2025 Tax Law Changes for Retirees: Top 10 Provisions from the One Big Beautiful Bill Act

Last week, Congress passed the “One Big Beautiful Bill Act” (OBBBA) — a sweeping 800+ page piece of tax legislation. While most people haven’t made it past the table of contents (and who could blame them), it includes some major updates that will impact retirees and those approaching retirement. In this blog, we break down the 2025 tax law changes for retirees.

My goal here is to highlight the ten provisions that are most likely to affect you. Honestly, this post is basically a tax love letter to my retired clients—but these changes impact retirees broadly, so putting it out into the world feels like the morally right thing to do. (Also, the couple in this stock photo looks uncannily like my in-laws. And their expressions? That’s about how enthusiastic they get when I bring up tax legislation at the dinner table. I’m sure I’ll be a real hit this Thanksgiving.)

As is the Collective Wealth Planning way, let’s break them down in plain English — what the law was before OBBBA, what it will be after OBBBA, when it starts and ends, and the planning opportunities it creates for retirees.

Important Notes:

• As with any major piece of legislation, additional IRS guidance and technical corrections are likely. We should expect updates and clarifications in the months ahead.
• To keep this blog digestible, I’ve limited it to 10 key changes. I’m not skipping the others because they’re unimportant — in fact, many of us are deeply concerned about cuts to safety net programs included in this bill. These changes matter not only through a financial lens, but through the broader lens of what it means to be part of a civil society. If you’re interested in the broader implications of the bill, I encourage you to read further, stay abreast to the impacts as they’re better understood over time and get involved where and how you can.
• I am not a CPA or Enrolled Agent. This post focused on 2025 tax law changes for retirees is intended for general educational purposes and reflects my interpretation of the bill as it stands today.

1. $6,000 Personal Exemption for Retirees Age 65 and Older

• Before OBBBA: Personal exemptions were eliminated under the 2017 Tax Cuts and Jobs Act (TCJA), and retirees received only an additional standard deduction amount. Prior to that, all taxpayers received a personal exemption (e.g., $4,050 in 2017), regardless of age.
• After OBBBA: Starting in 2025, individuals age 65 or older (as of year-end) can claim a $6,000 personal exemption. For couples, that’s $12,000 if both spouses qualify. This is in addition to the extra standard deduction that already exists. There is no personal exemption for people under 65. This exemption phases out completely at $75k MAGI (single) / $150k (MFJ).
  • When it starts: 2025
  • When it ends: 2028
• Planning Opportunity: This effectively brings back personal exemptions—but only for older adults. If your income hovers near the phaseout limits, we may want to manage adjusted gross income (AGI) through strategies like Roth conversions, capital gains harvesting, or adjusting IRA withdrawal timing.

2. Charitable Deductions Now Available to Standard Deduction Filers

• Before OBBBA: You could only deduct charitable contributions if you itemized. Temporary exceptions expired in 2021.
• After OBBBA: Starting in 2026, standard deduction filers can claim $1,000 (Single), $2,000 (Married Filing Jointly)
  • When it starts: 2026
  • When it ends: No end date
• Planning Opportunity: This lets non-itemizers claim a modest but meaningful deduction. If your typical annual giving is in the $1,000–$2,000 range and you don’t itemize, this new rule allows you to receive a tax benefit without changing your behavior. For those who donate more than that, itemizing might still make more sense depending on your full deduction picture (what a great segue to the next item on our list…).

3. AGI Thresholds Added for Itemized Charitable Deductions

• Before OBBBA: As long as you itemized, you could deduct charitable donations—subject to overall AGI limits—but there was no minimum threshold required to do so.
• After OBBBA: Starting in 2026, charitable donations are only deductible if they exceed 0.5% of your AGI. In other words, small itemized gifts may no longer reduce your tax bill unless they clear this new floor.
  • When it starts: 2026
  • When it ends: No end date
• Planning Opportunity: Consider “bunching” your giving—combining multiple years of charitable contributions into a single tax year—to ensure your donations clear the threshold. For example, if your AGI is $400,000, you’ll need to give more than $2,000 in that year before any portion becomes deductible as an itemizer. If your annual giving tends to be in the $3,000–$5,000 range, you may still benefit from itemizing depending on other deductions. Donor-advised funds (DAFs) can also help simplify the timing and tracking. You can learn more about these charitable gifting strategies in our blog, Tax-Efficient Giving: Unlocking Smart Philanthropy.

4. Higher Standard Deduction Confirmed for 2025 and Beyond

• Before OBBBA: Temporary increases from the 2017 TCJA set the standard deduction at $13,850 (Single) and $27,700 (Married) for 2023, with added amounts for those over 65. These were going to sunset at the end of the year.
• After OBBBA: The TCJA increases are now permanent, with further increases to $15,750 (Single), $31,500 (Married) and an additional $2,000 (Single 65+), $1,600 per spouse (Married 65+)
  • When it starts: 2025
  • When it ends: No end date
• Planning Opportunity: With a higher standard deduction, fewer clients will itemize. That shifts planning to Qualified Charitable Distributions (QCDs), which reduce AGI directly, or strategies that deliver benefit regardless of itemization status.

5. Estate and Gift Tax Exemption Increased to $15 Million

• Before OBBBA: The exemption was set to revert from $13.99M per person in 2025 to ~$6M in 2026.
• After OBBBA: Permanently set at $15M per person, indexed for inflation.
  • When it starts: 2026
  • When it ends: No end date
• Planning Opportunity: Few of us need to worry about federal estate tax now, particularly because that exemption applies per person for those MFJ (a total of $30M transferable before federal estate taxes kick in). However, Oregon’s estate tax starts at $1M with rates ranging from 10% to 16%. A $4M estate for a couple with poor planning could still face $300k+ in Oregon estate taxes, while a single filer could owe significantly more. If you might be impacted, this is the year to revisit your gifting and trust strategies.

6. SALT Deduction Limit Rises to $40,000 Through 2029

• Before OBBBA: The Tax Cuts and Jobs Act capped the SALT deduction at $10,000, regardless of filing status. This limit applied to the total of state income tax and property tax payments.
• After OBBBA: Beginning in 2025, the SALT cap increases to $20,000 for Single filers and $40,000 for Married Filing Jointly.
  • When it starts: 2025
  • When it ends: 2029
• Planning Opportunity: Oregon residents typically pay high state income and property taxes, so this expanded cap may allow for significantly more deductions. To make the most of it, we might:
  • Prepay January property tax installments in December of a high-tax year.
  • Make Oregon estimated tax payments in December instead of January—especially helpful if your income varies or you’re doing part-time or consulting work in retirement (several of my retired clients still work).
  • Leverage Oregon’s elective PTE (Pass-Through Entity) tax if you retain ownership in an S-corp or partnership. This allows the business to pay Oregon income tax at the entity level, potentially increasing your federal deduction (retirement doesn’t always mean you’re out of the business game).These strategies can help accelerate deductible SALT payments into years when the higher cap is in effect, potentially improving your tax outcome.

7. TCJA Tax Brackets Made Permanent in 2025 Tax Law

• Before OBBBA: Many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) — including lower income tax brackets and broader brackets across income levels — were scheduled to sunset after 2025, reverting to pre-2018 tax law.
• After OBBBA: OBBBA locks in the current TCJA tax brackets and rate structure permanently. This includes the wider brackets, lower rates, and the higher Alternative Minimum Tax (AMT) exemption amounts.
  • When it starts: 2026 (when TCJA would have sunset)
  • When it ends: No end date
• Planning Opportunity: The permanence of these brackets allows us to continue using strategies we’ve been modeling for years — such as spreading income (via Roth conversions, IRA withdrawals, or capital gains) across multiple years to stay in lower tax brackets. It also removes the urgency many retirees felt to complete conversions before 2026. We can take a more measured, long-term approach to income planning knowing these brackets will remain intact. Want a full rundown of the tax brackets and other important thresholds to keep in mind? Here’s our 2025 “Important Numbers” document.

8. Mortgage Interest Deduction Limits Made Permanent

• Before OBBBA: The 2017 Tax Cuts and Jobs Act reduced the cap on mortgage interest deductibility from $1 million to $750,000 for new loans, but that change was set to expire after 2025.
• After OBBBA: OBBBA makes the reduced cap permanent. Interest can now only be deducted on mortgage balances up to $750,000, with no expiration date.
  • When it starts: 2026 (as the TCJA limit would have sunset)
  • When it ends: No end date
• Planning Opportunity: While this may not directly impact many retirees with smaller or fully paid-off mortgages, it can affect planning for those considering downsizing and taking on a new mortgage, or helping children or grandchildren purchase homes. If home financing is part of your broader financial or legacy strategy, we can revisit how this limit may apply.

9. Phaseout of SALT Deduction Smoothed and Indexed for Inflation

• Before OBBBA: SALT deduction phased out completely at $500,000 MAGI with a sharp cutoff, meaning taxpayers who earned just one dollar over that threshold received no deduction.
• After OBBBA: A gradual phaseout now applies between $500,000 and $600,000 of MAGI. In addition, the phaseout thresholds will increase by 1% annually for inflation.
  • When it starts: 2025
  • When it ends: 2029
• Planning Opportunity: This change provides a buffer zone that can be especially helpful for those with fluctuating income. For example, if your MAGI is $550,000, under prior rules you would receive no SALT deduction. Under the new rules, you’ll still retain 50% of the deduction. If your income fluctuates near these thresholds, we can use strategies like timing capital gains, Roth conversions, or IRA withdrawals to smooth income over multiple years and preserve more of your deduction.

10. No Change to How Social Security Benefits Are Taxed

• Before and After OBBBA: Up to 85% of your Social Security remains taxable based on provisional income. No changes were made.
• Planning Opportunity: While the rules didn’t change, planning remains critical. Roth conversions, tax-efficient withdrawals, and managing your MAGI are key to minimizing the taxable portion of Social Security.

A Few Things To Explore Before the End of 2025

In addition to the 2025 tax law changes for retirees mentioned above, there are a few other items to explore before the end of the year (and some cases, end of the summer). If you were already considering certain purchases or home improvements, the OBBBA makes it more urgent to take action before the deadlines. Several tax credits are being rescinded — meaning they’re going away entirely — and doing them in 2025 could be your last chance to capture the benefit.

1. Electric Vehicle Tax Credit

• Before OBBBA: Buyers could claim a federal tax credit of up to $7,500 for qualified new electric vehicles.
• After OBBBA: The credit is eliminated for any electric vehicle acquired after September 30, 2025. This is the most time-sensitive elimination to consider.

2. Alternative Fuel Refueling Property Credit

• Before OBBBA: A credit was available for installing EV chargers and other alternative fuel equipment.
• After OBBBA: The credit is eliminated for property placed in service after June 30, 2026.

3. Energy Efficiency Home Improvement Credit

• Before OBBBA: You could receive credits for qualified energy efficiency upgrades (e.g., doors, windows, insulation, heat pumps, etc.).
• After OBBBA: These credits are eliminated for improvements made after December 31, 2025.

4. Residential Clean Energy Credit

• Before OBBBA: A 30% tax credit was available for solar, wind, geothermal, battery storage, and other renewable energy systems.
• After OBBBA: This credit is repealed for expenditures made after December 31, 2025.

5. New Energy Efficient Home Credit

• Before OBBBA: Homebuilders could claim a credit for constructing energy-efficient homes.
• After OBBBA: This credit expires for homes acquired after June 30, 2026.

Planning Opportunity: If these were projects you were already considering, completing them in 2025 (or by the applicable deadlines in 2026) will ensure you can still claim the associated credits. We can talk through whether it makes sense to accelerate these plans based on your overall financial picture.

Final Thoughts

If you’re retired or planning to retire soon, the 2025 tax law changes for retirees include more than a few reasons to revisit your overall strategy. Some changes simplify things. Others, like charitable deduction thresholds or estate tax shifts, create opportunities — and also some potential pitfalls.

For my ongoing clients, as always, I’m here to help you interpret what applies and make smart decisions from here. Let’s discuss any of these provisions that feel especially relevant in our next check-in.

For those visiting, feel free to reach out if you have questions about how these changes impact your unique financial picture.

Disclaimer: The information contained in this post is for general educational purposes only and does not constitute tax, legal, or investment advice. While I strive to ensure accuracy, I am not a CPA or Enrolled Agent, and the interpretations shared here reflect my understanding of the law as of the date of publication. Tax laws may change, and each individual’s situation is unique. Please consult with a qualified tax advisor or attorney before making decisions based on this content.