How the One Big Beautiful Bill Act Could Affect Your Retirement Tax Changes 2025

Retirement tax changes in 2025 could shift the planning landscape—especially for those approaching retirement or already living on fixed income. With the House passing the One Big Beautiful Bill Act (OBBBA) on May 22, 2025, Americans are closely watching how these proposed changes might impact retirement strategies. While the bill still awaits Senate approval and could undergo adjustments, several provisions stand out for individuals focused on long-term financial stability.

At Frezzotti Financial Services, we work with retirees and pre-retirees in Miami, South Florida, and across the country to tailor strategies that align with their evolving needs. From Health Savings Accounts to estate planning adjustments, the OBBBA introduces potential tools—and challenges—that require thoughtful review.

Understanding the Core Retirement Tax Changes in 2025

With a mix of tax relief and new retirement planning opportunities, the OBBBA is positioned to change the retirement conversation for many Americans. Whether you’re based in Coral Gables, Delray Beach, or planning nationally, here’s what to watch.

1. Permanent Extension of the Tax Cuts and Jobs Act (TCJA)

The OBBBA seeks to make the 2017 TCJA provisions permanent. For retirees, this means:

• Continued access to lower income tax rates

• A higher standard deduction for all filers

• A $15 million estate tax exemption, which particularly benefits high-net-worth individuals in estate and wealth transfer planning

If passed, these provisions may provide greater after-tax income flexibility in retirement, giving retirees in Miami and beyond more breathing room to balance healthcare, travel, and legacy goals.

2. New $4,000 Senior Deduction

The bill introduces a $4,000 standard deduction specifically for taxpayers age 65+ with modified adjusted gross incomes below $75,000 (single) or $150,000 (married filing jointly). For many retirees in South Florida, this could increase disposable income and reduce tax burdens—particularly those living on moderate pensions, Social Security, or investment income.

This change supports retirement planning by reducing liabilities for seniors already in fixed-income scenarios.

3. Health Savings Account (HSA) Expansion

Retirement tax changes in 2025 include a significant update to HSA rules. Workers on Medicare Part A who still hold high-deductible health plans would now be able to continue contributing to HSAs—reversing a prior restriction.

Contribution limits will rise to:

• $8,600 for individuals

• $17,100 for married couples under income thresholds

Married couples can also make catch-up contributions to the same HSA, and qualifying expenses now include fitness memberships and health-related reimbursements. In high-cost regions like South Florida, these enhancements can help retirees better plan for growing healthcare costs.

4. 529 Plan Flexibility

Education planning intersects with retirement for many who support grandchildren or seek continued learning later in life. The OBBBA expands 529 uses to include:

• Testing fees

• Tutoring

• Educational therapies

• Credential programs

This gives retirees more ways to use these accounts tax-efficiently while supporting family education or personal development goals.

5. ABLE Account Enhancements

For retirees with disabilities—or those supporting loved ones who are disabled—the bill extends the Saver’s Credit to ABLE accounts. This enhances tax-advantaged saving without risking public benefit eligibility, reinforcing the importance of integrated financial planning and risk management.

6. Changes to FERS for Federal Employees

For federal retirees, particularly those in South Florida government or civil service positions, OBBBA proposes key changes:

• The FERS annuity supplement may be eliminated for new retirees after January 1, 2028 (with some exceptions)

• New federal hires must choose between higher contributions with civil service protections or lower contributions as at-will employees

This could significantly reduce guaranteed retirement income, making personal retirement planning and investment management through options like the TSP even more vital.

7. Trump Accounts for Newborns

The OBBBA introduces “Trump Accounts” (formerly MAGA Accounts), allowing:

• A $1,000 federal seed deposit for newborns (2025–2028)

• Up to $5,000 in annual parental contributions

Funds can be used for education, down payments, or small business capital. While tax treatment is less favorable than 529s, these accounts could be part of long-term wealth planning strategies.

8. Retirement Plan Updates: Catch-Up Contributions and Auto-Enrollment

The bill reinforces SECURE 2.0 provisions by:

• Increasing catch-up limits for those aged 60–63 starting in 2025

• Requiring high earners to make Roth catch-up contributions beginning in 2026

• Mandating automatic enrollment for new 401(k) plans

These updates promote greater participation and flexibility in late-stage retirement planning.

Tailored Retirement Planning for a Changing Landscape

At Frezzotti Financial Services, we specialize in helping individuals and families across Miami, South Florida, and the nation navigate shifting financial policy. Our services include:

• Financial Planning: Coordinating cash flow, tax, and estate needs

• Retirement Planning: Evaluating retirement income strategies in light of legislation like the OBBBA

• Investment Management: Aligning portfolios with post-tax goals and risk tolerance

• Wealth Management: Supporting multi-generational wealth strategies

• Education Planning & Risk Management: Integrating tools like HSAs, 529s, and insurance for a holistic approach

Whether you’re in Boca Raton or managing your financial future from another state, we bring clarity and structure to your retirement journey.

Plan for Tomorrow—Today

The OBBBA is not yet law, but understanding its potential effects can give you a head start. If you want to talk through how these retirement tax changes in 2025 might apply to your situation, we’re here to help.

Based in Miami, serving South Florida—and clients nationwide.

Contact us today, let’s build a retirement plan that moves with the times while protecting what matters most.

The information contained herein is obtained from carefully selected sources believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation or a recommendation that any particular investor should purchase or sell any particular security. All information discussed and expressions of opinions are subject to change without notice. Opinions are those of Frezzotti Financial Services. 

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.