The One Big Beautiful Bill Act (OBBBA) — signed into law in 2025 — made several significant changes to the U.S. tax code that create new planning opportunities for investors and retirees. While much of the legislation continues provisions from the 2017 Tax Cuts and Jobs Act, OBBBA also introduces new deductions and alters key rules that can impact how you manage income, donations, and deductions in retirement.
In this article, we focus on practical planning strategies for individual taxpayers, especially those preparing for or living in retirement, and how to think about these changes in the context of broader tax and retirement planning.
What the OBBBA Changed for Individual Taxpayers
The OBBBA made a number of tax changes that affect how retirees and near-retirees should approach income, deductions, and planning. These changes include:
Higher Standard Deduction (Permanent through 2026)
The standard deduction has been increased and is indexed for inflation. For many taxpayers, this change reduces taxable income without requiring itemizing.
Expanded SALT Deduction Cap
The deduction for state and local taxes (SALT) increased from the prior $10,000 cap to $40,000 for taxpayers who itemize. High-tax state residents — such as those in California, New York, or New Jersey — may benefit if they have enough deductions to exceed the standard deduction.
New Charitable Deduction Rules
Starting in 2026:
- You can deduct up to $1,000 (single) or $2,000 (married filing jointly) of cash charitable contributions above the line without itemizing.
Itemized deductions for charitable cash gifts above these amounts are subject to a new floor based on a percentage of Adjusted Gross Income (AGI). Qualified Charitable Distributions (QCDs) from IRAs age 70½+ remain unchanged and continue to count toward RMDs while excluding the amount from taxable income.
Key Planning Opportunities Under OBBBA
1. Evaluate Itemizing vs. Standard Deduction
The expanded SALT cap and higher standard deduction mean that retirees should regularly reassess whether bunching deductions makes sense.
Example strategy:
If you usually take the standard deduction, you might:
- “Bunch” two years of property tax payments plus charitable donations into one year to exceed the standard deduction, then take the standard deduction the next year.
This technique can boost deductions when combined with the higher SALT cap, especially if you have substantial state tax and mortgage interest.
This works well with broader planning, including charitable giving strategies and Qualified Charitable Distributions (QCDs) when you reach age 70 1/2 (see How to Reduce IRMAA and 9 Ways to Manage Capital Gains).
2. Leverage Above-the-Line Charitable Cash Deductions
For 2026 and beyond, you can deduct a modest amount of cash donations without itemizing.
- Up to $1,000 (single)
- $2,000 (married filing jointly)
Planning tip:
If your cash contributions would otherwise be below your total standard deduction, timing donations to maximize this deduction can improve your tax efficiency.
Note that donations of appreciated securities may still be more advantageous for reducing capital gains elsewhere — consider that when coordinating with 9 Ways to Manage Capital Gains and broader wealth planning.
3. Coordinate SALT Planning with Your Retirement Income
The expanded SALT deduction is a temporary windfall — it is scheduled to revert to the old $10,000 limit after tax year 2029.
This means:
- If you routinely pay significant state and local taxes (property, income, etc.), consider whether timing deductions around years with higher retirement income (e.g., years you take IRA withdrawals or Roth conversions) could reduce your overall federal tax burden.
This interacts with other planning topics like:
4. Make Qualified Charitable Distributions (QCDs)
For investors age 70½ and older, QCDs remain a highly tax-efficient way to give to charity — and they continue to count toward RMDs without increasing your taxable income.
Because a QCD reduces taxable income, it can also help:
- Avoid higher Medicare IRMAA surcharges
- Reduce taxation of Social Security benefits
- Improve tax efficiency during years of planned income spikes
For more on the income sequencing side, see:
5. Understand Credits and Deduction Expirations
Some popular tax incentives not directly part of OBBBA — such as clean energy tax credits — are expiring by the end of 2025.
If you were planning:
- Solar or energy efficiency upgrades
- Clean vehicle purchases for tax credits
Then 2025 may be your last year to benefit under prior rules.
While these credits may not directly impact your retirement accounts, they are part of a holistic tax plan that should be coordinated with your broader income and spending decisions.
How This Fits Into Your Retirement Tax Strategy
OBBBA changes are just one part of the evolving tax landscape for retirees. Tax planning remains about coordination, not isolated deductions. The tax code interacts with income sequencing, retirement distributions, Roth conversions, Medicare premiums, and charitable planning.
For example:
- Timing larger IRA conversions during years when you can benefit from expanded SALT or senior deductions (such as a new $6,000 senior deduction) can produce real tax savings — particularly when coordinated with income years that avoid high Medicare IRMAA or Social Security taxation.
- Meanwhile, beneficiaries may still benefit from step-up in basis rules on inherited assets, which affect capital gains planning (see 9 Ways to Manage Capital Gains).
Legislative changes like OBBBA reinforce the importance of ongoing tax planning for retirees, rather than reacting to tax law changes one year at a time.
Practical Action Steps for Retirees (2026)
Here are practical steps retirees and pre-retirees can take in light of the OBBBA:
- Revisit your itemized vs. standard deduction strategy annually.
- Evaluate the timing of charitable contributions (especially cash vs. appreciated assets).
- Coordinate SALT planning with other income events like Roth conversions.
- Continue using QCDs once eligible.
- Complete any energy or credit-related projects before scheduled expirations.
- Work income planning into RMD and Social Security timing decisions.
These should all fit into a broader tax planning framework rather than being treated as one-off tactics.
How a Fiduciary Advisor Can Help
OBBBA tax changes add complexity — and opportunity — but they also interact with many other retirement planning domains. A fiduciary advisor helps by:
- Modeling tax outcomes over multiple years
- Coordinating deductions, timing, and distributions
- Integrating charitable and income planning
- Reducing the risk of unintended consequences on Medicare or Social Security taxes
You don’t need to execute all strategies yourself — but knowing which ones matter for your situation can preserve more of your wealth.
Related articles you may find helpful:
- Portfolio Tax Optimization for High Net Worth Investors
- 9 Ways to Manage Capital Gains
- Backdoor Roth — Still Available in 2026
This topic is often part of a broader retirement or tax planning conversation. If you’d like help applying these ideas to your own situation, you can request an introductory conversation here.
Frequently Asked Questions
What is the expanded SALT deduction under OBBBA?
Under OBBBA, the SALT deduction cap increased to $40,000 for taxpayers who itemize, though it reverts to $10,000 after 2029.
Can I still use Qualified Charitable Distributions (QCDs)?
Yes. QCDs remain a valuable way for those age 70½+ to satisfy RMDs while excluding taxable income.
What changed for charitable deductions in 2026?
OBBBA added an above-the-line deduction for up to $1,000 (single) or $2,000 (married) in cash donations without needing to itemize.
