In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss the newly passed tax legislation known as the Big, Beautiful Bill and its significant impact on retirement tax planning. They are joined by Taylor Wolverton, a Certified Financial Planner and Enrolled Agent, who breaks down how the standard deduction 2025 increase and new senior tax deductions can help retirees save thousands in taxes. If you’ve been wondering how the new tax bill 2025 affects your retirement income strategy, this episode delivers clarity, practical examples, and actionable tax planning strategies to help you make informed decisions.

Listen in to learn about how these 2025 tax law changes may influence your retirement planning. Taylor walks through a real client case study showing how the standard deduction increase and a special $12,000 senior deduction can dramatically reduce taxable income and create more retirement tax savings. Whether you want to plan for retirement, update your retirement checklist, or make adjustments to secure a better financial future, this episode will help you optimize your income tax planning and avoid leaving money on the table.

In this episode, find out:

·     How the Big Beautiful Bill changes the IRS standard deduction 2025 and what it means for retirees.

·     Details about the new $12,000 senior tax deduction and who qualifies for it.

·     How these federal tax deductions can reduce your taxable income and save thousands.

·     Why your tax strategy for retirement must consider these 2025 tax law changes.

·     Practical steps for using these updates to maximize retirement tax savings and plan for retiring comfortably.

Tweetable Quotes:

“An increase in the standard deduction is an increase in tax-free income — meaning less taxes paid for the year.”

 — Taylor Wolverton

“Good tax planning is all about control. The more you understand the rules, the better your chances of securing your retirement.”

 — Murs Tariq

Resources

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome everyone to secure your retirement podcast. We are excited to be talking with

you today and going through a topic that I think a lot of people have questions

about, and it is around the newly passed tax bill called the big,

beautiful bill. I think that’s a guess that’s what it’s called. That’s it. And

and I always like to say this, whether or not you personally think it’s big and

beautiful, that’s neither here nor there. We’re just going to talk about some

concepts and things that we’re seeing in real practice. And when we talk about

taxes. And we talk about how we help our clients. There is no one better to help

us in that than to bring on our own in -house tax strategist, Taylor Wolverton.

So, Taylor, thanks for coming on and chatting with me and Murs. You’re welcome. So

I was in an appointment the other day and then Murs actually was just in another

one with you. And quite honestly, you’re showing people things right now around this,

this new. Bill that honestly I didn’t even understand how it worked, and we had been

saying we’ve been telling our listeners that we’re going to come out and talk about

some of these things and I felt like me and Merce were like it’s a little

overwhelming to come on here and talk about every single thing about this new bill

so, we’ve all as we see things in real life practice how we might be able to come

on and explain it but I do I believe though that what we’re seeing you show people

is extremely impactful and I don’t think people know about it. I mean, they find

out once you tell them, but I don’t think they know what’s going on. I mean,

Murs, what’s your impression about what you’ve gotten in the couple that you’ve set

in on? Yeah. So, I think the topic that we’re going to go over today is brand new

to everyone. It’s never, I don’t think it’s something that’s ever been done before

in the tax code. So very impactful. I learned in that meeting a couple of things

that we’re going to share with you. And I know the clients did as well. And by

the end of it, you’re like, man, if I don’t have someone looking at this for me,

then then I make I could be making some potential tax issues for myself. So very,

I think powerful. But yeah. All right, well, let me just set this up really quick.

And then Taylor, I’m going to ask you to kind of walk us through a scenario. But

here’s the scenario. And I’m going to give, you know, I’m not disclosing every

personal detail here. But ultimately, we met with a client, we were doing what we

what we do in the second half of the year, which is a tax strategy meeting. So, in

this tax strategy meeting, what Taylor does is she looks at last year of how that

worked and then basically says what’s going to happen this year. And a big part of

that conversation is, are you putting enough away in taxes? Are you putting too much

away in taxes? Do we need to adjust withholding? Do we need to adjust quarterly tax

payments? Whatever that might be and in this particular family scenario they last

year and when they filed their taxes, they owed money and because of some of the

new parts of this bill what she was showing them is in fact with no changes of

what they’re doing they’re actually going to get back now a sizable amount of money.

So, what I did is I got through with that meeting and I went Taylor that is going

to be a really good podcast and I want you to kind of walk us through that exact

scenario so that people understand it because right now we’re sitting here in the

latter part of the year and people are going to be getting ready to do their taxes

while there’s some maybe some opportunities there that they could take advantage of

and so, Taylor if you don’t mind could you kind of set up and kind of walk us

through almost like you would be walking a client through this situation and explain

kind of a step by step of what is the difference today

compared before this bill passed? Yes. Yeah. The two things that we’re going to be

talking about and looking at specifically in this example that have changed as a

result of the new tax law is the first one is that the standard deduction was

updated for everyone. Everyone who files a tax return is eligible to take the

standard deduction. The majority of people do take the standard deduction. The

standard deduction is the first amount of income that you don’t have to pay tax on.

And depending on if you’re below age 65 or over age 65, your standard deduction is

a different amount and also your filing status also is a determining factor in what

exact dollar amount your standard deduction is going to be. But the new tax law

increased for those filing jointly, increase the standard deduction by $1,500,

regardless of your age. And if you’re filing single, it increases your standard

deduction by $750, regardless of your age. So, for everyone,

the increase in standard deduction, everyone taking the standard deduction, I should

say, is going to be impacted. And an increase in the standard deduction is an

increase in tax -free income, which means less taxes paid for the year.

And then the other thing we’re going to look at, which is another update in the

tax law, is for those over the age of 65, they’re eligible for an additional up to

$6 ,000 deduction. So again, $6,000 more in tax -free income this year.

The standard deduction is quote unquote permanent. What permanent means when it comes

to tax lie, I don’t really know, but the other senior deduction for the $6,000 if

you’re over age 65, that is set to go from 2025 through the year 2028.

So that one we’ll see here for the next few years, but it’s not permanent.

So, I’ll start sharing my screen here. Yeah, Taylor, while you’re pulling that up,

I wonder if off the top of your head, let’s say the tax reform or the tax bill

didn’t go through the standard deduction was scheduled to go down pretty, pretty

significantly, wasn’t it? Yes, it was, I believe it was about to be cut in half or

somewhere close to being sloshed in half around. Yes. Right. So, it’s staying in

place, but also being an increase is definitely going to be a positive for a lot

of, for all the taxpayers that are taking the standard. Real quick, I want to say

this too, just because I didn’t say this a little bit earlier, Taylor is sharing

her screen. I will tell you that if you watch this podcast, you can watch it on

Spotify, Spotify allows you to be able to watch this and see it. We also have this

on YouTube as well, so you can watch it on YouTube. If you’re walking right now or

you’re driving and you just hear it, that’s okay, but I want you to know you can

come back and either watch it on Spotify or watch it on YouTube and actually see

this because I think this is, to me, one of the most impactful things is what she’s

about to walk through, what’s on the screen.

– Yes, okay, so what we are looking at right now is, in a way, a recreation of a

2025 tax return. So, this is obviously forward looking for the current year 2025 and

I’m just going to walk through and this example, this is a married couple they are

filing jointly. They are also both over the age of 65. That’s an important factor

to know because if you’re over the age of 65 you have a different standard

deduction and you’re also eligible for that other deduction that we were talking

about as well. So, I’m just going to walk through some of the sources of income

that we’re expecting this couple to have in 2025.

So, first thing starting out that we’re looking at, they have some interest. Interest

comes from money market accounts, CDs, savings, things like that, generate interest,

also, some investments do as well. So, they have, we’re estimating around $7 ,000 in

interest for 2025. They also have some dividends from their investment accounts were

estimating around $1,000 in dividends.

And then they’re also both taking distributions from their traditional IRAs.

Anytime you take a distribution from your traditional IRA, it’s fully taxable. You’ll

pay tax in the year you take a distribution. So, this couple, they have this year

by the end of 2025 expecting around $60 dollars in IRA distributions.

And then they also have some pension income around $30 ,000 a year between the two

of them. So that’s another source that we’re expecting this year.

And then they also have social security. So, we have around $63 ,000 in social

security this year as another source of income for them. One place that’s been kind

of confusing around the new tax law for a lot of people is whether social security

taxation changed at all. So, I want to be clear on this point, the way social security

is taxed has not changed at all for the new tax law. That is still the exact same

as it was last year, the year before that, the year before that. What happens in

this couple situation is they pay tax on 85 % of their social security.

So that’s the way that it was last year. That’s not going to change. Can we take

a second to clarify, clarify that one? Cause I, the social security and what’s tax

there, I think people are always confused on it. And there’s a, there’s a whole, a

whole tier as far as based off of your income, your total, your, your,

your total income in all essence is going to dictate how much of your Social

Security is taxed. So, if you’re looking on the screen, 63 ,000 roughly is what their

total gross Social Security income is, but Taylor is saying, and the law is, is

that because of their income, 85 % of it is taxable and added to their income for

the year. So, you still get a tax break, but it’s not tax -free. Yes, yep,

exactly. So, for their situation, they’re going to, Again, their gross social security

is around $63 ,000 for the year. They’re going to pay tax on around $53 ,000 of

their social security. So that’s what gets added in for purposes of determining how

much of their total income they’re going to pay tax on this year.

And then the last thing in this example is they had some prior losses from an

investment account. You are eligible to take up to a $,000 loss on your tax

return that offsets other sources of income, so that means you’re not paying tax on

$3,000 of other sources of income. And if you have additional losses beyond the $3

,000, then that carries forward to the next year. So that’s what happened in their

situation. Previous year, they had $50 ,000 plus in losses, they’re going to be able

to use $3,000 of that loss to offset other income sources, the remaining loss we’ll

carry forward to 2026. So that’s not new in the tax law. That’s how it’s been for

a long time. So, adding up all of their sources of income,

we talked about the interest, dividends, the social security, IRA distributions,

pensions, totaling all that up, they have around $150 dollars in total income just

below $150 ,000.

So, the standard deduction for this year, again these people are both over the age

of 65. Their standard deduction is going to be $34,700.

So that is again a $1,500 increase from where it was prior to the update in the

tax law. And all that means is of their total $150ish in income,

they don’t have to pay tax on $3,700 of that income.

So, your standard deduction is an amount of income tax -free.

And then the next line that we’ll see here is the other update from the tax law,

which is the other or senior deduction where each person is eligible to take a $6,000 other deduction. So, where they’re married, we’re seeing a $12 ,000 combined other

deduction here.

So, the standard deduction gets subtracted out from total income. The $12,000 other

deduction gets subtracted out from total income. And then the amount of income that

they have to actually pay tax on is around

thousand dollars that we’re estimating. So, your taxable income,

after subtracting out the standard deduction and any other deductions that you’re

eligible for, your taxable income is what gets plugged into the tax brackets. And

that’s where the first portion of income you pay a 10 % rate, the next portion of

income you pay a 12 % rate. And then in this example that we’re looking at their

final dollars of income land in the 22 % bracket. So, we would say their marginal

tax rate is 22 % because that’s the final bracket that their income lands in.

So, when that calculation occurs where the first portion, they’re paying a 10 % tax

on, the next they’re paying a 12, the final dollars they’re paying 22, total amount

of federal tax that we’re estimating that they’ll owe in this situation is 12,220

dollars for 2025.

And from their IRA distributions, from their social security, from their pensions,

they have federal tax being withheld from all those sources of income throughout the

year. So, each time they’re getting an IRA distribution, they’re also paying some

federal tax at the same time. So that’s taking care of the tax liability from those

sources of income as they’re receiving it throughout the year. In this situation,

they’re also paying quarterly estimated tax payments. So, with the withholdings and the

quarterly payments, we have that they will pay through the end of the year without

any changes. They will pay $15,765 in federal tax.

So, if they owe $12,220, they pay throughout the year, $15 ,765,

then that means that at the time they file, they get a refund because they paid

more than they owed. So, they’re going to get back around $3 ,500.

So, in this situation, what we talked to them about, and if anyone else was in a

similar situation, what I would talk to them about is if they’re comfortable with

getting a $3,500 refund if they like the sound of that or if we want to look at

reducing the remaining quarterly payments that they have for the year or reducing

some of the withholdings on their sources of income throughout the year as well to

reduce the amount of the refund that they’re expected to get because you’re basically

just giving the IRS $3 ,500 for them to give it back to you later when you file.

So, if you want to keep some of that beforehand to reduce the refund that is

expected, then that’s a conversation that we want to have to make sure whatever

their preference is, is what we’re working towards for this year too. So, right, I

think that refund conversation is always something that people have a preference on

and prefer one or the other. But at the end of the day, the way that I think

good tax strategy kind of runs is that we, in most cases, if you’re getting a

refund, that means, like you said, you overpaid, right? And you let the IRS hold on

to some money. Some people are okay with that. They treat it as, hey, I’m getting

some money back on a specific date. And I’ll spend that is for savings, right? And

then the other is, if I owe a lot, well, that means I didn’t plan it properly for

taxes. And so, the goal, I think for most is we want to try to get that to a

place where it’s break even. But if you don’t know tax law changes, then it’s

really hard to navigate that. So, what if the $12 ,000 didn’t exist?

I mean, do they go back to now having to write a check or kind of break an even

in this case? Yeah, that’s what I want to show next is what exactly the new tax

law update means in terms of federal tax due in 2025.

I will say though too, before we leave this topic, we see all the time where the

opposite happens and there ends up being a payment still owed at the time that they

file and then we still have the same conversation. Do we want to increase quarterly

estimated tax payments? Do we want to increase the withholdings on your sources of

income? Are there any changes that need to be made to reduce the amount of the

payment owed or at least just be prepared to make that payment and know that it’s

coming so it’s not a surprise that you have to make a payment and you’re scrambling

to figure out where is that money going to come from when your tax preparer tells

you whatever the final amount is.

Okay, so I’m going to scroll back up here. Again, remember the two changes in the

situation. Number one, a $1,500 increase in the standard deduction. And number two,

a $ ,000 other deduction. One thing that is important to know on this $12 ,000

other deduction is that there are some income limitations around this. So, if your

total income is greater than $15,000 if you’re filing jointly then your $12,000

other deduction starts to be reduced as your income exceeds $15 ,000 you’re not

eligible for the full $12 ,000 you’re eligible for less than $1,000. If your income

goes over $250 ,000, you’re not eligible for the other deduction at all.

So, the phase out range is between $150,000 to $250,000 filing jointly.

If you’re filing single, it’s half of that. So, $75

Yeah, sorry Taylor. That’s like the thing that came up in my meeting We that

we had together was And I tell this all the time in financial planning and

retirement planning There’s so many knobs that are intertwined like you know You’re

how you’re investing in a lot of cases going to determine how you would make your

withdrawal or your income plan Which then leads into what your taxation is going to be

from various accounts and then you got to control your income, so you don’t run into

Medicare or Irma. But just within the tax code itself, there’s a bunch of knobs.

And that’s what kind of led us into now a strategic decision with this client

around, well, how much do we take from various sources so that we can maximize this

new $12,000 deduction? And I think that’s kind of where you were headed, right?

Yeah, if you have the ability to be flexible in your distributions and if we can

kind of play with the timing where maybe we get some of the distribution this year

and some of the distribution next year which in the example that Merse is talking

about is kind of what we ended up deciding to not take the full distribution in

2025 to maximize that exactly the other deduction because that is now available.

So, it can lead to conversations around flexibility in distributions to reduce the,

the goal is always reduce the amount of federal tax that you’re paying. So when

there’s opportunity to do that and it works out for everyone on both sides for us

and for whoever we’re having the conversation with, then yeah, that’s always what

we’re trying to do. Okay, so what I want to calculate is exactly what it means in

terms of like we’re getting the standard deduction we’re getting this other deduction

but what does that actually translate to in dollars saved so an additional in this

example again $1500 increase in the standard deduction and they’re going to be

getting the full $12,000 other deduction so that’s another $13,500 total in income

that they are not paying tax on this year compared to last year prior tax law so

again, they’re in the 22 % marginal tax bracket so if they had the $13 ,500 it would

have been taxed at 22%.

So that means in this situation the new tax law updates just from those changes

with the standard deduction and the other deduction, it’s reducing the amount of tax

that they will pay this year by

and $70 and that’s true for anyone in the situation married both over the age of

65, income below $150 ,000, the new tax law is saving you $2 ,970 in federal tax

this year.

– Yeah, I think what’s so good about this is it just helps the person, we’re doing

this well ahead of next year, so this person now can go, okay, maybe I don’t need

to do the quarterly If they really like a refund,

then go ahead and make it, and you’ll get a refund. I don’t understand why you

would do that, but people could do that just so they feel good about getting a

refund, but I’d rather keep the money in my bank account now versus giving it to

the IRS and then give it back to me next year sometime. So, this is just,

I think, one tidbit. Obviously, there’s going to be other things that we could talk

about. So, for example, not that we’re going to go into it now, but if I’ve got

these higher deductions, it could be a conversation around, do I do a Roth

conversion of some sort? Do I take and convert some money and just eat up that

rebate or that refund rather by doing the Roth conversion? There’s a lot of

different things that we could do here in order to maximize this, but I think that

For right now, we just wanted to share this one picture. I saw Taylor do it and I

went, man, this is going to be a really good podcast and be able to walk people

through it. So, thank you very much, Taylor, for walking us all through it. And then

as I say all the time, if you ever are listening to this and you go, man, I

would love to be able to have a conversation around this, all you got to do is go

to our website, go to the Contact Us page, submit your information and we’ll get in

touch with you. But again, thank you all for listening. Thank you very much, Taylor.

Thank you, Murs. Everybody have a great week. We’ll talk to you again next Monday.