Michael Conrath, Chief Retirement Strategist, and Tina Anstett, J.D., ERISA Strategist, explain what lies ahead.

Five key things for retirement savers to know

This sweeping 900-page tax and spending bill includes important rule changes that will influence how Americans save for retirement and other long-term goals. Here’s where we recommend you focus attention:

1. Lower income tax rates

Many tax cuts and credits dating from the 2017 Tax Cuts and Jobs Act (TCJA) were set to sunset at the end of 2025. Passage of OBBBA makes these lower rates permanent and keeps in place the current individual income tax brackets. Without OBBBA, tax rates next year would have moved higher for many filers. Now, families can plan with greater confidence. For example, with tax rates fixed in perpetuity, tax-planning strategies, such as Roth conversions, can be modeled several years into the future with more clarity.

2. Increased state and local tax deductions 

OBBBA raises the current cap on state and local tax (SALT) deductions from $10,000 to $40,000 for the 2025 through 2029 tax years. However, this enhanced deduction begins to phase out when a taxpayer’s income hits $500,000. And those earning more than $600,000 will find their SALT deductions capped at $10,000. After 2029, the SALT deduction amount for all taxpayers will revert to the old $10,000 limit. Until then, eligible taxpayers may feel some relief when they file their federal tax returns, starting in 2026.

3. More deductions for taxpayers aged 65+

Beginning with the 2025 tax year—and ending after 2028—individuals age 65 and older are eligible for a $6,000 annual income tax deduction. Taxpayers do not have to itemize their deductions to receive this benefit. However, the deduction begins to phase out for single and joint filers with income above $75,000 and $150,000, respectively. It fully phases out at $175,000 for individuals, and $250,000 for married couples filing jointly.

While the taxation of Social Security income remains unchanged under OBBBA, this new deduction for seniors could provide some cushion and deliver an overall income tax cut for lower- and middle-income taxpayers. With lower tax revenues collected for Social Security, this means that the trust fund’s expected insolvency date of 2034 could be nudged a bit earlier; this is something we’d expect to see included in the 2026 report from the Social Security Trustees.

4. Enhanced transfer-tax exemptions

OBBBA raises the lifetime exemption for estate, gift and generation-skipping transfer (GST) taxes to $15 million per decedent, indexed for inflation. This exemption had been scheduled to decrease from the current $13.9 million to $7.1 million in 2026—a significant concern for affluent families.

Further, the new $15-million exemption amount remains portable. So, starting next year, couples will have a combined $30-million exemption. Taxpayers and families concerned about how estate taxes may impact their heirs will welcome this news—and the clarity it provides on the future state of gifting strategies. It will likely lead to more confident planning for legacy and estate goals.

5. New Trump Accounts for children under age 18

Beginning on January 1, 2026, U.S. citizens under the age of 18 will be eligible for a new tax-advantaged savings account known as a Trump Account. Under a pilot program, the government will seed these starter Individual Retirement Accounts (IRA) for eligible children born between January 1, 2025 and December 31, 2028, with a one-time contribution of $1,000. 

Additionally, beginning July 4, 2026, parents, relatives and employers can make annual contributions to a Trump Account on a child’s behalf. However, their combined contributions cannot exceed $5,000 a year—and employer contributions are capped at $2,500 per employee (or dependents of employees) under the age of 18 if certain conditions are met. Trump Accounts do not impact the contribution limits for either traditional or Roth IRAs for working children under age 18.

Distributions from Trump Accounts generally will be limited to rollovers to other Trump Accounts or to ABLE programs¹ until a beneficiary reaches age 18—at which time, the Trump Account converts to a traditional IRA and standard IRA rules apply.

Investments made within Trump Accounts are restricted to mutual funds or ETFs tracking the S&P 500 or a similar index. They also must adhere to strict guidelines, including a 10-basis-point cap on fees and a prohibition on leverage.

Overall, Trump Accounts represent a meaningful step towards encouraging early financial literacy and savings for children, setting the stage for a more financially secure future, such as saving for a home or retirement. Moreover, they don’t preclude families from also funding a 529 plan for a child’s future education expenses. Given the rising cost of college, 529’s more generous contribution limits, investment flexibility and tax-advantaged benefits remain attractive.

To sum up: The passage of new legislation can create a timely opportunity to evaluate your current investment strategies as well as your overall planning and long-term goals. OBBBA introduces several changes families planning for their financial future will want to evaluate, including how they save for retirement. For more information, check out our Guide to Retirement.

¹ABLE savings and/or investment accounts are for people with disabilities who qualify under Section 529A of the Internal Revenue Code.

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