After months of debate, Congress passed H.R. 1 in July—officially known as the “One Big Beautiful Bill.” This sweeping legislation makes major updates to taxes, Medicare and Medicaid, Social Security, and estate planning. Whether you’re still working, retired, or planning your legacy, here’s what you need to know.
What Retirees and Workers Can Expect
For retirees, the new law locks in stability by making the 2018 Tax Cuts and Jobs Act’s standard deduction permanent. On top of that, there’s a one-time boost for 2025: $750 for single filers and $1,500 for married couples. Seniors get even more good news—those 65 and older can now claim an extra $6,000 deduction, in addition to existing age-based deductions.
Workers benefit too. Between 2025 and 2028, overtime pay is fully deductible, and up to $25,000 in tips can be written off each year. The state and local tax (SALT) cap also increases significantly, from $10,000 to $40,000, starting in 2025 and lasting through 2029.
Medicare and Medicaid Changes
The bill clarifies several long-debated issues for Medicare beneficiaries. Contributions to Health Savings Accounts after enrolling in Medicare Part A are still prohibited, and proposed programs for rural emergency hospitals and AI-driven payment recovery did not make it into the final law.
What did change? Medicare eligibility now excludes illegal immigrants, though certain lawful residents from Cuba, Haiti, and Pacific island nations remain covered. Medicaid will also see over $1 trillion in spending reductions over the next decade. Beginning in 2027, Medicaid enrollees will need to regularly prove employment or qualified status in order to maintain coverage.
Estate and Legacy Planning
The legislation also reshapes legacy planning. Starting in 2026, the gift, estate, and generation-skipping transfer tax exclusions will increase to $15 million per individual and $30 million for married couples. Charitable giving incentives were expanded as well: even taxpayers who don’t itemize can deduct up to $1,000 ($2,000 for joint filers) for charitable donations. Families will also benefit from higher education allowances, with the annual limit for K–12 education expenses doubling from $10,000 to $20,000.
Social Security Relief
Social Security remains a vital source of income for millions of retirees, and the bill provides some relief. A new “senior bonus” deduction of up to $670 is now available for those age 65 and older (but not for early benefit recipients). This change will make Social Security benefits tax-free for 88 percent of seniors—up from just 64 percent before the law.
What This Means for You
The “One Big Beautiful Bill” is one of the most comprehensive overhauls in years. It offers retirees bigger deductions, gives workers new tax breaks, reshapes Medicare and Medicaid eligibility, raises estate tax limits, and provides meaningful relief on Social Security taxation.
Now is the time to review your financial plan. The choices you make today can help you take advantage of these new deductions, secure your benefits, and protect your legacy for the future.
If you’d like to understand how these changes affect your situation, call us at (805) 570-3765 or schedule a complimentary consultation by clicking the “Contact Us” button on Facebook.
