The One Big Beautiful Bill: What Retirees Need To Know

Give While You Live: The Meaningful Impact of Gifting Today – (0:00)

Daniel Ruske: My name is Daniel Ruske. I’m a Lead Advisor here at Peterson. I’ve been here for about five years. I’m loving it, and I know it sounds crazy, but today we’re going to talk a lot about taxes, and that gets us excited around here.

Before we jump into the One Big Beautiful Bill, I do want to go over a few housekeeping items. First, I’m hoping to keep this webinar to about 30 minutes. There will be a question-and-answer session afterward, and then we’ll spend about five or so minutes on a survey. If you don’t mind, at the end of the presentation, let me know what you liked, what you didn’t like, and also vote on the next webinar topic. If you are attending our webinars, you can vote on what we’re going to do next.

Also, our website is petersonwealth.com. All of our webinars are in a library—you can go to the ‘Learn’ tab and see all of our prior webinars. This one will be uploaded there as well.

For everyone who registered for today’s webinar, there will be a recording sent out after this presentation is over. I believe we’ll get it out today, maybe early tomorrow. That way, if you have to check out at any time or take off early, just know you’ll have access to see that.

Really quick, we’re going to go through this webinar fairly quickly. There’s a lot to tackle. If you’re a client and you have questions, contact your advisor. If you’re not yet a client, we will have a link posted in the chat. In that chat, you can set up a consultation with one of our advisors.

On the Zoom recording today, we’re going to have a question-and answer-feature. I’m going to have Jeff Sevy and also Zach Swens0n—they’re both Associate Advisors. They’re going to be able to answer your questions as we go.

If for some reason we don’t know the answer or if we need more specific information regarding your situation, we may ask you to email either myself at daniel@petersonwealth.com or info@petersonwealth.com, and we can get to your questions there.

Before we get started, I do have to go over this disclaimer: This webinar is for informational purposes only. It’s not intended to give any legal, tax, or financial advice. If you are looking for investment or tax advice, contact your CPA or talk to one of us. But we want to get to know you individually and talk about your situation before you apply any of the information you receive today.

Okay, let’s get started.

What is the One Big Beautiful Bill? – (2:43)

Today we’re talking about the One Big Beautiful Bill Act—also called the OBBBA or the BBB Act, or sometimes just the BBB.

Now, I’ve heard it called all of these things. And if that name isn’t confusing enough, wait until we dive into the over 800 pages included in this bill. Today, I’m going to refer to it either as the One Big Beautiful Bill or just the new bill.

This bill was signed into law by President Trump on July 4, 2025. A lot of the changes from this bill will take place in 2025, but many will go into effect in the coming months.

Let me just say once again, we will not be able to cover every change in this bill. We are going to focus on and do our best to cover the topics that are most applicable to retirees and soon-to-be retirees. But again, there is a lot in this bill that we will not cover.

This is also going to be a fairly high-level overview of the changes. So talk to your advisor if you’re a client—or schedule a consultation if you’re not yet a client—and we can go into more depth on the topics that most interest you.

Here are the changes we’re going to go over today:

• The permanent extension of the tax brackets and the standard deduction
• The new senior bonus deduction
• How non-itemizing charitable donations have changed
• A new charitable deduction
• The increased State and Local Tax (SALT) deduction
• Expanded access to Health Savings Accounts (HSAs)
• And lastly, what was not included in the bill but is important, the Obamacare subsidies were not extended

Permanent Extension of Lower Tax Brackets – (4:29)

As a quick reminder, the Tax Cuts and Jobs Act (TCJA) was passed in 2017 during President Trump’s first term. It lowered income tax rates for most people and nearly doubled the standard deduction. The 2017 change also capped things like state and local taxes, which we’ll talk about later in this webinar.

For most Americans, this meant a simpler tax return and lower taxes. These changes were set to expire—or “sunset”—at the end of 2025 unless Congress stepped in. Well, they did. And now we have the new beautiful bill that makes these lower tax brackets permanent.

On the slide you’re looking at, you can see the tax rate progression—for example, 10%, 15%, 25%. The current rates, since 2018, have been 10%, 12%, 22%—and that is what it’s going to be going forward.

I want to give a quick example here of an individual making $150,000. I’m showing the federal tax bill if they didn’t have the new One Big Beautiful Bill, and then with the new bill. You can see their taxes are reduced from $29,000 to $25,000—just federally.

Now, same example, but this time the individual is making $250,000. You’ll see the tax bill with and without the new law. Hopefully that’s helpful, it gives you an idea of the tax savings in a hypothetical situation.

Now, before I get going and start talking about itemized and standard deductions, I do want to take a moment here to talk about the difference between the standard deduction and itemized deductions.

A standard deduction is a flat amount that the IRS lets you subtract from your income before you calculate how much tax you owe. It’s simple, automatic, and the amount depends on your filing status. Since the Tax Cuts and Jobs Act in 2017, over 90% of Americans are taking the standard deduction since it was doubled.

Now, for itemized deductions, these are a list of specific expenses like mortgage interest, state and local taxes, medical expenses, and charitable donations that you get to add up one by one. If your itemized deductions are higher than your standard, then you will take the higher itemized deduction.

The key here is you can only take one or the other. You obviously want to take the higher.

As we go through some of these changes in the bill, some of the changes are going to impact those of you who take the standard deduction, and some of the changes will impact those of you who itemize on your tax return. Some will also impact both groups. And then also there’s a change that might make you switch from taking the standard to itemized. I’ll try to highlight that as I go, and you can pay special attention based on whether you itemize or take the standard.

Permanent Increase to the Standard Deduction – (7:21)

This is obviously relevant to everyone. You want to make sure that you’re taking the higher of the two. This year, the standard deduction is $15,750 for single filers and $31,500 for married filing jointly.

As shown on the chart, the standard deduction doubled in 2018, and we’ve had cost-of-living adjustments every year from 2018 to 2025. So you can see the difference you’ve received if you’re taking the standard deduction. Thanks to the new tax bill, both the lower tax rates from 2017 and the increased standard deduction are now permanent.

Now, I’m going to put “permanent” in air quotes. What we mean by permanent is that there is no current sunset or expiration on them. That doesn’t mean they’re going to be permanent forever, it just means that Congress would have to pass a new law to change them.

Temporary Senior Bonus Deduction – (8:15)

Moving on, we’re going to talk now about this temporary senior bonus deduction. Now, I would say this is one of the most important slides for retirees because I think it’s going to impact a lot of our clients, and hopefully a lot of you as well. I feel like there’s been a lot of confusion around this deduction and the taxation of Social Security, so pay close attention here.

First, the temporary senior bonus deduction is available to taxpayers over 65 in 2025. I’m calling it a temporary deduction because it is only available from 2025 through 2028. This does have a built-in sunset. This is available whether you itemize or take the standard deduction.

Now, we talked earlier about how normally you can only take either the standard or itemized deduction. However, with this senior bonus deduction, it is added on whether you take the standard or you itemize. This amount is $6,000 for an individual or $12,000 if both you and your spouse are over the age of 65.

However, there are phaseouts. You begin phasing out when your income is over $75,000 as a single filer or $150,000 married filing jointly. Once you reach those respective phaseouts, as you see on the slide, you’ll fully phase out of this deduction.

Lastly, and a very important point here, this senior deduction was in exchange for Social Security becoming tax-free. There was a lot of discussion around whether Social Security would become taxable. I believe Trump even made some promises, but nothing regarding this senior bonus deduction impacts Social Security.

I’ll say it again: you do not need to be receiving Social Security benefits to receive this senior bonus deduction. Social Security will still be taxed the same as it was—none of that has changed. You simply receive this bonus deduction because lawmakers could not agree to let Social Security income be completely tax-free. Please, please, please do not claim Social Security purely because of this senior bonus deduction.

This next slide: I have an example of a 67-year-old and a 66-year-old couple who are filing jointly. I wanted to put this on the screen to highlight that whether you are taking the standard or whether you’re itemizing, you still receive the senior deduction—assuming that you haven’t phased out.

On the left-hand side (filing jointly), you’re going to get a $31,500 standard deduction. Plus, both husband and wife are over the age of 65. They’re going to get the normal $1,600 each deduction, so we add that $3,200. Then on top of that, they’re going to get the $12,000 senior deduction, once again, $6,000 each because both are over the age of 65. Quick note: that $3,200 is already in place. You get it because you’re over the age of 65.

Now, on the right-hand side, we have the same couple. But in this scenario, instead of taking the standard, they add up all their itemized deductions: $15,000 of charity, they add up the state and local tax, they add up their mortgage interest to get a total itemized deduction of $36,000. Then they also receive the $6,000 each, so we add the $12,000 to get a $48,000 deduction.

The whole point here is that whether you take the standard or whether you’re itemizing, you’re going to get that new senior deduction—if you’re 65+ and are not over those income phaseouts.

State and Local Tax (SALT) Cap Increased – (11:49)

Everyone should pay attention here because this is one of those changes that might cause you to itemize on your tax return when you might normally take the standard deduction. This can be a bit complex if you’re not the go-to tax person in your family, but try to hang with me. I’ll try to break it down.

One of the big questions during the negotiations of this new tax law was what would happen to the SALT (state and local tax) deduction cap.

Ever since the Tax Cuts and Jobs Act in 2017, it’s been capped at $10,000. This means that if your state tax, your property tax, and the other local taxes add up to over $10,000 in a year, you max out and can only include the $10,000 as part of your itemized deductions.

A lot of people, especially lawmakers from states with higher state tax, were not happy about this. Even Republicans from those states said they wouldn’t support the entire bill if this $10,000 cap was not raised. In the end, they got what they wanted. Starting in 2025, the One Big Beautiful Bill bumps the SALT (state and local tax) deduction limit up to $40,000.

This is great for those of you who pay a lot in state and property tax. However, there are income phaseouts that begin at $500,000. So if you’re itemizing and you have questions about this, let us know. This change will begin in 2025 and end in 2030.

To explain this further, here is a chart that helps explain the change. As I mentioned, the SALT deduction limit is set to drop back down to $10,000 in 2030. So chances are we’ll see another round of debate in Congress about what to do with it.

For now, though, there will be a steady increase of 1% each year for both the overall limit and the phaseout threshold. Feel free to take a picture of the slide if you’re one of those high state or local taxpayers. And once again, let us know if you have questions on that.

Charitable Donation Changes – (13:53)

Moving on, there were two notable charitable donation changes that I’ll go through.

First is for itemizers. Starting in 2026, the new bill introduces a hurdle for your itemized charitable deduction makers. This slightly hurts the charitable giver by implementing a new 0.5% AGI floor. Now what this means is that only a portion of your charitable contribution, the portion that exceeds 0.5% of your adjusted gross income (AGI), will be deductible.

Here’s an example: if your AGI is $150,000 and you donate $17,000 to your charity, the first 0.5% (or $750) will not count toward your itemized donation deductions. In the past, we didn’t have this floor—100% of it counted toward those itemized deductions.

Second is a change that actually helps a lot of charitable givers, and that is relevant to those who take the standard deduction.

In the past, taxpayers could only deduct charitable contributions if they itemized their deductions. But as we mentioned, with the standard deduction nearly doubling in 2018, far fewer households are itemizing. Mostly only those higher-income earners with large mortgage interest or state and local tax bills.

As a result, many of the middle- and lower-income households have not received any tax benefit for the charitable giving that they’ve done.

The CARES Act in 2021 briefly changed this, allowing just $300 for single filers and $600 for joint filers to be deducted, even if you didn’t itemize. That expired in 2021. But with the new One Big Beautiful Bill Act, it brings back this benefit and makes it permanent.

Starting in 2026, taxpayers who don’t itemize can deduct $1,000 if you’re filing single or $2,000 if you’re filing joint, regardless of income or other deductions. To add on top of this, the new deduction is not subject to the 0.5% AGI floor that we talked about on the last slide.

Now, I want to make a quick note here.

For those of you who are already making Qualified Charitable Distributions, or QCDs, I’m talking to you in a moment here. But if anybody is over the age of 70½ and is not making QCDs (paying their donations via QCD), please let us know. There’s a lot of tax savings there.

But for those of you who are, this will likely remain the most tax-efficient way to give.

However, this new deduction that I’m talking about is a great option for those smaller one-off donations that you might make throughout the year.

Often, we have clients who don’t want to go through the process of contacting their advisor to send a check directly from their IRA to their charity, and so they just give a few dollars here and there. With this, keep track of those smaller amounts and make sure to let your tax preparer know. You’ll receive a deduction for them.

More Marketplace Plans are now HSA-Eligible – (17:01)

Okay, let’s talk about health insurance. If you and everyone you know are already on Medicare, then you can tune me out for a minute or two. This is impactful for retirees or soon-to-be retirees aged 64 and below who need health insurance.

One of the helpful changes in this new law is that it expands the definition of what counts as a High Deductible Health Plan. This is the type of health plan that you need if you want to contribute to a Health Savings Account, or HSA.

Under the old rules, not every Bronze or Catastrophic plan on the Affordable Care Act exchange qualified. The IRS had specific guidelines for deductibles and out-of-pocket limits. But now, under this new law, every Bronze and Catastrophic plan offered through the federal or state Affordable Care Act marketplace automatically counts as an eligible plan.

This means that more people who choose these plans can also open and contribute to Health Savings Accounts. It’s a great tool for saving on taxes and for setting aside money for future healthcare costs. The reason, once again, this is important is primarily for retirees under the age of 65.

If you or a spouse is retiring before Medicare kicks in and you’re looking for private insurance on the Affordable Care Act marketplace, then this makes bridging that gap more flexible and tax-efficient.

Let me take a moment to explain how a Health Savings Account (HSA) works. You get to put your contributions into the health savings account tax-free. The money can be invested and grow. When you pull the money out, as long as it’s used for qualified medical expenses, it is completely tax-free.

So what’s nice is that you essentially never pay tax on the money you put in. You never pay tax on the growth either, as long as it’s used for those qualified medical expenses.

If your HSA is low, talk to us. We’ll maybe encourage you to put more in. If you’ve got a really large HSA, let’s talk and see if there’s a better place to put savings.

Affordable Care Act (ACA) – (19:02)

Staying on insurance, up to this point, everything we’ve talked about has been a change that did make it into the One Big Beautiful Bill. But this next point is actually worth mentioning because it did not change.

It’s one of the few things that people hoped would be updated but was left out, and that is: there is no extension of the Affordable Care Act (ACA) Obamacare credits. If you or someone you know gets health insurance through the Affordable Care Act or health exchange, this could have a huge impact.

Once again, we’re talking to the retirees and soon-to-be retirees who are 64 and under and need health insurance through the marketplace. Oftentimes, this insurance is used between retirement from full-time employment until you and your spouse both hop onto Medicare at 65.

Now, this topic could probably take an entire webinar by itself. And most likely, we’ll probably do one before the end of the year on this exact topic. I’m going to do my best to explain the entire thing in just a couple of slides.

In general, these Affordable Care Act or health marketplace plans are more expensive and have less coverage than what you might be used to through your employer. Individuals covered by an ACA insurance plan are eligible for a credit to help pay for them based on their income.

Now, the way these credits work is that the more income you have, the smaller the credits get. Once you make over a certain amount, you lose 100% of the credit. That limit is 400% of the poverty level.

To give you an idea, for a household of two, 400% of the poverty level is $84,600 in 2025. This means that if a couple on the ACA plan made $84,600 or less, they would qualify for approximately $18,000 in healthcare subsidies that would help pay for monthly premiums. But if they made even $1 more than that $84,600, they would lose the entire $18,000.

Here’s a quick history lesson: in March of 2021, the American Rescue Plan, one of the COVID acts, eliminated this “cliff.” That meant you wouldn’t lose the entire subsidy just for going over the income limit. Instead, the credit would taper off gradually until you fully phased out.

However, this change sunsets at the end of 2025. There was no update as part of the One Big Beautiful Bill.

That means that starting in 2026, if you are on an ACA plan, you need to pay a lot closer attention to your income to make sure you don’t exceed that 400% of the poverty level. If you do, you could lose thousands in healthcare subsidies.

This graph shows the annual subsidies you’d receive in 2025 versus 2026. On the vertical axis, you see the annual subsidies a 64-year-old couple would receive to help pay for their health insurance premiums. Along the horizontal axis, you see their hypothetical income.

As you can see, the higher the income, the lower the annual subsidy. The key difference between 2025 and 2026 is that big cliff you see in orange. When they cross that $84,600 threshold, they get close to $18,200 in subsidies. But if they go just $1 over, their subsidy drops to zero.

So please, pay close attention. If you have anyone you know on an ACA plan, let them know.

That is what we wanted to cover in today’s presentation.

However, as I mentioned, there is so much more that was in this bill that we’re not going to cover—less relevant to retirees and soon-to-be retirees.

That includes:

• Deductions on tips and overtime
• Trump Accounts and MAGA Accounts
• The increased Child Tax Credit
• Expanded 529 expenses
• Clean energy credits and auto loan interest
• Provisions affecting business owners
• The estate and gift tax exemption being set to $15 million

If any of that applies to you or if you have additional questions, once again, we’ll have Jeff send that link in the chat. Sign up for a free consultation—or, obviously, if you’re a client, reach out to your advisor.

Before we open it up to questions, I want to remind everybody about the survey at the end. We really appreciate your feedback. Let us know what you liked, what we do well, and what we can do better. And, of course, vote for the topic of next month’s webinar.

We normally get a lot of questions about our book. This is Scott’s book, Plan on Living. It talks a lot about our approach to investments and our Perennial Income Model™. If you would like a book, email info@petersonwealth.com with your name and address, and we’ll send you one. If you know someone who might enjoy it, feel free to request the book or have it mailed directly to them.

Question and Answer Session – (24:48)

Q: If one partner is over 65 and the other is under 65, should taxes be filed separately to receive the bonus for the older partner, or does the filing status not matter for the temporary senior bonus deduction?
A: You can file jointly, but you’ll only receive the $6,000 deduction, not the full $12,000, because one spouse is too young. So, no need to change your filing status for that reason.

Q: If I have one person in our household on Medicare and one on an ACA plan, how do they determine the household size for ACA subsidies?
A: Great question. It’s based on total household size regardless of who is on the plan. So even if one of you is on Medicare, the household size is still two.

Q: Does this new tax bill make Roth conversions more or less favorable?
A: Good question. It depends on your situation. Initially, I’d say less favorable if you’re trying to stay under the income threshold for the senior bonus deduction, since a Roth conversion would push you over and reduce that benefit. However, once you’re already phased out, Roth conversions could actually become more attractive thanks to the lower tax rates. So, it really depends—we’d need to look at your individual case.

Q: You mentioned the maximum income a couple should not exceed for ACA tax credits. What’s the maximum for a single individual?
A: I don’t have the exact number off the top of my head, but you can Google “400% of the poverty level 2025.” You’ll see a table based on household size. For a single filer, it’s likely in the high $60,000s to low $70,000s range. The larger the household, the higher the income limit.

Q: Can you touch on the estate tax changes?
A: Yes. We didn’t get to estate tax earlier, but this is a separate tax from income or property tax. When someone passes away, if their estate is over a certain amount, it’s subject to estate tax—also called the “death tax.”

The exemption is now set to $15 million per person. So, for a married couple, that’s $30 million. If your estate is under that, you likely won’t owe estate tax. But if it’s over, definitely let’s talk and put together a plan to minimize or avoid it. The estate tax rate is significant.

That wraps up our webinar today. There is so much more in this bill that we didn’t cover—things like:

• Deductions for tips and overtime
• Trump Accounts and MAGA Accounts
• Changes to the Child Tax Credit
• Expanded 529 uses
• Clean energy and auto loan interest deductions
• Business owner-related provisions
• And additional estate planning updates

If any of these apply to you, or if you want to dive deeper into what we did cover, please click the link in the chat to schedule a free consultation. Or, if you’re a client, just reach out to your advisor directly.

Before you go, please complete the short survey that will pop up. We truly appreciate your feedback. Let us know what you liked, what we can improve, and vote on our next webinar topic. Thanks, everyone!