Retirement Videos & Lessons

Hi, my name’s Logan Sanders with Sanders Retirement Planning. If you haven’t heard, the One Big Beautiful Bill Act passed earlier this year, and it brought about a number of tax changes. In the end, these could end up saving you thousands of dollars, so we wanted to highlight a few of the important changes we’ve seen and how they’re impacting many of our clients’ tax situations.

Change #1 – New Enhanced Deduction for Seniors
The first big change is a new enhanced deduction that could be available to senior citizens. This one doesn’t apply to everyone, so it’s important to understand the requirements and whether it may help in your situation.

The deduction could reduce taxable income by up to $6,000 per person. If you’re in the 22% tax bracket, for example, that’s worth a little over $1,000 in tax savings.

To qualify:

• You must be a senior citizen, defined as age 65 or older at the end of the tax year.

• You can take this deduction whether you use the standard deduction or itemize — it’s a separate category.

• Income limits apply.

  • For single filers: full deduction up to $75,000 of modified adjusted gross income, phased out between $75,000 and $175,000.

  • For married filing jointly: full deduction up to $150,000, phased out between $150,000 and $250,000.

This deduction is currently scheduled for tax years 2025–2028 (Congress could extend it).

Change #2 – Tax Rates Extended
Since the Tax Cuts and Jobs Act of 2017, we’ve had lower tax brackets than before. These were scheduled to expire after 2025, but the new law keeps today’s brackets in place under current law.

So in 2026, instead of rates going up, they’ll stay at today’s levels. That may not feel like a big change in the moment, but it’s important for long-term planning. In the past, we might have recommended pulling income forward before rates increased. Now that’s no longer necessary, though tax laws could always change again in the future.

Change #3 – Higher State and Local Tax Deduction (SALT)
The cap on the state and local tax deduction has been raised from $10,000 to $40,000. This applies whether you’re single or married filing jointly ($20,000 if married filing separately).

State and local taxes include property taxes, plus either income tax or sales tax. This deduction only helps if you itemize instead of taking the standard deduction. The standard deduction also increased, so even fewer people will itemize — but if you do, this change matters.

The income phaseout here is higher:

• Full deduction up to $500,000 of income.

• Phases out between $500,000 and $600,000.

• Above $600,000, the cap reverts to the prior $10,000 limit.

For those within that phaseout range, there could be planning opportunities — like shifting income to different years to maximize the benefit.

Bonus Change – New Charitable Deduction for Non-Itemizers
Starting in 2026, taxpayers who take the standard deduction will be able to claim a new charitable deduction:

• Up to $1,000 for single filers.

• Up to $2,000 for married couples filing jointly.

Generally, this applies to cash gifts to qualified public charities and does not apply to gifts to donor-advised funds or private foundations. It can help people who don’t itemize but still give to qualified charities. It’s also an alternative if you don’t qualify for Qualified Charitable Distributions (QCDs), which are generally available to those age 70½ or older with pre-tax retirement accounts.

Final Thoughts
The One Big Beautiful Bill Act introduced several significant tax changes. We’ve highlighted four here: the new senior deduction, extended tax brackets, the higher SALT cap, and the new charitable deduction for non-itemizers.

Tax laws are complex, so it’s important to review these changes with your tax professional and determine whether any planning strategies might make sense for you. Details are subject to IRS guidance and your specific plan documents.

That’s all for now — we’ll see you next time.