{"id":131226,"date":"2025-08-20T09:31:26","date_gmt":"2025-08-20T17:31:26","guid":{"rendered":"https:\/\/xira.com\/p\/2025\/08\/20\/how-the-one-big-beautiful-bill-changes-retirement-planning-for-lawyers\/"},"modified":"2025-08-20T09:31:26","modified_gmt":"2025-08-20T17:31:26","slug":"how-the-one-big-beautiful-bill-changes-retirement-planning-for-lawyers","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2025\/08\/20\/how-the-one-big-beautiful-bill-changes-retirement-planning-for-lawyers\/","title":{"rendered":"How The One Big Beautiful Bill Changes Retirement Planning For Lawyers"},"content":{"rendered":"

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\u2019ll need to stay tuned for adjustments and clarifications as the Treasury Department works through implementation details over the coming months.<\/p>\n

As a CERTIFIED FINANCIAL PLANNER\u00ae professional, my job is to help you cut through the media noise and understand what legislation actually means for your financial future. But I\u2019ll be honest with you \u2013 some provisions in the One Big Beautiful Bill have left even seasoned financial planners scratching their heads about how they\u2019ll work in real practice.<\/p>\n

That said, let\u2019s 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.<\/p>\n

<\/a>The Senior Bonus Deduction: An Extra $6,000 Deduction for Retirees<\/h1>\n

Starting with your 2025 tax returns, if you\u2019re 65 or older, you can claim an additional $6,000 deduction ($12,000 for married couples) on top of<\/em> the standard deduction and the existing age-65+ extra standard deduction. This isn\u2019t just another small adjustment; it\u2019s substantial tax relief that recognizes the financial realities of retirement.<\/p>\n

To be clear, all three of these \u201cregular\u201d deductions can be stacked on top of one another, regardless of whether you itemize. Let\u2019s break this down for 2025 for couples filing together and claiming the standard deduction:<\/p>\n

Existing<\/strong> standard deduction: $31,500<\/p>\n

Existing<\/strong> Age-65+ additional standard deduction: $3,200
NEW<\/strong> Age-65+ \u201cSenior\u201d bonus\u201d deduction: $12,000<\/p>\n

Total standard deduction age 65+ in 2025:<\/strong> $46,700<\/p>\n

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.<\/p>\n

Additionally, if you\u2019re managing partnership distributions, consulting income, or substantial investment returns, you\u2019ll want to monitor these thresholds carefully.<\/p>\n

<\/a>Social Security Remains Taxable, But Just Got More Tax-Friendly<\/h1>\n

Here\u2019s 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<\/a>. That\u2019s up from about 64% previously.<\/p>\n

This change doesn\u2019t alter Social Security\u2019s 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.<\/p>\n

I\u2019ll just note one additional interesting note here on the history of Social Security. You may have noticed I\u2019ve mentioned that the formula for taxing Social Security hasn\u2019t changed. In fact, it hasn\u2019t changed in over 40 years \u2014 and the income thresholds haven\u2019t been adjusted for inflation. The result? A slowly growing \u201cphantom tax\u201d on Social Security benefits.<\/p>\n

<\/a>Tax Rate Certainty Through 2025 and Beyond<\/h1>\n

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.<\/p>\n

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 \u2014 giving you more certainty for future planning. This stability is invaluable when you\u2019re making decisions about when and how much to withdraw from traditional IRAs and 401(k)s, or when considering Roth conversion strategies.<\/p>\n

<\/a>SALT Deduction Relief for High-Tax Areas<\/h1>\n

If you\u2019re 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.<\/p>\n

Many lawyers find themselves in expensive metropolitan areas during their careers. If you\u2019re 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.<\/p>\n

<\/a>Estate Planning Gets More Generous<\/h1>\n

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.<\/p>\n

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.<\/p>\n

<\/a>Summary Changes of the One Big Beautiful Bill:<\/h1>\n
\n\n\n\n\n\n\n\n\n
Change<\/strong><\/td>\nImpact on Retirees<\/strong><\/td>\n<\/tr>\n
Senior Bonus Deduction<\/td>\nMajor tax relief within income thresholds<\/td>\n<\/tr>\n
Social Security tax impact<\/td>\nMost pay no federal tax on benefits<\/td>\n<\/tr>\n
Permanent tax brackets<\/td>\nPlanning certainty for conversions, income<\/td>\n<\/tr>\n
Higher SALT cap (temp)<\/td>\nPotentially valuable for itemizers in high-tax areas<\/td>\n<\/tr>\n
Estate exemption increase (2026)<\/td>\nBigger transfer shield for high\u2011net\u2011worth retirees<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n

<\/a>Planning Considerations Moving Forward<\/h1>\n

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\u2019ll want to maximize benefits while they\u2019re available.<\/p>\n

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.<\/p>\n

As you navigate these changes, remember that good retirement planning isn\u2019t 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.<\/p>\n

I\u2019ll be unpacking more from this legislation over the coming months and sharing how it\u2019s affecting the retiring lawyers that we work with. To follow along, simply head over to our Money Meets Law newsletter page<\/a> to learn more.<\/p>\n

Disclosure: The information within this article is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision.<\/em><\/p>\n

Supporting References:<\/strong><\/p>\n

One Big Beautiful Bill Act: Tax deductions for working Americans and seniors<\/a><\/strong><\/p>\n

<\/a>No Tax on Social Security is a Reality in the One Big Beautiful Bill<\/a><\/p>\n

\n
\"\"
<\/figcaption><\/figure>\n

David Hunter, CFP\u00ae is a CERTIFIED FINANCIAL PLANNER\u2122 and owner of\u00a0First Light Wealth, LLC<\/a>, a financial planning & wealth management firm with a unique focus on serving attorneys nationwide. David has over a decade of experience helping clients build financial plans and has been featured in publications such as Attorney at Work, ThinkAdvisor, MarketWatch, Financial Planning, and InvestmentNews. David also writes weekly to attorneys in his popular\u00a0Money Meets Law<\/a>\u00a0newsletter. For more about David, visit\u00a0firstlightwealth.com\/lawyers<\/a>\u00a0or connect with him on\u00a0LinkedIn<\/a>.<\/em><\/strong><\/p>\n

The post How The One Big Beautiful Bill Changes Retirement Planning For Lawyers<\/a> appeared first on Above the Law<\/a>.<\/p>\n

\"\"<\/figure>\n

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\u2019ll need to stay tuned for adjustments and clarifications as the Treasury Department works through implementation details over the coming months.<\/p>\n

As a CERTIFIED FINANCIAL PLANNER\u00ae professional, my job is to help you cut through the media noise and understand what legislation actually means for your financial future. But I\u2019ll be honest with you \u2013 some provisions in the One Big Beautiful Bill have left even seasoned financial planners scratching their heads about how they\u2019ll work in real practice.<\/p>\n

That said, let\u2019s 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.<\/p>\n

Starting with your 2025 tax returns, if you\u2019re 65 or older, you can claim an additional $6,000 deduction ($12,000 for married couples) on top of<\/em> the standard deduction and the existing age-65+ extra standard deduction. This isn\u2019t just another small adjustment; it\u2019s substantial tax relief that recognizes the financial realities of retirement.<\/p>\n

To be clear, all three of these \u201cregular\u201d deductions can be stacked on top of one another, regardless of whether you itemize. Let\u2019s break this down for 2025 for couples filing together and claiming the standard deduction:<\/p>\n

Existing<\/strong> standard deduction: $31,500<\/p>\n

Existing<\/strong> Age-65+ additional standard deduction: $3,200
NEW<\/strong> Age-65+ \u201cSenior\u201d bonus\u201d deduction: $12,000<\/p>\n

Total standard deduction age 65+ in 2025:<\/strong> $46,700<\/p>\n

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.<\/p>\n

Additionally, if you\u2019re managing partnership distributions, consulting income, or substantial investment returns, you\u2019ll want to monitor these thresholds carefully.<\/p>\n

Here\u2019s 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<\/a>. That\u2019s up from about 64% previously.<\/p>\n

This change doesn\u2019t alter Social Security\u2019s 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.<\/p>\n

I\u2019ll just note one additional interesting note here on the history of Social Security. You may have noticed I\u2019ve mentioned that the formula for taxing Social Security hasn\u2019t changed. In fact, it hasn\u2019t changed in over 40 years \u2014 and the income thresholds haven\u2019t been adjusted for inflation. The result? A slowly growing \u201cphantom tax\u201d on Social Security benefits.<\/p>\n

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.<\/p>\n

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 \u2014 giving you more certainty for future planning. This stability is invaluable when you\u2019re making decisions about when and how much to withdraw from traditional IRAs and 401(k)s, or when considering Roth conversion strategies.<\/p>\n

If you\u2019re 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.<\/p>\n

Many lawyers find themselves in expensive metropolitan areas during their careers. If you\u2019re 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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

\n\n\n\n\n\n\n\n\n
Change<\/strong><\/td>\nImpact on Retirees<\/strong><\/td>\n<\/tr>\n
Senior Bonus Deduction<\/td>\nMajor tax relief within income thresholds<\/td>\n<\/tr>\n
Social Security tax impact<\/td>\nMost pay no federal tax on benefits<\/td>\n<\/tr>\n
Permanent tax brackets<\/td>\nPlanning certainty for conversions, income<\/td>\n<\/tr>\n
Higher SALT cap (temp)<\/td>\nPotentially valuable for itemizers in high-tax areas<\/td>\n<\/tr>\n
Estate exemption increase (2026)<\/td>\nBigger transfer shield for high\u2011net\u2011worth retirees<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n

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\u2019ll want to maximize benefits while they\u2019re available.<\/p>\n

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.<\/p>\n

As you navigate these changes, remember that good retirement planning isn\u2019t 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.<\/p>\n

I\u2019ll be unpacking more from this legislation over the coming months and sharing how it\u2019s affecting the retiring lawyers that we work with. To follow along, simply head over to our Money Meets Law newsletter page<\/a> to learn more.<\/p>\n

Disclosure: The information within this article is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision.<\/em><\/p>\n

Supporting References:<\/strong><\/p>\n

One Big Beautiful Bill Act: Tax deductions for working Americans and seniors<\/a><\/p>\n

No Tax on Social Security is a Reality in the One Big Beautiful Bill<\/a><\/p>\n

\n
\"\"
<\/figcaption><\/figure>\n

David Hunter, CFP\u00ae is a CERTIFIED FINANCIAL PLANNER\u2122 and owner of\u00a0First Light Wealth, LLC<\/a>, a financial planning & wealth management firm with a unique focus on serving attorneys nationwide. David has over a decade of experience helping clients build financial plans and has been featured in publications such as Attorney at Work, ThinkAdvisor, MarketWatch, Financial Planning, and InvestmentNews. David also writes weekly to attorneys in his popular\u00a0Money Meets Law<\/a>\u00a0newsletter. For more about David, visit\u00a0firstlightwealth.com\/lawyers<\/a>\u00a0or connect with him on\u00a0LinkedIn<\/a>.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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\u2019ll need to stay tuned for adjustments and clarifications as the Treasury Department […]<\/p>\n","protected":false},"author":3,"featured_media":130917,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-131226","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-above_the_law"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/xira.com\/p\/wp-content\/uploads\/2025\/08\/David-Hunter-Headshot-HybjC6.png?fit=500%2C500&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/131226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=131226"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/131226\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media\/130917"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=131226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=131226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=131226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}