President Donald Trump’s One Big Beautiful Bill Act (OBBBA) is his administration’s signature legislation during his second term and includes tax cuts, health insurance cuts, green energy cuts, Medicaid cuts and more. It also contains new retirement account provisions that could affect how Americans plan for their golden years.
Learn More: 5 Ways Trump’s ‘Big, Beautiful Bill’ Could Impact Your Wallet
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As the landmark bill was recently passed, there are a few implications it could have for your retirement savings plan. Here’s a look at what changes are coming your way from the federal government that could change the way you approach your nest egg.
Quick Take: OBBBA vs. Your Retirement Plan
As the name would suggest, this is a big bill that just got signed into law and covers a lot of financial ground, especially for retirees and those planning on collecting Social Security benefits. Here are a few quick key takeaways from the new legislation to consider:
- Despite some speculation, the OBBBA does not eliminate the taxation of Social Security benefits, but rather offers a deduction of $6,000 for taxpayers aged 65 or older and $12,000 for joint filers from 2025 to 2028, regardless of whether they receive Social Security benefits. This tax break can lower the taxable income for eligible retirees, potentially resulting in lower taxes on their Social Security benefits for many recipients.
- The Committee for a Responsible Federal Budget (CRFB) now estimates that the tax rate cuts and increased senior deduction in OBBBA could accelerate the insolvency of the Social Security and Medicare trust funds, potentially leading to benefit cuts to the tune of 24% in the future if no other solutions are found by 2032.
- If the expanded senior standard deduction and other temporary measures within the OBBBA are made permanent, the projected benefit cuts could become even larger.
- There are IRA and 401(k) plan enhancements as the legislation increases contribution limits and provides more flexibility for certain employer-sponsored plans in the form of catch-up contribution allowances or annual contribution limits.
Find Out: What Trump’s New Tax Law Means for Upper-Middle-Class Families in 2025
Tax Cuts Could Make Saving for Retirement Easier
Many Americans will now likely receive a break on their taxes owed. This means they would be able to channel more money into retirement savings accounts such as traditional IRAs, Roth IRAs or 401(k) plans.
“Retirement planning fundamentally comes down to having sufficient resources to make work optional,” said Brett Horowitz, principal and wealth manager at Evensky & Katz / Foldes Financial Wealth Management. “The Tax Cuts & Jobs Act provisions, combined with new deductions for tip income, overtime pay and seniors over 65, could significantly improve retirement outcomes for Americans.”
Those who benefited from the cuts in the original Tax Cuts & Jobs Act will continue to enjoy these cuts, allowing them to continue saving the same amount of money for retirement as they had been.
“Retirement modeling depends on clear inputs and stable variables,” he continued. “The less uncertainty in tax policy, the more accurately we can project success rates. When these changes take effect — pending Senate approval — we’ll be able to deliver much better news to clients about their retirement timeline.”
Horowitz believes that if Trump’s “One Big Beautiful Bill” hadn’t passed, it could have negatively affected Americans’ abilities to save for retirement.
“There’s a profound psychological difference between telling someone they can retire earlier than expected versus having to extend their working years,” he said. “The former energizes people about their financial future; the latter can feel overwhelming. These tax provisions create the conditions where more Americans can realistically achieve a comfortable retirement.”
It Affects Long-Term Investment Strategies
Savvy long-term investment strategies should always take taxes into account, so changes to tax laws can shift these strategies.
“Smart investing isn’t actually about chasing the highest gross returns — it’s about maximizing what clients actually keep after taxes and expenses, and this tax bill addresses some issues there,” Horowitz said. “While we can control costs through low-fee funds, tax efficiency requires a more nuanced approach that varies by everyone’s personal circumstances.
“Higher tax rates push us toward tax-free municipal bonds and tax-efficient ETFs in taxable accounts, while we place tax-inefficient investments in retirement accounts,” he continued. “This ‘tax location’ strategy can significantly impact net returns, even if it means accounts perform differently.”
Changes to the SALT Deduction Provide More Freedom
No matter where you plan to retire, it’s good to know that the OBBBA has increased the State and Local Tax (SALT) deduction cap. It has gone up to $40,000, with some limitations for higher earners, which can potentially provide relief for retirees in high-tax states.
“Two provisions in the Tax Cuts & Jobs Act have created the most anxiety for our clients — the SALT deduction cap and estate tax exemptions,” Horowitz said. “Both are getting significant relief.”
The increase in the SALT deduction cap means retirees will face less of a penalty if they choose to spend their golden years in a state with higher income taxes.
“The SALT deduction increase from $10,000 to $40,000 will reshape where people choose to live and retire,” Horowitz said. “We’ve already seen migration patterns shift dramatically since 2017, with high-tax states losing residents to states like Florida and Texas. This change reduces the penalty for living in high-income-tax states, though it doesn’t eliminate the advantage of no-tax states entirely.”
A Higher Estate Tax Exemption Will Bring Relief to Wealthy Americans
Estate planning strategies will also change for many Americans.
“On the estate side, the current $13.99 million exemption was set to drop to $7.14 million in 2026 — a reduction that had wealthy clients scrambling to implement complex gifting strategies and trust structures,” Horowitz said. “The permanent increase to $15 million per person, or $30 million for couples, provides enormous relief for families in that middle tier.”
This is particularly important because of state-level complications, Horowitz continued.
“Take New York, where you could face no federal estate tax, but still owe state estate taxes on estates between $7.16 million and $13.99 million,” he said. “The interplay between federal and state rules makes domicile planning critical.”
The “One Big Beautiful Bill” looks to make estate planning less complex for many people.
“For clients who’ve already implemented sophisticated estate planning strategies, those structures remain valuable,” Horowitz said. “But for families with estates under the new thresholds, this eliminates the pressure to make rushed gifting decisions or create complex trusts simply to avoid tax cliffs.”
Overall, Horowitz believes the bill will make retirement planning easier. “The permanent nature of these changes finally gives families the certainty to make long-term decisions about where to live, how to structure their wealth and when to implement estate planning strategies,” he said.
Caitlyn Moorhead contributed to the reporting for this article.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 4 Big Retirement Changes Under Trump’s Big Beautiful Bill
