Retirement is supposed to be about sipping wine at 3 PM, not frantically Googling “what happens if the Trump tax cuts expire?” But here we are. When the 2017 Tax Cuts and Jobs Act (TCJA) sunsets at the end of 2025, a bunch of sweet retiree-friendly tax perks could disappear faster than your grandkids when it’s time to clean up. That means higher taxes, fewer deductions, and some pretty jarring changes to your nest egg math.
It’s not all doom and gloom—you’ve still got time to plan. But it is the kind of thing you’ll want to keep an eye on if you’re living on a fixed income and trying to make your savings last longer than a season of The Golden Bachelor. Here are the first 5 retiree tax breaks that could go poof in 2026—and what you should know before the clock runs out.
1. Lower Income Tax Brackets
Right now, retirees are enjoying historically low federal income tax brackets, thanks to the TCJA’s across-the-board rate cuts. Whether you’re pulling income from Social Security, an IRA, or a part-time gig at the golf course pro shop, you’re likely being taxed less than you would’ve been pre-2017. But unless Congress intervenes, those lower brackets will expire in 2026, and the old, higher rates will return.
According to MarketWatch, this could raise taxes for most retirees—even those with modest incomes. For example, the 12% bracket could jump back up to 15%, and the 22% rate might leap to 25%. That means more of your retirement withdrawals will be taxed at a higher rate, even if your income doesn’t change. If you’ve been enjoying a few extra perks under the current rates, brace yourself. This change hits quietly but deeply—especially when every percentage point matters on a fixed income. Now might be the time to consider Roth conversions or other long-game tax strategies. Because a 3% tax increase adds up fast when you’re budgeting for 30 years of pickleball.
2. Doubled Standard Deduction
One of the biggest boons from the 2017 tax law was the near-doubling of the standard deduction, which made life way easier for people who don’t itemize. For retirees, especially those without a mortgage, this has been a lifesaver. In 2024, a married couple over 65 can claim a standard deduction of over $30,000—that’s a lot of untaxed income.
But this bump is set to disappear after 2025, and the deduction could shrink to nearly half its current size. Forbes notes this will result in many seniors suddenly finding themselves owing more, even without earning more. If you’re used to not itemizing because the standard deduction covered everything, you might be in for a rude awakening. This especially hurts retirees with fixed incomes who don’t have big expenses to write off. It also increases the complexity of filing and planning. You may have to track every charitable donation, medical bill, and state tax payment just to match what you used to get for free. Pro tip: make the most of that big deduction while it lasts. Because post-2025, the IRS might be dipping into more of your retirement pie.
3. Lower Capital Gains Thresholds
If you’re living off a mix of Social Security and your investment portfolio, here’s where things get spicy. Under the current tax law, you could qualify for a 0% capital gains tax rate if your income is below a certain threshold. Translation: you might be selling stock and paying nothing in taxes, which is basically financial magic.
But once the TCJA provisions expire, the income thresholds for that 0% rate will likely shrink—or disappear entirely. According to Kiplinger, this could mean retirees who once paid zero on capital gains now owe 10% or 15% on the same investment income. That includes selling shares to cover living expenses or funding a long-awaited cruise. It’s a sneaky tax hike that disproportionately affects retirees living modestly on investment income. If you’ve been harvesting gains tax-free, you might want to accelerate those sales while the window’s still open. After 2025, Uncle Sam may come for your Apple stock profits like it’s Black Friday. Consider talking to a financial advisor now to game out your capital gains strategy before the rules shift.
4. Higher Estate and Gift Tax Exemption
Got a legacy plan in place? You might want to double-check it. One of the quiet victories in the TCJA was a huge bump in the estate and gift tax exemption—currently over $13 million per person. For most retirees, that’s more than enough to pass on wealth without worrying about the IRS crashing your grandkids’ inheritance party.
But unless Congress acts, that exemption will drop back to about $6–7 million per person in 2026. Bloomberg points out that high-net-worth retirees are already scrambling to gift assets now while the exemption is high. If your estate is on the larger side (think property, business interests, or retirement accounts), you’ll need to do some strategic planning. Even if you don’t consider yourself “rich,” that threshold might be closer than you think—especially with home values and stock portfolios ballooning over the last decade. This change won’t affect everyone, but for those it does, the tax bill could be massive. The sooner you plan, the more you can preserve. Unless, of course, you want the IRS to be your favorite grandchild.
5. Qualified Business Income (QBI) Deduction
Yes, retirees can be entrepreneurs too—especially in the era of Etsy shops, consulting gigs, and tax-prep side hustles. The Qualified Business Income (QBI) deduction currently allows self-employed retirees and small business owners to deduct up to 20% of their income from certain pass-through businesses. It’s been a game-changer for folks turning hobbies into extra retirement income.
But here’s the bad news: this deduction is on the chopping block for 2026. Forbes reports that without congressional action, the QBI deduction will vanish entirely, leaving retirees with higher taxable income and fewer ways to offset it. This means your charming handmade quilt business or part-time financial coaching gig could suddenly get a lot more expensive, tax-wise. Retirees who’ve embraced the freelance life will need to reassess their strategy—and possibly restructure their business. It’s also worth reviewing whether converting to an S-corp or LLC makes sense under the coming rules. If you’ve enjoyed some nice deductions on your second act, start prepping now. Because Uncle Sam might be your new silent partner in 2026.
6. Personal Exemptions (Still Gone, and Not Coming Back)
Before 2018, retirees got to claim personal exemptions for themselves and their spouses—kind of like a tax discount just for existing. But the TCJA swapped that out in favor of a bigger standard deduction. Cute while it lasted, but here’s the catch: when the standard deduction shrinks back in 2026, the personal exemptions don’t automatically come back. So you could end up with a smaller deduction and no exemption, which feels like a double slap from the IRS.
This sneaky change hits retirees who live simply but depend on those small tax breaks to stretch every dollar. It also complicates things for anyone supporting an adult child or grandchild, because those personal exemptions used to be helpful. Think of it like showing up at the same restaurant, ordering your usual, and finding out half the menu’s missing—but the prices went up. If you haven’t planned for this deduction drought, you might be surprised when your taxes go up without your income doing the same. Budget accordingly, especially if you’re on a razor-thin margin. Your best move now? Take full advantage of what is available while you can, and don’t assume old tax perks will make a triumphant return.
7. Medical Expense Deduction Thresholds
As we age, the medical bills pile up—dental work, prescriptions, hearing aids, you name it. Right now, you can deduct qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI), which is actually a pretty decent break. But when the TCJA sunsets, that threshold could jump back up to 10%, making it much harder to qualify. Suddenly, your out-of-pocket expenses need to be even higher before you get any tax relief.
This disproportionately affects retirees, who tend to spend a lot more on healthcare than younger filers. If you’ve had surgeries, long-term care, or mobility-related expenses, that 7.5% rule has probably been a life-saver. But after 2025, many of those same expenses might not make the deduction cut anymore. That means fewer tax benefits for just staying alive and staying healthy—which feels kind of rude, honestly. To prep, start tracking every eligible medical cost now so you’re not scrambling during tax time. And consider bunching your medical expenses into one year to break through the threshold before it changes. Because if you’re going to drop $10,000 on new knees, you might as well get some tax love in return.
8. SALT Deduction Cap Repeal (Spoiler: It’s Not Guaranteed)
Currently, state and local tax (SALT) deductions are capped at $10,000, which has been a sore spot for retirees in high-tax states like California, New York, and New Jersey. The TCJA put that cap in place, and it’s set to expire in 2026—technically. But here’s the twist: there’s no guarantee Congress will lift the cap. If anything, there’s chatter it might stick around or come back in some different, equally annoying form.
For retirees who still own a home and pay hefty property taxes, the SALT deduction limit has been painful. Many expected relief once the cap expired—but politics, as always, makes that murky. If the cap stays, you’re missing out on thousands in deductions just because you chose to retire near the grandkids in Westchester. Even if it does expire, there’s no telling how long it’ll last. For now, consider this one a Schrödinger’s tax break: both dead and alive until 2026. Don’t base your whole retirement plan on the idea that the cap will vanish. Plan conservatively, and anything better will feel like a bonus.
9. Child Tax Credit for Grandkids You’re Raising
Some retirees are full-time caregivers for their grandkids—a tough gig made slightly easier by the expanded child tax credit. The TCJA increased the credit and broadened eligibility, making it easier for grandparents to get financial help if they’re stepping in as mom and dad. But those changes are set to end after 2025, and the credit could shrink dramatically while the income phase-outs tighten up.
So if you’re raising grandkids on a fixed income, this could be a double whammy. Not only do you have added expenses (hello, soccer cleats and orthodontics), but you may lose the one credit that made it a little more manageable. The smaller credit means less help from Uncle Sam—and more budget stress for you. For those who just started receiving the credit, the change will feel especially abrupt. And no, it doesn’t matter how adorable the kid is—Congress doesn’t factor in cuteness. Keep an eye on this if you’re planning long-term support. If you’re in this situation, it’s worth speaking to a tax pro about what this phase-out means for your finances.
10. Reduced Alternative Minimum Tax (AMT) Risk
The TCJA quietly raised the income threshold for the Alternative Minimum Tax (AMT), which used to be a giant migraine for retirees with large one-time windfalls—like selling a house or cashing out a big retirement account. The new threshold made it so most people didn’t even have to think about the AMT anymore. But when the law expires in 2026, those thresholds fall back down, and suddenly, more people could get dragged back into AMT land.
The worst part? Most retirees don’t even know what AMT is until it bites them. It’s like a secret second tax system that basically ignores your deductions and recalculates everything. If you’ve been enjoying the AMT-free life thanks to today’s higher exemption levels, you could be in for a nasty surprise. This is especially true if you’re planning to sell real estate, pass on business assets, or tap large capital gains all in one year. After 2026, those big moves could come with a bigger tax hit than you bargained for. If you’re sitting on a windfall, it might make sense to act before the threshold drops. Because once AMT shows up, it’s hard to make it leave.
11. Backdoor Roth Conversions May Get Complicated
Backdoor Roth conversions are a clever way for higher-income retirees to move funds into a tax-free Roth IRA without technically violating income limits. Under the current tax law, the IRS has taken a hands-off approach to this maneuver—basically letting folks get away with it as long as they follow the paper trail. But post-2025? That could change fast. Lawmakers have already grumbled about closing this “loophole,” and if they get their way, backdoor conversions could be history.
That would be a bummer for retirees using this strategy to minimize required minimum distributions (RMDs) and reduce taxable income in future years. It’s one of the last great tax hacks, and it could be on the chopping block. If you’ve been meaning to convert, now might be the time to do it. The paperwork’s a little annoying, but the payoff is long-term, tax-free growth—aka retirement gold. Once this door slams shut, there may not be another one opening soon. And if you wait too long, you’ll be stuck watching others toast their tax-free gains while you’re still writing checks to the IRS.
12. Charitable Deduction Rules May Tighten
If you’ve been making donations from your IRA using a Qualified Charitable Distribution (QCD), congrats—you’re playing the tax game like a pro. But after 2025, some of the flexibility around charitable deductions could change. Right now, even if you don’t itemize, you can still get favorable treatment for QCDs or cash donations up to certain limits. But if the standard deduction shrinks and itemizing becomes necessary again, you might have to work harder to make those gifts count on your tax return.
This could discourage casual givers and make it harder for retirees to support their favorite causes while staying tax-savvy. And honestly, isn’t that kind of backwards? We should be rewarding generosity, not burying it in Schedule A. If you’re planning large gifts—especially ones tied to Required Minimum Distributions—it may be smart to get them in while the rules are still friendly. Otherwise, giving may still feel good…but it won’t be as financially efficient. So if you’ve got a favorite rescue shelter or scholarship fund on your list, 2025 might be the year to write that check.
13. Mortgage Interest Deduction Limits Could Shift Again
Even though many retirees have already paid off their homes (high five!), those who haven’t have had to deal with reduced mortgage interest deductions under the TCJA. The cap currently sits at $750,000 for new loans. When the law expires, it could bounce back up to $1 million—but that doesn’t automatically mean good news for retirees. Because to benefit from that deduction, you’d have to itemize, and as we’ve already covered, that might be harder to justify after 2025.
So unless you have a giant mortgage and a pile of deductions, this break might be a mirage. If anything, the shifting rules just add another layer of confusion to a housing market already high on drama. And for retirees considering downsizing, refinancing, or tapping equity, these deduction changes could nudge decisions in one direction or another. Bottom line: the mortgage interest deduction might sound fancy, but it’s not as helpful as it once was. And post-2025? It may be even less relevant—especially if it only applies to the ultra-mortgaged. Don’t count on it as a big tax-saver unless you’ve crunched the numbers with a pro.
14. Sunset of Expanded 529-to-Roth IRA Rollovers
This one’s a little niche but super useful if you’ve got unused 529 college savings funds sitting around. A recent update allows you to roll over some of that money into a Roth IRA without tax or penalty—huge win if Junior bailed on college and now you’re left holding the bag. But like many “bonus” provisions, this one isn’t permanent. It’s currently tied to broader tax rules that may vanish post-2025.
That means this nifty trick could be gone before most people even realize it exists. For retirees who funded college accounts for grandkids or children who didn’t end up needing all the money, this is a way to shift funds into a retirement tool. But the clock is ticking. If you want to take advantage, start the process now—because after the sunset, you’ll be back to facing penalties or scrambling for alternative uses. It’s one of those blink-and-you-miss-it perks that’s actually helpful. So if you’re sitting on a leftover 529, it might be time to give it a retirement makeover.
This article is for informational purposes only and should not be construed as financial advice. Consult a financial professional before making investment or other financial decisions. The author and publisher make no warranties of any kind.
