Donna Cournoyer

Every client’s situation is unique, but it’s helpful to consider a few categories that many folks fall into, to illustrate potential effects and possible tax planning moves you might consider following the passage of OBBBA.

In the article that follows, we cover those demographics likely to benefit most from the tax changes and then divide each category into Singles and Married Couples, so that you can reference a profile consistent with your stage of life and tax filing status.

Clients in Mid-Career

Situation: You’re in your prime working years, possibly with kids at home or in college. You might have a mortgage, you’re saving for retirement, and you could be in a high tax bracket due to dual income or career success.

Mid-Career Singles

If you’re single (or a single head of household) in this stage, your tax rates will remain at the current lower levels going forward, giving you stability. You won’t see your 24% bracket jump to 28% in 2026, for instance – it stays 24%.

The higher standard deduction is now permanent, meaning if you aren’t a homeowner or otherwise don’t itemize, you’ll continue to get a larger deduction each year.

However, with the new SALT (State and Local Tax) cap increase, you might actually benefit from itemizing if you own a home or live in a high-tax area.

For example, if you pay $8k in state taxes and $7k in property tax, previously you could only deduct $10k of that; now you could deduct the full $15k.

Combined with other itemizables (charity, mortgage interest), you may exceed the standard deduction and lower your taxable income further.

We recommend calculating this each year to determine if you could benefit from itemizing.

Also be mindful of the SALT cap phase-out: if your income is approaching ~$500k, there could be a marginal “tax bump” where deductions phase down.

It’s a consideration if, say, you’re negotiating a bonus or liquidating stock options – it might be worth spreading income over two years to keep AGI (Adjusted Gross Income) under that threshold and maximize deductions.

One more note: if you have any side business or 1099 income, remember that the 20% QBI deduction (Qualified Business Income) is permanent, so continue to keep good records of business expenses and income to fully utilize that break each year.

Mid-Career Married Couples

Dual-income couples will likewise benefit from the permanent lower brackets and the standard deduction. You’ll also get the slightly higher child tax credit if you have kids under 17 – an extra $200 per child annually.

Many taxpayers could benefit from the new $40k SALT deduction cap. In states like Massachusetts, a married couple with two decent incomes can easily pay over $20k in state income tax plus property taxes.

Now you’ll be able to deduct up to $40k of those taxes, which could make a significant difference in your itemized deductions.

Suppose you pay $15k state + $12k property = $27k, and you also have $5k of mortgage interest and donate $5k to charity – that total $37k would all be deductible (well above the ~$31k standard amount).

If your situation mirrors the example above, then for 2025–2029, you’d itemize and cut more off your taxable income. Look for tax-planning help in identifying if you cross that threshold.

As a strategy, consider “bunching” charitable donations (if you’re inclined toward charitable giving) into certain years to maximize your deductions. Because of the new 0.5% AGI floor on charity from 2026, you get more bang for your donated buck by concentrating gifts.

For example, instead of $5k each year, doing $10k every other year might yield a better tax result. You can facilitate this via donor-advised funds if desired.

Also, if you’re paying a mortgage, note that mortgage insurance (PMI) will be deductible again starting in 2026 – not a huge factor unless you bought recently with a small down payment, but worth knowing.

Overall, mid-career couples should find that they have a few more deductions to work with and no looming tax rate hikes, which may then allow you to invest more, set aside additional saving for college, and possibly accelerate income (like Roth conversions or stock option exercises) during these relatively low-tax years.

Clients Approaching Retirement

Situation: You’re within shouting distance of retirement, maybe planning to retire in the next 5-10 years. You’re thinking about Social Security, transition of income sources, and positioning your portfolio for withdrawals.

Approaching Retirement – Singles

If you’re single and nearing retirement, one key takeaway from OBBBA is tax predictability as you transition away from full-time work. The marginal rates you pay now on your salary will likely be the same or even lower when you switch over to retirement income streams.

This makes planning things like Roth IRA conversions or when to claim Social Security a bit easier, since we don’t have to worry about a major across-the-board tax increase in 2026.

Another benefit: if you’ll be 65 or older during 2025–2028, you’ll get that additional $6k deduction each year. Suppose you plan to retire at 66 in 2026 – your first few years in retirement (2026–2028) will have this built-in tax break.

You could use that to, for example, convert an extra $6k from your traditional IRA to a Roth IRA each year tax-free, or take slightly larger distributions in those years without tax.

You will need to watch the phase-out: if you have significant income from a pension or a high Required Minimum Distribution (RMD), and your AGI creeps above ~$75k, that $6k deduction starts shrinking.

It might influence things like whether to do partial Roth conversions (to keep AGI in a range that preserves the senior deduction).

Also, note that Social Security taxation hasn’t changed – up to 85% of benefits can still be taxable depending on your other income.

The new deductions can help reduce the taxable portion indirectly (since they lower overall AGI), but the formula is the same.

One strategy could be to take more income in 2025–2028 while you have extra deductions and maybe delay some income in 2029 when the senior deduction ends (if that makes sense with RMDs, etc.).

Approaching Retirement – Married Couples

For couples nearing retirement, the alignment of retiring and these tax changes is quite favorable.

If you both retire by, say, 2026, you’ll slide into retirement with permanently lower tax rates locked in and a four-year window of extra deductions (if at least one of you is 65+, and certainly if both are).

Let’s say one spouse is 65 and the other 63 in 2025: you’d get $6k extra in 2025 (for the older spouse), and by 2027 when both are 65, you’d get the full $12k extra for 2027–2028. This effectively gives you more tax-free income capacity.

A 65+ couple can have about $46k of income with no tax in 2025; by 2028 that will be a bit higher with inflation adjustments. This means many couples with moderate levels of income will pay very little tax in the first years of retirement on distributions, pensions, etc.

You’ll want to maximize the use of the 0% tax bracket – perhaps by doing Roth conversions or harvesting gains from investments while they’re free of tax.

Also, if you own a business and are selling it as you retire, or you plan to sell real estate, try (if possible) to schedule that sale’s income into these lower-tax years of 2025–2028.

Capturing a large capital gain in a year when you have a sizable standard deduction plus senior deduction could significantly reduce how much tax you pay on the sale.

One caution: if you have a high salary or large capital gain in 2025 and retire in 2026, be mindful that in 2025 your income might be high enough to phase out the senior deduction if one of you is 65 that year.

Lastly, regarding Social Security and Medicare – remember Medicare premiums (IRMAA surcharges) are tied to AGI from two years prior.

If you do take advantage of these low-tax years to convert a lot of IRA money to Roth, you’ll have to watch not to inadvertently spike your AGI too high and trigger high Medicare premiums down the road. It’s a balancing act: taxes vs. IRMAA.

Retired Clients

Situation: You are fully or mostly retired, living off Social Security, pensions, and/or portfolio withdrawals. You’re concerned with maintaining your lifestyle, managing RMDs, and preserving wealth for later in life or heirs.

Retired Clients – Singles

As a retired individual, you may not have thought a big new tax law would do much for you. After all, you’re not earning wages or running a business. But OBBBA actually gives retirees some tangible benefits.

First, the $6k senior deduction means you can have more income without paying tax (if you’re 65+ with income of less than $75k). If your income needs are modest (for example, mostly Social Security plus a bit of IRA withdrawal), you might find you owe zero federal income tax now.

For instance, Social Security gets special tax treatment (a minimum of 15% of Social Security income is untaxed for all recipients).

Combining that with a ~$23k total deduction (standard + new senior deduction) means many single retirees can have, say, $30-40k gross income and still pay virtually nothing in federal tax.

Additionally, the SALT cap increase could benefit you if you still own a home and pay significant property taxes. Perhaps you weren’t itemizing the last few years because the $10k SALT limit plus your other write-offs didn’t exceed the standard deduction.

But now, if you pay $12k in property tax and $5k in state tax (maybe on your IRA distributions being taxed by Massachusetts), that $17k would be fully deductible (under the $40k cap).

Add charitable contributions and maybe some mortgage interest if you still have one, and you might well exceed the ~$18k standard deduction.

Many retirees also give to charity— if you itemize, remember the new 0.5% rule: it’s minor, but you might consider consolidating gifts or using Qualified Charitable Distributions from your IRA if you’re over 70½, which let you satisfy your RMD by giving to charity tax-free, a strategy that bypasses the deduction limits entirely.

The main idea is: more of your money might stay in your pocket due to the senior deduction and SALT relief, but you should tailor your IRA withdrawal strategy to make the best use of these tax breaks now.

This might mean doing slightly higher withdrawals in 2025–2028 and a bit less later, effectively smoothing out taxes over time.

Retired Clients – Married Couples

Retired couples possibly may receive the biggest windfall from the OBBBA changes.

As noted, a married 65+ couple can have around $46k of income in 2025 and fall in the 0% tax bracket. That threshold will likely be around $50k by 2028 due to inflation adjustments on the standard deduction.

And even beyond that level, your next dollars are taxed at only 10%, then 12%, etc., with those rates staying lower permanently. This essentially means your retirement withdrawals and income can go further because less is paid in taxes.

One strategy we highly recommend that you consider is Roth conversions during 2025–2028 up to the amount that fills your 0% and maybe 10% bracket (or perhaps even higher tax brackets, depending on your personal situation).

For example, if you typically have $30k of taxable income (after deductions) in retirement, you might convert an extra ~$15k of IRA money to Roth each of those years and still be at a 0% tax rate on that conversion because of the deductions.

Even beyond the zero bracket, converting at 10% or 12% to fill your tax bracket is quite attractive (since down the road, RMDs could force that money out at higher rates if tax laws ever change or if you’re in a higher bracket then).

Additionally, if you have a large taxable brokerage account, you can realize capital gains up to the point that keeps you in the 0% capital gains bracket (which in 2025 for a married couple is roughly up to $96k of total income).

The stable tax environment with bigger deductions allows some creative balancing of where you draw funds – from IRAs, Roths, or taxable accounts – to manage not just taxes now but in the future.

And if you intend to help family (children, grandchildren), the Trump Accounts or gifting strategies can be employed without worrying about losing your own tax benefits (since the estate tax issue is largely moot federally for most taxpayers).

One caution for high-income retirees: if, for example, you have a large pension and significant investment income putting you in the top bracket (37%), note that your itemized deductions might be trimmed by the new 35% limitation rule, and your SALT cap might effectively still be $10k due to the phase-out.

In other words, very high-income retirees don’t benefit from some of these changes. But that is not the typical scenario, as most retirees have less income than when they were working.

For the majority of retired couples, however, this law provides more breathing room and more planning opportunities to ensure your money is as tax-efficient as possible.

-RK

In this article, MFA founder Susan Moore demystifies the headlines and hype around Social Security, and answers questions that are on the minds of many people who are approaching, or already in, retirement.

With Social Security often in the headlines, many of you have asked: Will it still be there when I retire? Will my benefits be cut?

These are valid concerns—and we’d like to share where things currently stand, what’s being discussed in Washington, and how it could impact your planning.

When Will the Social Security Trust Fund Run Out?

According to the 2025 Trustees Report, the Social Security Trust Fund is projected to be depleted by 2033. At that point, the program would rely solely on ongoing payroll taxes to pay benefits, which are expected to cover about 77% of scheduled payments.

If no changes are made, benefits would be automatically reduced by roughly 23% starting in 2033.

What Would Benefit Reduction Mean?

If reductions occur across the board, here’s what the estimated impact could look like by income tier:

Source: Moore Financial Advisors

Will Cuts Affect Current Retirees?

This is one of the most frequent questions we’re asked. So far, Congress has never reduced benefits for current retirees

Most proposals focus on future beneficiaries or apply gradual changes, such as adjusting the retirement age or benefit formulas for younger workers.

However, if lawmakers do nothing, all beneficiaries—current and future—would face automatic cuts in 2033 due to the trust fund running dry.

What Is Being Proposed to Fix This?

There are several ideas on the table, but no consensus yet. Here are a few commonly discussed options:

1. Raising the Full Retirement Age (FRA) Budget proposals supported by the Republican Study Committee and Project 2025 have called for increasing FRA from 67 to 69; some versions of these proposals would roll out before 2033. This effectively cuts benefits for many, especially low- and middle-income workers, even if reductions aren’t framed as “cuts.”
2. Lifting the Payroll Tax Cap Currently, wages above $176,100 (2025) are not taxed for Social Security. One proposal would apply payroll taxes on income up to $250,000.
3. Targeted Cuts for Higher Earners Some reform plans propose benefit reductions for higher earners while preserving or increasing them for lower earners. These reductions would go into effect around 2029 for new beneficiaries with higher incomes, phasing reductions up to 50% for individuals earning over $180,000 in modified adjusted gross income (MAGI) or joint earners over $360,000.
4. Increasing Payroll Taxes Slightly Raising the 6.2% payroll tax to 6.4% or higher to bring in more revenue.
5. Means Testing Some proposals suggest reducing benefits or slowing the cost of living adjustment (COLA) for retirees with high net worth or income from other sources.
6. Backdoor Privatization Plans Recently Treasury Secretary Scott Bessent said that “Trump baby accounts” or child savings accounts are a back door for privatizing Social Security, although he later back-peddled on that statement. This raised concerns about eventually shifting FICA payroll tax funding into private investment vehicles—undermining Social Security’s defined-benefit structure and reducing program coverage over time—even if not explicitly cutting current benefits.
7. Alternative Funding Models Republican Senator Bill Cassidy and Democratic Senator Tim Kaine have proposed an alternative funding model for the safety net program, which would supplement the program’s Trust Fund with a new diversified pool of investments. Their proposal would create a new, parallel investment fund for Social Security. They estimate that the fund would require an up-front federal investment of $1.5 trillion, and propose that it be given 75 years to grow. The Treasury would shoulder the burden of supporting current benefit levels through borrowing during those 75 years. At the end of 75 years, the fund would pay the Treasury back and supplement payroll taxes to help fill the future gap.

Important: No plan has been signed into law yet—but there is broad bipartisan agreement that something must be done before 2033.

If I’m Eligible, Should I Start Benefits Now?

If you’ve reached Full Retirement Age (FRA, currently 67) and are waiting until age 70 to claim your maximum benefit, you may be wondering if you should claim now to avoid possible benefit reductions in the future.

Here’s our advice:

• There’s no clear reason to change course—yet.
• For now, the rules remain unchanged. By waiting until age 70, you still earn delayed retirement credits, increasing your benefit by up to 8% per year between FRA and 70.
• Current beneficiaries are the least likely to face reductions.
• Starting benefits now doesn’t necessarily “lock in” protection against cuts—but neither does waiting expose you to significantly more risk. Historically, any benefit reductions or reforms have applied to future retirees, not those already collecting. Some proposals (see below) include making changes before 2033, but none to date include cuts for current beneficiaries before 2029.
• Cuts (if they happen) would likely be phased in or income-based.
• Congress has options. For example, they could preserve full benefits for those already collecting, or protect lower earners while modifying formulas for higher-income individuals.
• We recommend continuing to base your claiming decision on longevity, tax, and income needs, not on speculation. If your plan supports delaying until 70, it likely still makes sense to do so—unless there’s a sudden policy change (which we will monitor closely).

What Does This Mean for Your Financial Plan?

While the uncertainty surrounding Social Security is real, it’s important to remember:

• Cuts are not guaranteed, and changes are likely to be phased in
• If you’re already collecting—or soon will be—you are less likely to see reductions
• For younger clients, we plan with a margin of safety—factoring in modest benefit reductions as part of our retirement projections

As always, we are monitoring developments and will adjust your plan if needed.

If you have questions about how Social Security fits into your personal plan—or if you’re nearing retirement and want to discuss timing your benefits—please reach out.

-SM