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New Tax Laws in 2025

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What retirees need to know to save money.


Navigating taxes in retirement can be complex, especially with recent changes to tax laws. Retirees must understand these updates to manage their finances effectively and minimize tax liabilities.



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One significant change is the increase in the standard deduction. For 2025, the standard deduction has nearly doubled to $13,850 for individuals and $27,700 for married couples filing jointly[1]. This increase simplifies tax filing for many retirees, as fewer need to itemize deductions. However, eliminating personal exemptions offsets some of this benefit, particularly for those with dependents[1].

 

Another important update is the cap on state and local tax (SALT) deductions. Retirees can only deduct up to $10,000 in combined state and local income, sales, and property taxes[1]. This change can significantly impact those living in high-tax states or owning multiple properties.

 

Required Minimum Distributions (RMDs) from retirement accounts have also seen adjustments. The age for starting RMDs has been raised to 73, giving retirees more flexibility in managing their retirement savings[2]. However, failing to take RMDs can result in substantial penalties, so staying informed about these requirements is essential.

Social Security benefits may also be subject to taxes. Depending on your combined income, up to 85% of your Social Security benefits could be taxable[2]. Planning for this potential tax liability is essential when budgeting for retirement.

 

Additionally, new tax credits and deductions are available for retirees. For example, the Saver's Credit provides a tax break for low- to moderate-income individuals contributing to retirement accounts[2]. Understanding and utilizing these credits can help reduce overall tax burdens.

 

At Affinity Advisory Network, we stay on top of the latest news and are here to help you navigate these changes. Our team of professionals is dedicated to providing personalized advice to ensure you make the most of your retirement benefits. For more information, visit our website at www.affinityadvisorynetwork.com or call us at (888) 720-0360.


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