When lawmakers call something “permanent,” advisors know better than to take it literally. The One Big Beautiful Bill Act of 2025 (OBBBA) created what looks like a more stable tax structure with locked-in brackets, a revised standard deduction, a new senior deduction, and several changes to itemized deductions. At first glance, this feels like simplification. In reality, the new rules shifted the pressure points in the tax system, and the interactions between those rules matter more than ever.

OBBBA did not make retirement tax planning simpler. It changed where advisors need to pay the closest attention. Advisors who use an Effective Marginal Rate (EMR) approach will find more opportunities in this environment, not fewer.

Here are the areas where careful planning adds the most value today.

 

The New Reality: Interactions Matter More Than Brackets

Clients see lower brackets and a larger standard deduction. What they often miss are the hidden elements that push their EMR higher.

For example:

  • The temporary additional senior deduction phases out as income rises.
  • SALT adjustments and modified itemized deductions can raise EMRs faster than than expected.
  • Social Security taxation still interacts with other incomes in ways that magnify the marginal rate.
  • IRMAA cliffs remain unchanged and continue to create steep cost jumps.

A client who appears to be in the 22 percent bracket may still face an EMR of 55+ percent on the next dollar of income.

Advisors shine when they can show clients what their next dollar actually costs. This is where Tax Clarity® proves especially useful, because it provides a visual explanation of those interactions.

 

The Senior Deduction: A New Lever for Tax Strategy

One of the most overlooked changes in OBBBA is the new senior deduction and the fact that it phases out with higher income. This shifts the timing and sequencing of income for many households.

When the deduction is still available, it may make sense to:

  • Realize income earlier than expected
  • Draw from traditional IRAs up to a favorable EMR range
  • Complete targeted Roth conversions before the deduction begins to phase out

When the deduction is partially or fully phased out, it becomes more important to:

  • Keep AGI from rising unnecessarily
  • Consider Roth or taxable withdrawals

Income InSight® helps clients see how each year’s decisions affect the long-term picture.

 

Social Security: The Same Complexity, New Interactions

OBBBA did not change how Social Security benefits are taxed, but it changed how other income interacts with those taxes. As a result, new breakpoints can appear where additional income increases the taxable portion of benefits.

This affects filing strategies, conversion opportunities, and withdrawal sequencing. In most cases clients benefit from delaying benefits to keep EMRs manageable. In other cases an early benefit combined with early IRA withdrawals can be effective.

Social Security Timing® helps you explain and demonstrate the mechanics of the Social Security decision.

 

Roth Conversions in the OBBBA Era: Why Timing Is Everything

The old narrative around Roth conversions focused on completing conversions before tax rates increased. After OBBBA, the focus has shifted to identifying where the client’s EMR is most favorable.

Before recommending a conversion, advisors should consider:

  • Whether the conversion will trigger any of the new phaseouts
  • The impact on IRMAA thresholds
  • The client’s current EMR compared with future EMR projections
  • The effect of the conversion on survivor income and long-term RMDs

Roth conversions continue to be a powerful tool, but only when executed within the right EMR range. Tax Clarity® helps illustrate that range for every client.

 

Withdrawal Sequencing Matters Even More

Withdrawal sequencing has always mattered. Under OBBBA it is even more impactful. Two clients with identical portfolios can end up with very different lifetime tax outcomes based solely on sequencing decisions.

Strategies worth evaluating include:

  • Early IRA withdrawals
  • Strategic reliance on taxable accounts to prevent EMR spikes
  • Selective Roth withdrawals to preserve deductions
  • Multi-year withdrawal blends to avoid large tax swings

Clients value the transparency that comes from seeing these outcomes illustrated over a lifetime.

 

Adaptability Is Now a Core Planning Value

OBBBA highlights an important truth. Even when lawmakers call something permanent, tax laws will always evolve. Advisors who treat EMR-based planning as an ongoing process are better equipped to adjust quickly when the next change comes.

We cannot control Congress, but we can help clients stay prepared for whatever comes next.

 

The Takeaway: Clarity Always Wins

OBBBA gives skilled advisors a real advantage. Clients are overwhelmed by the complexity of the new law, and they want someone who can explain it clearly and apply it effectively.

By focusing on EMR planning, you are helping clients:

  • Reduce lifetime taxes
  • Enjoy more predictable income
  • Strengthen their retirement security
  • Improve outcomes for surviving spouses
  • Transfer wealth more efficiently

This is the kind of clarity that builds long-term confidence.

If you want to explore how each piece of OBBBA affects client decisions, watch the latest Bite-Sized Insights on the Covisum Resources page. Each short episode focuses on one part of the new law and how advisors can turn it into a meaningful planning conversation.