What Retirees Need to Know About the One Big Beautiful Bill

By now you’ve probably heard plenty about the One Big Beautiful Bill; in fact, you may even be suffering from information overload. That’s why we’re going to break down what it means for those in and near retirement. Is the Big Beautiful Bill a big bust or a big opportunity for your savings?

A Quick Recap 

In case you missed the news, the One Big Beautiful Bill Act (OBBBA) became law this past 4^th of July. Some headline-making provisions that were in previous iterations of the bill—like Health Savings Account expansions—ultimately were left on the cutting room floor. But there are still a number of provisions in the final bill that could impact your retirement, including: 

• A new deduction for eligible taxpayers age 65 or older 

• A delay to federal nursing home staffing rules  

• A new cap for the State and Local Tax (SALT) deduction 

• A new deduction for qualifying auto-loan interest for new vehicles 

• The 2017 Tax Cuts and Jobs Act’s (TCJA) income tax brackets and larger standard deduction being made permanent 

Some of these provisions will have an immediate impact on your taxes, while others won’t take effect for some time. Let’s take a closer look at the details.  

New Deduction for Taxpayers 65+ 

Effective: tax year 2025 – tax year 2028

Thanks to the OBBBA, the new senior tax deduction will offer taxpayers 65 and older a $6,000 deduction for single filers, or a $12,000 deduction for joint filers. The deduction phases out for adjusted gross income above $75,000 for single filers and $150,000 for joint filers. It’s available beginning with this tax year and will expire after 2028 if not extended by congress.  

While this provision won’t eliminate Social Security taxes entirely as some had hoped, it will mean that an estimated 90% of Social Security recipients will no longer pay federal income taxes on their benefits.  

Nursing Home Staffing Rule Delay

Effective: October 1, 2034

In 2024, the Centers for Medicare and Medicaid Services released new requirements for nurse staffing levels in nursing facilities. The nursing home industry criticized the rules as too strict, while resident and family advocates felt the standards didn’t go far enough to address poor patient care. In response, the OBBBA placed a moratorium on the implementation of federal staffing mandates until 2034, leaving it up to the states to set their own staffing requirements in the meantime. 

New SALT Deduction Cap 

Effective: tax years 2025 – 2029

The state and local tax (SALT) deduction cap was set to expire this year, but thanks to the OBBBA, the deduction has not only been saved, but increased. Under the SALT deduction, taxpayers have been able to subtract some state and local taxes from their federal taxable income. The Tax Cuts and Jobs Act capped the SALT deduction at $10,000 for tax years 2017-2025. The OBBBA boosts the cap to $40,000 for 5 years (starting this year), but only for households with an adjusted gross income (AGI) at or below $500,000. Those exceeding that AGI will instead have a $10,000 cap. Both the $40,000 cap and $500,000 AGI limit will be subject to a 1% inflation adjustment.  

No Tax on Car Loan Interest

Effective: tax years 2025 – 2028

If you’re thinking about financing a new vehicle, you’re bound to like this provision. So long as the new car is a qualified vehicle for personal use, you can deduct the interest paid on your loan. The maximum annual deduction is $10,000 and phases out for taxpayers with an AGI over $100,000, or $200,000 for joint filers. The vehicle must have undergone final assembly in the United States.  

TCJA Tax Brackets & Standard Deduction Made Permanent 

Effective: tax year 2025

Finally, it’s important to note the OBBBA made many of the temporary provisions of the Tax Cuts and Jobs Act permanent. This includes the TCJA’s lower individual tax rates and increased standard deduction, which were set to expire at the end of this year. Though this essentially maintains the status quo, it’s one less change to track! 

The OBBBA may be an intimidatingly dense piece of legislation, but you don’t have to tackle the implications alone. At Golden Reserve, we’re staying ahead of the changes, so we can best help you safeguard your savings. Get in touch and we’ll strategize together. 

Disclaimer: Numbers are for illustrative purposes only. Consult a professional for personalized advice.