On July 4, 2025, the One Big Beautiful Bill of 2025 (OBBBA) was signed into law. While the name might sound playful, this legislation brings real and lasting changes that will affect how Americans file taxes, manage retirement income, and plan their estates. For retirees and those 65+, understanding these updates is essential.

In this Cardinal Lesson, we highlight 11 major provisions that matter most for seniors and explain how they can influence your retirement strategy.

1. Lower Federal Income-Tax Rates Extended Permanently

The tax cuts from the 2017 Tax Cuts and Jobs Act were set to expire at the end of 2025, which would have meant higher tax rates beginning in 2026. The new bill makes the lower rates permanent.

For retirees, this means more certainty when planning Roth conversions or drawing income. While “permanent” in law can always be changed by a future Congress, for now these rates provide a more predictable planning window.

2. Estate and Gift Tax Exemption Increased

The estate and gift tax exemption was scheduled to be cut in half in 2026. Instead, the new law raises the exemption to $15 million per person ($30 million for couples).

For retirees with significant assets, farms, or businesses, this means fewer families will be subject to federal estate taxes. While some states still impose their own estate or inheritance taxes, this change reduces federal exposure for most households.

3. Qualified Business Income Deduction Made Permanent

If you’re self-employed or own a small business, the 20% Qualified Business Income (QBI) deduction has been made permanent and income thresholds expanded.

This is especially important if you’re still working past 65 or consulting in retirement. However, keep in mind that large Roth conversions could push you above the QBI income limits, reducing or eliminating this deduction.

4. Standard Deduction Increases

The law boosts the standard deduction to $15,750 for single filers and $31,500 for married couples, with extra amounts for those 65+ or blind.

Most retirees no longer itemize deductions, so a higher standard deduction means a simpler return and lower taxes for many seniors.

5. The New $6,000 Senior Deduction (2025–2028)

Perhaps the most talked-about provision for retirees is the temporary $6,000 senior deduction ($12,000 for couples), available whether you itemize or not.

This deduction applies only from 2025 through 2028 and phases out at higher income levels ($75,000 for singles and $150,000 for couples). For many seniors on fixed income, this provides immediate tax relief.

6. Higher SALT Deduction Cap

The cap on deducting state and local taxes (SALT) rises from $10,000 to $40,000. This benefits retirees in high-tax states like New York, California, or New Jersey—though the cap begins phasing out at $500,000 of income.

7. Charitable Giving Deduction Returns in 2026

Starting in 2026, even if you take the standard deduction, you’ll be able to deduct up to $1,000 (single) or $2,000 (married filing jointly) in charitable contributions.

This makes it more rewarding for retirees who consistently give to churches, charities, or nonprofits—even if they don’t itemize. Those already using Qualified Charitable Distributions (QCDs) from IRAs may need to coordinate how they give to maximize tax benefits.

8. Deduction for Tips (2025–2028)

For seniors who work part-time in jobs that earn tips, the law introduces a deduction for tip income up to $25,000. This provision phases out for higher earners but could provide meaningful savings for retirees supplementing their income through part-time work.

9. Deduction for Overtime (2025–2028)

Similarly, overtime pay is now deductible—up to $12,500 for singles and $25,000 for couples. This could apply to retirees working part-time who pick up extra hours.

10. Child Tax Credit Increase

The child tax credit is permanently increased to $2,200 per child, with future inflation adjustments. While most retirees won’t claim this directly, many will appreciate the relief it provides their children who are raising families.

11. New “Trump Accounts” for Children

Beginning in 2026, families can open new savings accounts for children under 18. If a child is born between 2025 and 2028, the government will seed the account with $1,000.

Grandparents may want to consider funding these accounts for grandchildren, weighing the benefits against 529 plans (which are limited to education expenses).

What This Means for Retirees

The One Big Beautiful Bill of 2025 provides both immediate and long-term planning opportunities. Lower tax rates, higher deductions, and estate tax relief create breathing room for seniors—but Roth conversions, charitable giving, and state tax planning now require new calculations.

At Cardinal Advisors, we’ve updated our financial planning tools and tax charts with these changes. If you’re 65+ and wondering how this law impacts your taxes, estate plan, or retirement income strategy, now is the time to review your plan.