The One Big Beautiful Bill: What Retirees Over 65 Need to Know

On July 4, the One Big Beautiful Bill (OBBBA) was signed into law. While tax legislation often feels abstract, this one has very real implications for retirees—especially those over 65 who are living on fixed incomes, pensions, and retirement accounts.

As always, my focus is on helping you plan with clarity. Let’s take a closer look at how this bill may affect your income taxes and retirement planning.

Extension of the 2017 Tax Cuts

The OBBBA extends several provisions from the 2017 Tax Cuts and Jobs Act. For retirees, that means:

Marginal tax brackets remain lower than they were pre-2017, at least for now. This can be favorable when withdrawing from IRAs or 401(k)s.
However, these rates are not permanent for everyone, so planning distributions over the next several years becomes even more important.

Planning insight: Consider whether accelerating withdrawals now—at lower tax rates—could reduce future exposure when rates eventually reset higher.

Standard Deduction and Age 65 Bonus

The bill preserves the higher standard deduction that many retirees benefit from, plus the additional amount available once you turn 65. For most retirees, this means you’ll continue to avoid itemizing and still reduce taxable income significantly.

Planning insight: Even with a larger deduction, retirees with charitable goals should look at strategies like Qualified Charitable Distributions (QCDs) from IRAs, which allow you to give directly to charity without raising your taxable income.

Medicare and IRMAA Implications

While OBBBA doesn’t directly change Medicare, it can impact IRMAA surcharges (Income-Related Monthly Adjustment Amounts). Higher taxable income—whether from RMDs, capital gains, or Roth conversions—can push you into higher Medicare premium brackets.

Planning insight: Thoughtful coordination of withdrawals and Roth conversions is key. What looks like a “small” income increase could add hundreds of dollars a month to your Medicare premiums.

Roth Conversion Opportunities

Because tax brackets remain relatively low under OBBBA, retirees may find that the next few years are an attractive window to convert portions of traditional IRA assets to Roth IRAs. This strategy can reduce future Required Minimum Distributions (RMDs) and provide tax-free income later in retirement.

Required Minimum Distributions (RMDs)

RMD rules weren’t directly altered in this bill, but they remain a crucial factor in planning. The lower tax rates under OBBBA mean that taking only the RMD might not be the most tax-efficient move. Sometimes drawing more than the minimum—strategically—can save you money long term.

The Bottom Line

For retirees over 65, the One Big Beautiful Bill provides both opportunities and challenges. Lower brackets and higher deductions are good news, but the law’s temporary nature means proactive planning is more important than ever.