Originally published on Above the Law on August 19, 2025. The original article is available here.

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This sweeping legislation, which passed along largely partisan lines amid significant political controversy over its $3.4 trillion price tag and temporary funding mechanisms, brings substantial changes to retirement planning that could benefit many of you. However, as with any major tax overhaul, we'll need to stay tuned for adjustments and clarifications as the Treasury Department works through implementation details over the coming months.

As a CERTIFIED FINANCIAL PLANNER® professional, my job is to help you cut through the media noise and understand what legislation actually means for your financial future. But I'll be honest with you– some provisions in the One Big Beautiful Bill have left even seasoned financial planners scratching their heads about how they'll work in real practice. 

That said, let's walk through the five most important changes that directly impact your situation as a retiring legal professional, while acknowledging that some details may evolve as regulations are finalized.

The Senior Bonus Deduction: An Extra $6,000 Deduction for Retirees

Starting with your 2025 tax returns, if you're 65 or older, you can claim an additional $6,000 deduction ($12,000 for married couples) on top of the standard deduction and the existing age-65+ extra standard deduction. This isn't just another small adjustment; it's substantial tax relief that recognizes the financial realities of retirement.

To be clear, all three of these “regular” deductions can be stacked on top of one another, regardless of whether you itemize. Let’s break this down for 2025 for couples filing together and claiming the standard deduction:

Existing standard deduction: $31,500

Existing Age-65+ additional standard deduction: $3,200
NEW Age-65+ “Senior” bonus” deduction: $12,000

Total standard deduction age 65+ in 2025: $46,700

However, there are income limits to consider. The deduction phases out if your modified adjusted gross income exceeds $75,000 for singles or $150,000 for married couples filing jointly, disappearing entirely above $175,000 and $250,000 respectively. These phase-outs typically present planning opportunities for those hovering around the upper range of these thresholds.

Additionally, if you're managing partnership distributions, consulting income, or substantial investment returns, you'll want to monitor these thresholds carefully.

Social Security Remains Taxable, But Just Got More Tax-Friendly

Here's where things get particularly interesting for your retirement planning. While Social Security remains technically taxable under existing rules, the combination of increased standard deductions and the new senior bonus deduction means approximately 88% of beneficiaries will pay zero federal tax on their Social Security benefits according to a recent White House Council of Economic Advisers analysis. That's up from about 64% previously.

This change doesn't alter Social Security's taxability structure, but rather creates a situation where your deductions exceed your taxable income. For many retiring lawyers who built substantial retirement accounts but also qualify for Social Security, this could mean significant tax savings on a portion of your retirement income.

I’ll just note one additional interesting note here on the history of Social Security. You may have noticed I’ve mentioned that the formula for taxing Social Security hasn’t changed. In fact, it hasn’t changed in over 40 years—and the income thresholds haven’t been adjusted for inflation. The result? A slowly growing “phantom tax” on Social Security benefits.

Tax Rate Certainty Through 2025 and Beyond

The individual tax rate brackets from the 2017 Tax Cuts and Jobs Act, which were set to expire at the end of 2025, are now permanent. This gives you the long-term clarity you need for strategic planning, particularly around Roth conversions and managing retirement account withdrawals.

For example, with the pre-OBBB tax rates set to expire this year, you may have faced a jump from the 24% to the 32% bracket in 2026. Now, the lower brackets are locked in—giving you more certainty for future planning. This stability is invaluable when you're making decisions about when and how much to withdraw from traditional IRAs and 401(k)s, or when considering Roth conversion strategies.

SALT Deduction Relief for High-Tax Areas

If you're retiring in a state with high property or income taxes (think New York, California, or New Jersey), the temporary increase in the state and local tax deduction cap from $10,000 to $40,000 through 2029 could provide meaningful relief. This applies to those earning under $500,000 annually (Modified Adjusted Gross Income). For those earning over this limit this year, the SALT deduction will gradually be phased out until the deduction is back down to the original $10,000 cap. In 2030, this temporary increase in the SALT deduction will revert back to $10,000 unless additional legislation is passed.

Many lawyers find themselves in expensive metropolitan areas during their careers. If you're staying put in retirement and still itemizing deductions due to high property taxes or state income taxes, this change could reduce your federal tax burden significantly during the early years of your retirement.

Estate Planning Gets More Generous

Starting in 2026, the unified estate and gift tax exemption increases to $15 million per individual, or $30 million per married couple. For successful legal careers that generated substantial wealth, this elevated exemption provides more flexibility in estate planning strategies.

While this change primarily affects higher-net-worth retirees, it also simplifies planning for many lawyers who may have been concerned about crossing the previous exemption thresholds through continued investment growth and property appreciation.

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Planning Considerations Moving Forward

These changes create new opportunities for tax-efficient retirement planning, but they also require careful consideration of timing and strategy. The temporary nature of some provisions means you'll want to maximize benefits while they're available.

Pay particular attention to the potential future changes mentioned in the legislation, including possible required minimum distributions from Roth IRAs for large balances. While these are still under study, they could affect long-term tax-free growth strategies.

As you navigate these changes, remember that good retirement planning isn't just about minimizing taxes in any single year. Rather, a good plan should focus on creating a sustainable, flexible strategy that adapts to both legislative changes and your evolving needs throughout retirement. These new provisions give you additional tools to build that strategy effectively.

I’ll be unpacking more from this legislation over the coming months and sharing how it’s affecting the retiring lawyers that we work with. To follow along, simply head over to our Money Meets Law newsletter page to learn more.

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Supporting References:

One Big Beautiful Bill Act: Tax deductions for working Americans and seniors

No Tax on Social Security is a Reality in the One Big Beautiful Bill