The big, beautiful bill has passed. So what happens now?
With the passing of the new tax legislation, many advisors are wondering what this means for their planning conversations—both internally and with clients. It’s a prime moment to align your team and proactively reach out to the people who rely on you most.
Despite the headlines, the fundamentals haven’t changed. Roth conversions continue to be a smart strategy, especially in today’s relatively low tax environment. Unless tax rates go lower—and there’s no real indication they will—converting now can still offer meaningful long-term benefits.
Think about it this way: If a 25-year-old came to you today, would you advise them to contribute to a Roth IRA or a Traditional IRA? Most of us would say Roth. Why? Because it’s almost always better to pay tax on the seed than on the fruit. That logic still holds.
A common question we’re hearing: Will Social Security now be tax-free?
The short answer is no. There were no changes to how Social Security is taxed. The same income levels and formulas still apply, and if a retiree’s income is high enough, up to 85% of their Social Security benefits can be taxed.
What did change is the standard deduction for those 65 and older. In theory, this will result in fewer retirees having to pay taxes on their Social Security. Before the bill passed, roughly 35% of Americans paid taxes on their benefits. With the new changes, estimates suggest that figure may drop to around 20–25%.
That’s a meaningful tax break for some, but Social Security remains taxable based on total income.
The bill increased the State and Local Tax (SALT) deduction cap to $40,000. At first glance, that seems like a big win. But for most retirees, it’s not likely to move the needle.
Why? Because the standard deduction has also gone up, and most retirees already take the standard deduction rather than itemizing. Even with a higher SALT limit, many won’t cross the threshold where itemizing makes sense.
That said, this could open the door to more strategic tax planning. For example, bundling deductible expenses in alternating years may help some clients benefit from itemizing periodically. And for business owners, the SALT workaround is still available—another opportunity worth exploring.
Your clients will hear about this bill. They’ll be talking to someone about what it means. Make sure that someone is you.
Proactive communication shows leadership, builds trust, and reinforces your value. These are the kinds of moments that separate great advisors from the rest.