President Donald Trump’s signature legislation, dubbed the “One Big Beautiful Bill,” includes plans for tax cuts, green energy cuts, Medicaid cuts and more. It also contains new retirement account provisions that could affect how Americans plan for their golden years.
Be Aware: 6 Mistakes Boomers Are Making With Their Money in the Trump Economy
Read Next: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
As the landmark bill makes its way from the House to the Senate, here’s a look at what you need to understand about how it can affect how you plan for retirement.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Tax Cuts Could Make Saving for Retirement Easier
Many Americans would receive a break on their taxes owed if the bill is passed. This means they would be able to channel more money into retirement savings accounts.
“Retirement planning fundamentally comes down to having sufficient resources to make work optional,” said Brett Horowitz, principal and wealth manager at Evensky & Katz / Foldes Financial Wealth Management. “The proposed extensions of the Tax Cuts & Jobs Act provisions, combined with new deductions for tip income, overtime pay and seniors over 65, could significantly improve retirement outcomes for Americans.”
Those who benefited from the cuts in the original Tax Cuts & Jobs Act will continue to enjoy these cuts, allowing them to continue saving for retirement as they had been.
“With many TCJA provisions set to expire at the end of 2025, the House Republican proposal to make these extensions permanent may provide the certainty we need for effective long-term planning,” Horowitz said.
“Retirement modeling depends on clear inputs and stable variables,” he continued. “The less uncertainty in tax policy, the more accurately we can project success rates. When these changes take effect — pending Senate approval — we’ll be able to deliver much better news to clients about their retirement timeline.”
Horowitz believes if Trump’s “One Big Beautiful Bill” does not ultimately pass, it could negatively affect Americans’ abilities to save for retirement.
“There’s a profound psychological difference between telling someone they can retire earlier than expected versus having to extend their working years,” he said. “The former energizes people about their financial future; the latter can feel overwhelming. These tax provisions create the conditions where more Americans can realistically achieve comfortable retirement.”
Learn More: Trump Wants To Eliminate Social Security Taxes: Here’s How Much the Average Retiree Would Save
It Could Affect Long-Term Investment Strategies
Savvy long-term investment strategies should take taxes into account, so changes to tax laws can shift these strategies.
“Smart investing isn’t actually about chasing the highest gross returns — it’s about maximizing what clients actually keep after taxes and expenses, and this tax bill addresses some issues there,” Horowitz said. “While we can control costs through low-fee funds, tax efficiency requires a more nuanced approach that varies by everyone’s personal circumstances.
“Higher tax rates push us toward tax-free municipal bonds and tax-efficient ETFs in taxable accounts, while we place tax-inefficient investments in retirement accounts,” he continued. “This ‘tax location’ strategy can significantly impact net returns, even if it means accounts perform differently.”
Changes to the SALT Deduction Can Provide More Freedom When It Comes to Where You Plan To Retire
“Two provisions in the Tax Cuts & Jobs Act have created the most anxiety for our clients — the SALT deduction cap and estate tax exemptions,” Horowitz said. “Both are getting significant relief under the current proposal.”
The proposed increase in the SALT deduction cap means retirees will face less of a penalty if they choose to spend their golden years in a state with higher income taxes.
“The SALT deduction increase from $10,000 to $40,000 will reshape where people choose to live and retire,” Horowitz said. “We’ve already seen migration patterns shift dramatically since 2017, with high-tax states losing residents to states like Florida and Texas. This change reduces the penalty for living in high-income-tax states, though it doesn’t eliminate the advantage of no-tax states entirely.”
A Higher Estate Tax Exemption Will Bring Relief to Wealthy Americans
Estate planning strategies would also change for many Americans if the bill were to pass.
“On the estate side, the current $13.99 million exemption was set to drop to $7.14 million in 2026 — a reduction that had wealthy clients scrambling to implement complex gifting strategies and trust structures,” Horowitz said. “The proposed permanent increase to $15 million per person, or $30 million for couples, provides enormous relief for families in that middle tier.”
This is particularly important because of state-level complications, Horowitz continued.
“Take New York, where you could face no federal estate tax, but still owe state estate taxes on estates between $7.16 million and $13.99 million,” he said. “The interplay between federal and state rules makes domicile planning critical.”
The “One Big Beautiful Bill” should make estate planning less complex for many people.
“For clients who’ve already implemented sophisticated estate planning strategies, those structures remain valuable,” Horowitz said. “But for families with estates under the new thresholds, this eliminates the pressure to make rushed gifting decisions or create complex trusts simply to avoid tax cliffs.”
Overall, Horowitz believes the bill will make retirement planning easier.
“The permanent nature of these changes — assuming they pass — finally gives families the certainty to make long-term decisions about where to live, how to structure their wealth and when to implement estate planning strategies,” he said.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
-
6 Costco Products That Have the Most Customer Complaints
-
Mark Cuban Warns of ‘Red Rural Recession’ — 4 States That Could Get Hit Hard
-
How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
-
4 Low-Risk Ways To Build Your Savings in 2025
This article originally appeared on GOBankingRates.com: 4 Ways Trump’s ‘Big Beautiful Bill’ Will Change How You Plan for Retirement
