This
sweeping
legislation,
which
passed
along
largely
partisan
lines
amid
significant
political
controversy
over
its
$3.4
trillion
price
tag
and
temporary
funding
mechanisms,
brings
substantial
changes
to
retirement
planning
that
could
benefit
many
of
you.
However,
as
with
any
major
tax
overhaul,
we’ll
need
to
stay
tuned
for
adjustments
and
clarifications
as
the
Treasury
Department
works
through
implementation
details
over
the
coming
months.
As
a
CERTIFIED
FINANCIAL
PLANNER®
professional,
my
job
is
to
help
you
cut
through
the
media
noise
and
understand
what
legislation
actually
means
for
your
financial
future.
But
I’ll
be
honest
with
you
–
some
provisions
in
the
One
Big
Beautiful
Bill
have
left
even
seasoned
financial
planners
scratching
their
heads
about
how
they’ll
work
in
real
practice.
That
said,
let’s
walk
through
the
five
most
important
changes
that
directly
impact
your
situation
as
a
retiring
legal
professional,
while
acknowledging
that
some
details
may
evolve
as
regulations
are
finalized.
Starting
with
your
2025
tax
returns,
if
you’re
65
or
older,
you
can
claim
an
additional
$6,000
deduction
($12,000
for
married
couples)
on
top
of
the
standard
deduction
and
the
existing
age-65+
extra
standard
deduction.
This
isn’t
just
another
small
adjustment;
it’s
substantial
tax
relief
that
recognizes
the
financial
realities
of
retirement.
To
be
clear,
all
three
of
these
“regular”
deductions
can
be
stacked
on
top
of
one
another,
regardless
of
whether
you
itemize.
Let’s
break
this
down
for
2025
for
couples
filing
together
and
claiming
the
standard
deduction:
Existing
standard
deduction:
$31,500
Existing
Age-65+
additional
standard
deduction:
$3,200
NEW
Age-65+
“Senior”
bonus”
deduction:
$12,000
Total
standard
deduction
age
65+
in
2025:
$46,700
However,
there
are
income
limits
to
consider.
The
deduction
phases
out
if
your
modified
adjusted
gross
income
exceeds
$75,000
for
singles
or
$150,000
for
married
couples
filing
jointly,
disappearing
entirely
above
$175,000
and
$250,000
respectively.
These
phase-outs
typically
present
planning
opportunities
for
those
hovering
around
the
upper
range
of
these
thresholds.
Additionally,
if
you’re
managing
partnership
distributions,
consulting
income,
or
substantial
investment
returns,
you’ll
want
to
monitor
these
thresholds
carefully.
Here’s
where
things
get
particularly
interesting
for
your
retirement
planning.
While
Social
Security
remains
technically
taxable
under
existing
rules,
the
combination
of
increased
standard
deductions
and
the
new
senior
bonus
deduction
means
approximately
88%
of
beneficiaries
will
pay
zero
federal
tax
on
their
Social
Security
benefits
according
to
a
recent
White
House
Council
of
Economic
Advisers
analysis.
That’s
up
from
about
64%
previously.
This
change
doesn’t
alter
Social
Security’s
taxability
structure,
but
rather
creates
a
situation
where
your
deductions
exceed
your
taxable
income.
For
many
retiring
lawyers
who
built
substantial
retirement
accounts
but
also
qualify
for
Social
Security,
this
could
mean
significant
tax
savings
on
a
portion
of
your
retirement
income.
I’ll
just
note
one
additional
interesting
note
here
on
the
history
of
Social
Security.
You
may
have
noticed
I’ve
mentioned
that
the
formula
for
taxing
Social
Security
hasn’t
changed.
In
fact,
it
hasn’t
changed
in
over
40
years
—
and
the
income
thresholds
haven’t
been
adjusted
for
inflation.
The
result?
A
slowly
growing
“phantom
tax”
on
Social
Security
benefits.
The
individual
tax
rate
brackets
from
the
2017
Tax
Cuts
and
Jobs
Act,
which
were
set
to
expire
at
the
end
of
2025,
are
now
permanent.
This
gives
you
the
long-term
clarity
you
need
for
strategic
planning,
particularly
around
Roth
conversions
and
managing
retirement
account
withdrawals.
For
example,
with
the
pre-OBBB
tax
rates
set
to
expire
this
year,
you
may
have
faced
a
jump
from
the
24%
to
the
32%
bracket
in
2026.
Now,
the
lower
brackets
are
locked
in
—
giving
you
more
certainty
for
future
planning.
This
stability
is
invaluable
when
you’re
making
decisions
about
when
and
how
much
to
withdraw
from
traditional
IRAs
and
401(k)s,
or
when
considering
Roth
conversion
strategies.
If
you’re
retiring
in
a
state
with
high
property
or
income
taxes
(think
New
York,
California,
or
New
Jersey),
the
temporary
increase
in
the
state
and
local
tax
deduction
cap
from
$10,000
to
$40,000
through
2029
could
provide
meaningful
relief.
This
applies
to
those
earning
under
$500,000
annually
(Modified
Adjusted
Gross
Income).
For
those
earning
over
this
limit
this
year,
the
SALT
deduction
will
gradually
be
phased
out
until
the
deduction
is
back
down
to
the
original
$10,000
cap.
In
2030,
this
temporary
increase
in
the
SALT
deduction
will
revert
back
to
$10,000
unless
additional
legislation
is
passed.
Many
lawyers
find
themselves
in
expensive
metropolitan
areas
during
their
careers.
If
you’re
staying
put
in
retirement
and
still
itemizing
deductions
due
to
high
property
taxes
or
state
income
taxes,
this
change
could
reduce
your
federal
tax
burden
significantly
during
the
early
years
of
your
retirement.
Starting
in
2026,
the
unified
estate
and
gift
tax
exemption
increases
to
$15
million
per
individual,
or
$30
million
per
married
couple.
For
successful
legal
careers
that
generated
substantial
wealth,
this
elevated
exemption
provides
more
flexibility
in
estate
planning
strategies.
While
this
change
primarily
affects
higher-net-worth
retirees,
it
also
simplifies
planning
for
many
lawyers
who
may
have
been
concerned
about
crossing
the
previous
exemption
thresholds
through
continued
investment
growth
and
property
appreciation.
|
Change |
Impact on Retirees |
|
Senior Bonus Deduction |
Major tax relief within income thresholds |
|
Social Security tax impact |
Most pay no federal tax on benefits |
|
Permanent tax brackets |
Planning certainty for conversions, income |
|
Higher SALT cap (temp) |
Potentially valuable for itemizers in high-tax areas |
|
Estate exemption increase (2026) |
Bigger transfer shield for high‑net‑worth retirees |
These
changes
create
new
opportunities
for
tax-efficient
retirement
planning,
but
they
also
require
careful
consideration
of
timing
and
strategy.
The
temporary
nature
of
some
provisions
means
you’ll
want
to
maximize
benefits
while
they’re
available.
Pay
particular
attention
to
the
potential
future
changes
mentioned
in
the
legislation,
including
possible
required
minimum
distributions
from
Roth
IRAs
for
large
balances.
While
these
are
still
under
study,
they
could
affect
long-term
tax-free
growth
strategies.
As
you
navigate
these
changes,
remember
that
good
retirement
planning
isn’t
just
about
minimizing
taxes
in
any
single
year.
Rather,
a
good
plan
should
focus
on
creating
a
sustainable,
flexible
strategy
that
adapts
to
both
legislative
changes
and
your
evolving
needs
throughout
retirement.
These
new
provisions
give
you
additional
tools
to
build
that
strategy
effectively.
I’ll
be
unpacking
more
from
this
legislation
over
the
coming
months
and
sharing
how
it’s
affecting
the
retiring
lawyers
that
we
work
with.
To
follow
along,
simply
head
over
to
our
Money
Meets
Law
newsletter
page
to
learn
more.
Disclosure:
The
information
within
this
article
is
not
intended
as
tax,
accounting
or
legal
advice,
as
an
offer
or
solicitation
of
an
offer
to
buy
or
sell,
or
as
an
endorsement
of
any
company,
security,
fund,
or
other
securities
or
non-securities
offering.
This
information
should
not
be
relied
upon
as
the
sole
factor
in
an
investment
making
decision.
Supporting
References:
One
Big
Beautiful
Bill
Act:
Tax
deductions
for
working
Americans
and
seniors
No
Tax
on
Social
Security
is
a
Reality
in
the
One
Big
Beautiful
Bill
David
Hunter,
CFP®
is
a
CERTIFIED
FINANCIAL
PLANNER™
and
owner
of First
Light
Wealth,
LLC,
a
financial
planning
&
wealth
management
firm
with
a
unique
focus
on
serving
attorneys
nationwide.
David
has
over
a
decade
of
experience
helping
clients
build
financial
plans
and
has
been
featured
in
publications
such
as
Attorney
at
Work,
ThinkAdvisor,
MarketWatch,
Financial
Planning,
and
InvestmentNews.
David
also
writes
weekly
to
attorneys
in
his
popular Money
Meets
Law newsletter.
For
more
about
David,
visit firstlightwealth.com/lawyers or
connect
with
him
on LinkedIn.