How the ‘One Big Beautiful Bill’ Act Could Impact Your Retirement 

The ‘One Big Beautiful Bill’ Act (OBBBA), signed into law on July 4, 2025, is one of the most sweeping pieces of federal legislation in recent years, especially for retirees and older Americans. 

The new law touches nearly every aspect of retirement life: taxes, healthcare, housing, and even the future of Social Security and Medicare. While some provisions offer short-term financial relief, others introduce new hurdles, particularly for pre-65 retirees. 

If you’re already retired, or getting close, here’s what you need to know about how the bill could impact your financial stability, healthcare access, and long-term retirement strategy.

A New Tax Deduction for Seniors 65+ (But It’s Temporary) 

One of the bill’s most senior-friendly provisions is a $6,000 tax deduction for people age 65 and older (up to $12,000 per couple). 

This bonus deduction, available starting with your 2025 tax return, can be claimed in addition to the standard deduction. 

• Income limits apply: the full deduction is available to individuals earning up to $75,000 or couples earning up to $150,000. It phases out completely at $175,000 (single) and $250,000 (joint) 

• Expires after 2028, unless renewed by Congress 

• Pre-65 retirees miss out: those under 65 do not qualify, even if already retired 

If you’re over 65, this could significantly reduce your taxable income, potentially lowering or eliminating federal taxes on your Social Security benefits, at least for the next four years. 

Healthcare: higher costs, stricter eligibility 

The OBBBA reshapes healthcare access, particularly for those on Medicare, Medicaid, or Affordable Care Act (ACA) marketplace plans. 

Medicaid changes 

• Starting in 2027, adults under 65 must work 80 hours/month or meet certain volunteer/training requirements to qualify for Medicaid 

• Retroactive coverage periods shrink (from 3 months to 1-2 months) 

Medicare changes 

• $500 billion in automatic cuts are triggered due to budget rules, which could reduce provider payments and limit access to care 

• Fewer prescription drugs will qualify for Medicare price negotiations, likely increasing out-of-pocket drug costs starting in 2028 

• Nursing home staffing mandates are delayed until 2034, raising concerns about care quality 

ACA plans get pricier 

• Enhanced subsidies that reduced ACA premiums expire in 2025 

• Premiums for those aged 55-64 are projected to rise 75% or more beginning in 2026 

• Pre-65 retirees may face $5,000+ in additional annual costs 

If you’re under 65 and rely on Medicaid or ACA coverage, expect higher costs and more administrative hoops. If you’re 65+, your Medicare access could be limited if providers leave the program due to lower reimbursement rates. 

Housing-related tax breaks for seniors 

If you own your home or are planning to downsize, the OBBBA includes a few housing-related tax changes: 

• The SALT (state and local tax) deduction cap increases from $10,000 to $40,000 (2025-2029), helping homeowners in high-tax states 

• Mortgage insurance premiums remain deductible permanently, offering savings for those still paying PMI or FHA insurance 

• Energy-efficient home credits expire after 2025, so upgrades after that won’t receive federal tax help 

Homeowners who itemize deductions could see lower taxes, particularly if they live in high-tax states or still carry mortgage insurance.  

Social Security’s solvency is weakened 

The bill’s tax cuts are expected to accelerate Social Security trust fund depletion by six months, now projected for 2033. 

• Social Security’s long-range shortfall grows slightly, from 3.82% to 3.98% of payroll 

• No changes have been made to benefits yet, but rising deficits increase the risk of future cuts 

There’s no immediate change in benefit amounts, but OBBBA puts more pressure on Congress to act soon or face automatic benefit reductions. 

What pre-65 retirees should watch out for 

If you’re retired but not yet 65, the OBBBA could hit harder: 

• No access to the senior tax deduction 

• Loss of Medicaid or SNAP benefits if you can’t meet new work rules 

• ACA premiums could spike by thousands starting in 2026 

• Possible loss of Medicaid eligibility entirely in 2027 

How retirees can prepare 

Issue	What’s Changing	What to Do
Taxes	$6,000 deduction for seniors 65+	Claim it if eligible; expires after 2028
Healthcare	Cuts to ACA, Medicaid, Medicare	Review your coverage options and prepare for cost increases
Housing	Bigger SALT deduction, PMI deduction	Consider itemizing if you own a home
Social Security	Faster trust fund depletion	Stay informed; pressure is mounting for future reforms

How Dewitt & Dunn Can Help 

Whether you’re approaching retirement or already there, the landscape is shifting fast.  

From navigating rising healthcare costs to maximizing tax breaks, Dewitt & Dunn can help you build a retirement income strategy that adapts to today’s changing laws.  

Let us help you keep more of what you’ve earned and protect it for the future. Schedule your complimentary consultation with Dewitt & Dunn today.