The biggest tax law overhaul since 2017 was signed into law on July 4, 2025. If you are within ten years of retirement, it changes some things you thought you knew, confirms some things you were already doing, and creates at least one new opportunity that most people have not yet acted on.
The One Big Beautiful Bill Act (OBBBA) made the Tax Cuts and Jobs Act's individual tax provisions permanent, added a new temporary deduction for seniors, and arrived in the middle of a market environment that has already tested the nerves of anyone watching their retirement accounts closely. Understanding what actually changed, and what it means for your planning, requires cutting through a lot of noise.
Here is what matters for people in the ten years before retirement.
The Backdrop: A Year That Reminded Everyone Why Planning Matters
Before getting into the tax law specifics, it is worth acknowledging the environment in which this legislation landed. The S&P 500 finished 2025 up approximately 17%, but the path was anything but smooth.[^1] Tariff-driven volatility in early 2025 pushed the index into correction territory before it recovered. And as of early 2026, markets have continued to move sharply on trade policy headlines.
For anyone within five years of retirement, that kind of volatility is not just an abstract number. It is a real test of whether your plan can survive the sequence of returns risk that has derailed more retirement plans than any other single factor. The question is not whether markets will be volatile. They will be. The question is whether your plan is structured so that volatility in the portfolio does not become a crisis in your income.
That context matters for everything that follows.
What the New Tax Law Actually Changed
The OBBBA, signed as Public Law 119-21, made permanent the individual income tax provisions that were set to expire at the end of 2025.[^2] Here is what that means in practical terms.
Tax brackets are now permanent. The seven-bracket structure with a top rate of 37% and a bottom rate of 10% is no longer subject to a sunset date.[^3] For the past several years, a significant part of the urgency around Roth conversions was the expectation that rates would rise when the TCJA expired. That urgency has changed, though it has not disappeared entirely, for reasons explained below.
The standard deduction is permanent and higher. For 2025, the standard deduction increased to $31,500 for married couples filing jointly and $15,750 for single filers, indexed for inflation going forward.[^4] This matters for retirees who are deciding whether to itemize, and it affects the math on charitable giving strategies like qualified charitable distributions (QCDs).
The estate tax exemption is larger and permanent. The lifetime gift and estate tax exclusion increased to $15 million per individual ($30 million for married couples filing jointly), indexed for inflation.[^5] For clients with larger estates, this removes a planning constraint that had been hanging over legacy conversations for years.
The SALT deduction cap increased temporarily. The state and local tax deduction cap rose from $10,000 to $40,000 for 2025 through 2029, before reverting to $10,000 in 2030.[^6] For clients in high-tax states, this is meaningful. For most clients in North Carolina, it is less impactful.
The New Senior Deduction: Who Benefits and Who Doesn't
One of the most-discussed provisions of the OBBBA is the new $6,000 deduction for taxpayers age 65 and older, available for tax years 2025 through 2028.[^7] The deduction is in addition to the existing standard deduction and the existing additional deduction for seniors.
The catch is the income phase-out. The $6,000 deduction begins to phase out at $75,000 of modified adjusted gross income for single filers and $150,000 for married couples filing jointly.[^8] It phases out completely before $175,000 for single filers and $250,000 for joint filers.
For clients in the typical pre-retiree range of $750,000 to $3 million in investable assets, many will have income above these thresholds once Social Security, portfolio withdrawals, and any pension income are combined. The deduction may be partially or fully phased out for higher-income retirees. But for clients in the early years of retirement who are drawing down conservatively and deferring Social Security, the deduction could provide meaningful relief.
The more important point is what this deduction does not do. Despite widespread headlines suggesting that Social Security taxes were eliminated, they were not. Social Security benefits remain taxable at the federal level for individuals with combined income above $25,000 and couples above $32,000, with up to 85% of benefits taxable for higher earners.[^9] The $6,000 senior deduction may reduce taxable income enough to lower the effective tax on Social Security for some beneficiaries, but it does not eliminate the underlying taxation structure.
The Roth Conversion Question: What Actually Changed
Here is where the planning gets interesting, and where a lot of people are drawing the wrong conclusion.
The conventional wisdom for the past several years was: convert as much as possible to Roth before the TCJA expires and rates go up. Now that the TCJA is permanent, does that urgency go away?
Not entirely. Here is why.
The Roth conversion window, the period between retirement and the start of Required Minimum Distributions at age 73, is still one of the most powerful tax planning opportunities available to pre-retirees. The logic has not changed: if you retire at 63, delay Social Security to 70, and have not yet started RMDs, your taxable income in those years may be dramatically lower than it was during your working years. That creates an opportunity to convert traditional IRA or 401(k) dollars to Roth at a lower marginal rate than you will face once RMDs begin.
What changed is the urgency framing. The argument was never really "rates are going up in 2026, so convert now." The better argument, and the one that holds regardless of tax law changes, is: your income is unusually low right now, and the gap between your current rate and your future rate is real and worth capturing.
For a married couple with a $1.5 million traditional IRA who retires at 63 and delays Social Security to 70, the math still favors systematic conversions during the window. The IRA growing at 6% annually for ten years becomes approximately $2.7 million. The first RMD at age 73 would be roughly $100,000. Combined with Social Security income of $60,000 to $70,000, the couple could easily find themselves in the 22% or 24% bracket permanently, with no flexibility to manage it.
Converting $50,000 to $80,000 per year during the window at the 22% rate, and paying the tax from outside the IRA, systematically reduces that future RMD burden. The OBBBA making rates permanent does not change this logic. It simply removes the artificial deadline that was driving some of the urgency.
One additional consideration: the OBBBA did not eliminate the IRMAA surcharges on Medicare premiums. For 2025, the IRMAA threshold begins at $106,000 for single filers and $212,000 for married couples filing jointly.[^10] Large RMDs can push retirees into IRMAA territory unexpectedly. Roth conversions during the window, done carefully to stay below IRMAA thresholds, remain one of the most effective tools for managing Medicare costs in retirement.
The Market Volatility Context: What It Reveals About Your Plan
The market swings of 2025 and early 2026 are a useful diagnostic tool. Not because they tell you anything definitive about where markets are going, but because they reveal something important about how your plan is structured.
According to Northwestern Mutual's 2026 Planning and Progress Study, nearly half of Americans (48%) believe it is somewhat or very likely they will outlive their savings.[^11] That concern is highest among Gen X and Millennials, many of whom are now in the critical decade before retirement. And yet more than a third of Americans say they have not taken any steps to address the possibility of outliving their savings.
The sequence of returns problem is not hypothetical. A retiree who retired in early 2025 with no guaranteed income floor and a portfolio entirely dependent on withdrawals faced a real test when markets dropped in the spring of that year. If they were forced to sell equities at a loss to fund living expenses, those losses were permanent. The portfolio never fully participates in the recovery on those dollars.
The solution is not to avoid equities. It is to build a plan where the portfolio is not the only source of income, and where short-term living expenses are funded from sources that do not require selling at the wrong time.
This is the income floor concept that sits at the foundation of the SMART Retirement Blueprint. The guaranteed income sources, Social Security, pension income if applicable, and in some cases fixed annuity income, cover essential expenses regardless of what the market does. The portfolio handles discretionary spending and long-term growth. When markets are volatile, the income floor absorbs the shock so the portfolio does not have to.
What Pre-Retirees Should Actually Do Right Now
The combination of a new tax law, a changed Roth conversion calculus, and a market environment that has tested everyone's assumptions creates a specific set of actions worth taking in the next twelve months.
Reassess your Roth conversion strategy. The urgency framing has changed, but the opportunity has not. If you are within ten years of retirement and have a significant traditional IRA balance, the years between now and your RMD start date are still your best window for systematic conversions. The question is not whether to convert, but how much per year, at what bracket, and whether to stay below IRMAA thresholds.
Check your income floor. If markets dropped 30% tomorrow, how long could you fund your lifestyle without touching your equity portfolio? If the answer is less than two years, that is a structural vulnerability worth addressing before you retire, not after.
Revisit your Social Security strategy in light of the new law. Social Security benefits are still taxable for most higher earners. The $6,000 senior deduction may help at the margins, but the fundamental optimization question, when to claim and how to coordinate spousal benefits, has not changed. The higher earner's delay decision remains one of the most impactful choices a couple can make.
Understand the estate tax change. For clients with larger estates, the permanent increase in the lifetime exemption to $15 million per individual removes a planning constraint that had been driving some strategies. If your estate plan was built around the assumption that the exemption would revert to pre-TCJA levels, it may be worth revisiting.
Do not confuse a changed deadline with a changed strategy. The most common mistake after major tax legislation is assuming that because the urgency framing has changed, the underlying strategy no longer applies. The Roth conversion window is still real. The income floor is still the foundation of a resilient retirement plan. Tax-efficient withdrawal sequencing still matters. The new law changed some of the numbers and removed some artificial deadlines. It did not change the fundamentals.
The Bottom Line
The One Big Beautiful Bill Act is the most significant tax legislation in nearly a decade. For pre-retirees, it resolves some uncertainty, creates one new temporary benefit, and changes the urgency framing around Roth conversions without changing the underlying logic.
What it does not do is replace the need for a comprehensive, coordinated retirement plan. The market volatility of 2025 and 2026 is a reminder that the structure of your plan matters more than the performance of your portfolio in any given year. Americans now believe they need $1.46 million to retire comfortably, up from $1.26 million just a year ago.[^12] The gap between what people think they need and what they have saved is not closing on its own.
The tax law changed. The fundamentals of sound retirement planning did not.
References
[^1]: BBC News. "US stock market ends 2025 on a high note after volatile year." December 31, 2025. https://www.bbc.com/news/articles/clyd8r1xgjko
[^2]: Internal Revenue Service. "One, Big, Beautiful Bill provisions." July 2025. https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
[^3]: H&R Block. "One Big Beautiful Bill Act (OBBBA) Tax Impacts." 2025. https://www.hrblock.com/tax-center/irs/tax-law-and-policy/one-big-beautiful-bill-taxes/
[^4]: Tax Policy Center. "What is the standard deduction?" Updated 2025. https://taxpolicycenter.org/briefing-book/what-standard-deduction
[^5]: Fidelity Investments. "What's inside the new tax act?" 2025. https://www.fidelity.com/learning-center/personal-finance/one-big-beautiful-bill
[^6]: Fidelity Investments. "What's inside the new tax act?" 2025. https://www.fidelity.com/learning-center/personal-finance/one-big-beautiful-bill
[^7]: Internal Revenue Service. "Check your eligibility for the new enhanced deduction for seniors." February 27, 2026. https://www.irs.gov/newsroom/check-your-eligibility-for-the-new-enhanced-deduction-for-seniors
[^8]: AARP. "What to Know About the New Tax Deduction for Older Adults." July 8, 2025. https://www.aarp.org/money/taxes/what-to-know-new-tax-law-2025/
[^9]: Internal Revenue Service. "Social Security and equivalent railroad retirement benefits." https://www.irs.gov/taxtopics/tc423
[^10]: Medicare Resources. "What is the income-related monthly adjusted amount (IRMAA)?" Updated December 2025. https://www.medicareresources.org/medicare-eligibility-and-enrollment/what-is-the-income-related-monthly-adjusted-amount-irmaa/
[^11]: Northwestern Mutual. "Americans Believe They Will Need $1.46 Million to Retire Comfortably." April 1, 2026. https://news.northwesternmutual.com/2026-04-01-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably,-Up-More-Than-15-Since-Last-Year,-According-to-Northwestern-Mutual-2026-Planning-Progress-Study
[^12]: Northwestern Mutual. "Americans Believe They Will Need $1.46 Million to Retire Comfortably." April 1, 2026. https://news.northwesternmutual.com/2026-04-01-Americans-Believe-They-Will-Need-1-46-Million-to-Retire-Comfortably,-Up-More-Than-15-Since-Last-Year,-According-to-Northwestern-Mutual-2026-Planning-Progress-Study
Jason Rindskopf is the founder of Two Waters Wealth Management and creator of the SMART Retirement Blueprint®. He works with high-achieving professionals and couples in the Charlotte, NC area who are within 10 years of retirement or recently retired. If you'd like to talk through your new tax law and how it affects your retirement plan, book a complimentary consultation here.