On July 4th, 2025, a sweeping piece of legislation known as the One Big Beautiful Bill Act (OBBBA) was signed into law. At over 1,000 pages long, this bill touches taxes, healthcare, savings plans, small business provisions, and more.
The fine print is complicated, and reasonable people disagree about whether the OBBBA is a net positive for the country. But for retirees and pre-retirees, the practical question is narrower: what changed, and what should you do about it. Here’s the short version of both.
Bigger and More Permanent Standard Deduction
One of the headline provisions is the permanent expansion of the standard deduction. For 2026 and beyond, it looks like this:
| Filing Status | 2025 Standard Deduction (approx.) | 2026 Standard Deduction (projected) |
|---|---|---|
| Single | $13,850 | ~$16,300 |
| Married Filing Jointly | $27,700 | ~$32,600 |
| Head of Household | $20,800 | ~$24,500 |
👉 What this means for you: Most retirees will continue to benefit from simply taking the standard deduction. This simplifies tax filing and, in many cases, lowers your taxable income compared to pre-2017 rules.
Child and Dependent Credits — A Gift for Grandparents Too
Even though many of you are past the stage of raising children, the Child Tax Credit expansion can still touch your life.
| Credit Type | Previous Rule | New Rule Under OBBBA |
|---|---|---|
| Child Tax Credit (per child) | $2,000 | $2,500 (2025–2028), then indexed |
| Other Dependent Credit | $500 | $500 (unchanged) |
👉 Why this matters to retirees: If you’re helping raise grandchildren, or if you’re supporting a dependent family member, these credits can lower your tax bill.
Estate and Inheritance Planning
The bill makes permanent many provisions that were set to expire:
- The higher estate and gift tax exemptions are locked in.
- The mortgage interest deduction stays capped at loans of $750,000.
| Provision | Old Rule (pre-2017 sunset) | New Rule (permanent under OBBBA) |
|---|---|---|
| Estate & Gift Exemption | $5.49M per person (2017) | ~$13.6M per person (2025 levels, inflation adjusted) |
| Mortgage Interest Cap | $1,000,000 | $750,000 |
👉 For estate planning: This is a good time to review your wills, trusts, and beneficiary designations. With exemptions made permanent, you may have more flexibility in gifting strategies or legacy planning.
Health Savings Account (HSA) Enhancements
Key updates include:
| HSA Provision | Old Rule | New Rule Under OBBBA |
|---|---|---|
| Retroactive medical expenses allowed | Not allowed | Allowed up to 60 days prior to HSA setup |
| Spouse FSA rule | Blocked HSA eligibility | Now permitted |
| Extra contributions (income-based) | Not available | +$4,300 (single) / +$8,550 (joint) if under income thresholds |
👉 For retirees/pre-retirees: If you’re not yet on Medicare, maximizing HSA contributions is still one of the most tax-advantaged ways to save for future healthcare costs.
New “MAGA” Savings Accounts for Families
Starting in 2026, families with children under eight can open Money Accounts for Growth and Advancement (MAGA Accounts).
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Get Your Free Copy| MAGA Account Feature | Rule |
|---|---|
| Eligibility | Families with children under 8 |
| Contributions | $1,000 per year per child |
| Purpose | Education, first home, or future needs |
👉 For retirees: If you want to gift to grandchildren in a tax-smart way, MAGA accounts could become a useful vehicle.
Small Business Owners
Many retirees still run consulting practices, small businesses, or side ventures.
| Provision | Old Rule | New Rule Under OBBBA |
|---|---|---|
| Qualified Business Income Deduction | 20% | 23% (with smoother phase-outs) |
| Immediate Expensing | Phased out in 2023 | Restored 100% expensing through 2029 |
👉 For retiree business owners: These changes lower your tax liability and encourage reinvestment.
Key Takeaways for Retirees and Pre-Retirees
Here’s the “at-a-glance” view:
- Bigger, permanent standard deductions → simpler, lower taxes
- Child and dependent credits extended and expanded → relief for grandparents raising grandkids
- Estate tax exemptions locked in → more flexibility in legacy planning
- HSA improvements → more ways to save for healthcare costs
- MAGA accounts → new vehicle to support grandchildren’s futures
- Small business provisions → stronger deductions and reinvestment opportunities
What You Should Do Next
- Review your tax plan for 2025–2026. Run projections under the new rules with your tax professional.
- Update estate documents. Make sure your wills, trusts, and gifting strategies align with the new exemptions.
- Explore HSAs and MAGA accounts. Both are tax-smart ways to prepare for healthcare costs and family legacy planning.
- If you own a business, let’s review equipment purchases, QBI eligibility, and employee benefits to maximize deductions.
Final Thoughts
The One Big Beautiful Bill Act is sweeping, and while the headlines may sound political, the real impact is personal. For retirees and pre-retirees, it’s about keeping more of what you’ve earned, simplifying taxes, and creating better opportunities for your families.
The OBBBA’s real impact is personal — bigger standard deduction, locked-in estate exemptions, expanded HSAs, new MAGA accounts. Walk through each one against your own 2026 plan with your tax professional. For a refresher on how tax planning fits into a coordinated retirement income approach, read my piece on bucket planning.
This article is published by Confluence Media Group LLC, an independent publisher of educational financial content. Thomas Clark is a Series 65 Investment Advisor Representative. The information provided is for educational and informational purposes only and is not personalized financial, tax, or legal advice. Past performance does not guarantee future results. All investing involves risk, including potential loss of principal. Consult a qualified professional before making financial decisions.
Confluence Media Group LLC is a separate entity from Confluence Capital Management, the investment advisory practice through which Thomas Clark provides advisory services. Advisory services are not offered through this publishing platform.
Thomas Clark is a Series 65 licensed investment advisor and experienced trader. He specializes in investing, retirement planning, and market analysis, helping individuals build wealth and make informed financial decisions.
