As 2025 approaches, time is running short for taxpayers to take advantage of the favorable provisions from the Tax Cuts and Jobs Act (TCJA) before they’re set to expire at the end of next year. For retirees and pre-retirees, these changes could mean higher tax brackets, reduced deductions, and smaller estate tax exemptions, each impacting how much of your income you actually keep.
The good news? There’s still time to act. Strategic planning now may help you reduce future tax exposure and strengthen your retirement income strategy. Here’s what to know and what steps to consider as the clock winds down.

What’s Changing in 2026

When the TCJA was enacted in 2017, it lowered individual income tax rates and doubled the standard deduction. But many of those individual tax provisions were temporary. Unless Congress takes action, several key benefits will sunset after December 31, 2025:

• Higher tax brackets: The 12%, 22%, and 24% brackets will revert to 15%, 25%, and 28%, respectively.

• Standard deduction cuts in half: Married couples filing jointly may see their deduction drop from roughly $29,000 to about $14,500 (based on inflation-adjusted projections).

• Estate tax exemption reduced: The current exemption of over $13 million per person is scheduled to fall to around $7 million, potentially exposing more estates to federal tax.

• Child and family credits revert: Credits shrink, and thresholds change for households supporting dependents.


For retirees, these shifts don’t just affect tax returns—they can ripple through retirement income, charitable giving, and legacy plans.

How Higher Taxes Could Affect Retirement Income

Rising tax rates can reduce the net value of withdrawals from traditional IRAs, 401(k)s, and other tax-deferred accounts. For many retirees, it’s not just how much you withdraw—but when and from which source.

Consider how these strategies might help mitigate future tax exposure:

1. Roth Conversions While Rates Are Lower

   Converting a portion of a traditional IRA into a Roth before 2026 allows you to pay taxes now—potentially at lower rates—and enjoy tax-free withdrawals later. Partial conversions can help manage bracket creep.

2. Tax-Efficient Withdrawal Strategies

   Coordinating distributions between taxable, tax-deferred, and tax-free accounts helps control your annual income level—and, by extension, your tax liability.

3. Charitable Giving via Qualified Charitable Distributions (QCDs)

   For those age 70½ and older, directing up to $100,000 per year from an IRA to a qualified charity can count toward Required Minimum Distributions (RMDs) while reducing taxable income.

Estate Planning Considerations Before the Sunset

For higher-net-worth retirees, the estate tax exemption reduction could be significant. Assets that were previously below the threshold may now be taxable. Proactive moves could include:

• Gifting strategies: Taking advantage of the current $13 million+ exemption to transfer assets now rather than later.

• Establishing or reviewing trusts: These can help preserve wealth and manage future tax burdens efficiently.

• Coordinating with your advisor and estate attorney: Alignment ensures your plan remains consistent with your goals and evolving tax law.

For retirees, this planning window is now open, but closing fast. Proactive planning is essential to staying ahead of the unknown.

Why Acting in 2025 Matters

Deferring planning until after 2026 could mean paying significantly more in taxes over your lifetime. With one year left before the scheduled sunset, 2025 represents a rare opportunity to:

• Reassess income and tax projections.

• Review your charitable and gifting strategies.

• Evaluate Roth conversion timing.

• Coordinate RMDs with overall tax planning.


Waiting until December of next year may limit flexibility and increase the likelihood of rushed decisions. Taking time this fall to meet with an advisor can help you enter 2026 with clarity and control.

The Role of Professional Guidance

Tax policy is complex—and subject to change. The value of personalized advice cannot be overstated. A financial advisor who integrates income, investment, and legacy strategies can help ensure that every move you make works in harmony.
At TruNorth Advisors, our planning approach focuses on coordination across five key areas: income, investment, healthcare, tax, and legacy. That integration helps protect retirees from last-minute surprises and avoid costly mistakes as tax laws shift.

Let’s Start the Conversation

Tax law changes are inevitable—but unpreparedness doesn’t have to be. With 2026 approaching, now is the time to evaluate your retirement income strategy, consider conversions, and align your estate plan with future tax realities.
Schedule a complimentary consultation to learn how proactive tax planning can help protect your income and legacy before the 2025 tax countdown ends.

Disclosure


This material is provided for informational purposes only and does not constitute legal, investment, or tax advice. Resolute Capital, LLC, dba TruNorth Advisors, is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training.