of Money Wisdom, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® cut through the headlines to explain what’s changing, what’s staying the same, and why this bill may be a big retirement planning opportunity.

Extended 2017 Tax Cuts

One of the most significant takeaways from the new legislation is not a change, but rather an extension of the 2017 Tax Cuts and Jobs Act (TCJA). Key elements of the TCJA, such as lower tax rates and a higher standard deduction, will remain in effect through at least 2028.

This extension provides several tax planning opportunities. For individuals who are no longer in their peak earning years and now fall into historically low tax brackets, this could be an ideal time to consider Roth conversions, legacy planning, or tax-efficient gifting.

Additional Deduction for Seniors

Another key provision in the bill is an additional standard deduction of $6,000 for individuals aged 65 and older. For a married couple filing jointly, that’s an extra $12,000 added to the existing $31,500 standard deduction, potentially reducing taxable income by up to $43,500.

You may have heard misleading claims that the bill eliminates taxes on Social Security, but benefits remain federally taxable. However, with a higher standard deduction for those over 65, more Americans are projected to pay zero taxes on their benefits.

Expanded 529 Flexibility

The OBBBA also expands 529 education savings plans beyond traditional costs like tuition and room and board. These plans can now be used for continuing education, certifications, and professional development. This added flexibility is particularly valuable for parents and grandparents focused on long-term education and legacy planning.

Estate Tax Considerations

Starting in 2026, the federal estate tax exemption will rise to approximately $15 million per person, indexed for inflation. Connecticut will follow suit, but Massachusetts will keep a much lower exemption at $2 million per person, making proactive estate planning crucial for high-net-worth individuals.

Future Impact on Healthcare

There are also future implications for Medicaid and the Affordable Care Act (ACA) to consider. Both Medicare and Medicaid, programs that are vital to millions of Americans, continue to face significant funding challenges. To sustain these programs, the government will likely need to either increase tax revenue or reduce spending.

While the OBBBA introduces meaningful tax relief, it also underscores the importance of flexibility in financial planning. As these provisions continue to evolve, it’s essential to have a plan that adapts alongside them.

Want clarity about your tax situation? Get your free Are You Paying Too Much in Taxes in Retirement? guide by texting “OFFER” to 800-757-0436.