2026 Tax Planning for Retirees: Why Proactive Strategy Matters More Than Ever

For retirees and those nearing retirement, tax planning has always been important — but 2026 represents a pivotal moment. With evolving tax legislation, updated retirement account rules, and shifting long-term planning considerations, retirees face a landscape where reactive decisions can quietly erode wealth.

For individuals living on fixed income, withdrawing from retirement accounts, or

planning how assets will be passed on, tax strategy is no longer optional. It is a core component of protecting income, preserving flexibility, and sustaining long-term

financial confidence.

At FFS Advisory, we believe thoughtful tax planning is essential to a well-rounded

retirement strategy. Below, we outline the most impactful tax planning considerations for

2025 and how proactive planning can help retirees turn complexity into opportunity.

Why 2026 Is a Critical Year for Retirement Tax Planning

Unlike years where tax changes occur gradually, 2025 brings multiple overlapping

factors that affect retirees simultaneously — income thresholds, deductions, retirement

account distributions, and estate considerations all interact in ways that can compound

tax exposure.

Without an integrated tax plan, retirees risk unintentionally:

● Triggering higher marginal tax brackets

● Increasing taxation on Social Security benefits

● Missing time-sensitive deductions and planning opportunities

● Creating future required minimum distribution (RMD) challenges

The key difference in 2025 is that these decisions are interconnected. Income timing

today can significantly impact taxes years down the road. This is where strategic

planning becomes essential.

Expanded Age-Based Deductions: A PowerfulOpportunity After 65

One of the most meaningful developments for retirees in 2025 is the expansion of age-

based deductions. Individuals age 65 and older may qualify for enhanced deductions that

can materially reduce taxable income, regardless of whether they itemize or use the

standard deduction.

For many retirees, this creates meaningful opportunities to:

● Reduce or eliminate federal income tax liability

● Lower the taxation of Social Security benefits

● Withdraw modest amounts from IRAs or 401(k)s while staying in lower tax

brackets

However, these deductions are often income-sensitive. Higher income levels may phase

out eligibility, making income coordination a central element of retirement tax planning.

Strategic insight: Careful planning around withdrawal timing, investment income, and

Roth conversions can help preserve these deductions and maximize their impact.

Tax Rate Stability Opens the Door for Roth Conversion Planning

While deductions are evolving, tax rates themselves have become more predictable — at

least in the near term. This stability provides retirees with a planning window, particularly

when evaluating Roth conversion strategies.

Many retirees hold a significant portion of their assets in traditional retirement accounts.

While tax deferral has benefits, it can also create future challenges, including:

● Larger required minimum distributions

● Higher taxable income later in retirement

● Reduced flexibility for estate planning

Strategic Roth conversions in 2025 may help retirees:

● Lock in known tax rates

● Reduce future RMD obligations

● Create tax-free income streams

● Enhance legacy planning flexibility

The key is balance. Large, one-time conversions can trigger unintended tax

consequences. A measured, multi-year conversion strategy is often more effective and

tax-efficient.

Re-Evaluating Itemized vs. Standard Deductions

Long-standing assumptions about deductions deserve a fresh look in 2025. Changes to

deduction limits mean that itemizing may once again benefit certain retirees — especially

those with higher state and local taxes or significant charitable giving goals.

Annual tax reviews can help determine:

● Whether itemizing or taking the standard deduction is optimal

● If prepaying expenses makes sense in a given year

● How deductions interact with broader income and investment strategies

Tax efficiency in retirement is dynamic. What worked last year may not be optimal this

year.

SECURE 2.0 and Retirement Account Planning

SECURE 2.0 continues to influence retirement planning in 2025, offering new

opportunities for both savers and retirees. Enhanced catch-up contributions may benefit

those still working, while charitable planning options provide tax-efficient ways to give.

For retirees with philanthropic goals, Qualified Charitable Distributions (QCDs) remain

one of the most effective tools available. QCDs can satisfy RMD requirements while

reducing taxable income — an advantage traditional charitable deductions often cannot

provide.

Coordinating Income to Manage Social Security Taxation

Even modest increases in income can cause a larger portion of Social Security benefits

to become taxable. Without coordination, retirees may unknowingly increase their overall

tax burden.

A tax-aware income strategy considers:

● The timing of Social Security benefits

● Retirement account withdrawals

● Investment income and capital gains

When coordinated properly, retirees can improve after-tax cash flow while minimizing

unnecessary taxation.

Estate Planning and Long-Term Tax Considerations

While federal estate tax thresholds may appear generous, estate planning goes far

beyond estate taxes alone. Without proper planning, heirs may face:

● Accelerated taxation on inherited accounts

● Poorly timed distributions

● Reduced control over how assets are transferred

Tax planning plays a vital role in aligning investment strategy, income planning, and

legacy goals — ensuring wealth is transferred efficiently and intentionally.

Why Work With FFS Advisory

At FFS Advisory, tax planning is not an annual exercise — it is an ongoing, integrated

part of our wealth management process. Our approach emphasizes:

● Long-term tax efficiency, not short-term savings

● Coordination between investments, income, and tax strategy

● Proactive planning as laws and life circumstances evolve

If you are approaching retirement or already retired, 2026 is a year to review — not

assume — your strategy. Thoughtful tax planning isn’t about reacting to new rules; it’s

about positioning your wealth to work smarter under them.

If you’d like to explore how proactive tax planning can support your retirement goals,

FFS Advisory is here to help.

*Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied on for the purpose of avoiding any tax penalties. You should discuss any tax or legal matters with the appropriate professional.