Three Possible Tax Impacts for Retirees Under Trump
How might a second Trump term affect your tax bill in retirement — or the inheritance tax bill for your heirs? This pro has three predictions.


Editor’s note: This article was written in December 2024, and things are rapidly evolving, so please be aware that information could change at any time.
After the election, I was hopeful that we could start to focus on other things. Unfortunately, that is not the case. Many questions have come in about what a second Donald Trump term means for investments, the economy and taxes. Taxes are the only one I am willing to take a guess at. Based on what his campaign put out and what he has said into a microphone, here are three possible impacts on retirees.
1. An extension of the Tax Cuts and Jobs Act
This looks to be as much of a sure thing as is possible in Washington, D.C. With control of the White House, the Senate and the House by the GOP, it looks like the personal side of the Tax Cuts and Jobs Act (TCJA) could be made permanent.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
A brief history lesson: When Trump’s tax code was initially passed, the only way to get it through was via reconciliation, making the corporate side permanent and the personal side temporary. The personal tax cuts are due to expire on December 31, 2025.
The TCJA was a complete overhaul, but at a very high level, it did a few things:
- Cut most of the marginal rates by a couple of percentage points
- Doubled the standard deduction
- Significantly limited itemized deductions

At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.
What this means for you depends on where you live and how much income you have.
2. Estate exemption remains high
This goes along with number one but deserves its own mention. In the early part of my career, the estate exemption floated between $1 million and $5 million. This essentially is the amount you can pass to your beneficiaries before your estate owes estate taxes. For clients over that limit, a lot of resources were devoted to moving assets out of their estate to get them below that limit. As part of the TCJA, that estate exemption was doubled and indexed for inflation. Today, the exemption is $13.61 million per person, and for 2025, it’s $13.99 million. There are far fewer clients above those thresholds.
Many advisers, accountants and estate attorneys who play in this space spent an awful lot of time creating very technical plans based on the assumption that the exemption would be cut in half with the expiration of the current code. The risk in getting ahead of something like that is the same as writing an article like this: It may be a gigantic waste of time. However, it looks like the Republicans may have enough power to keep the estate exemption climbing.
3. Welcome back, SALT?
I remember seeing lines of people at City Hall hoping to pay local taxes in 2017 before that amount was capped at $10,000 per year. People who live on the coasts and have high income and high property values, and thus high state and local tax (SALT) bills, do not like the cap.
For many of our retired clients, it meant going from itemizing down to the new standard deduction. The domino effect of this was that their total tax bill may have actually gone up under the new “cuts.” It also changed the advice we give on how and how much to give to charity.
I think most of our clients will welcome back a higher cap or no cap on SALT. How we pay for it as a country is more difficult to figure out. The Tax Foundation has estimated that the extension of the TCJA, plus adding back in SALT, would add $4.4 trillion to our deficit over the next 10 years. Part of the balance for the initial cuts was the increased revenue from adding the SALT cap. Having your cake and eating it, too, would work only if we could print money. Wait a minute …
What about Social Security?
You may have noticed that I did not mention taxes disappearing on Social Security. For a program with serious funding issues, I cannot envision a way this comes to fruition. Hopefully, Elon Musk is as good at government efficiency as he is at making money. If we could do this without a huge jump in the deficit or an even earlier exhaustion of the Social Security Trust Funds, I would be all for it.
In the days following the election, I received a number of media inquiries asking how we would change our tax advice based on Trump’s victory. The reality is that what is happening in your life has much more of an impact on your taxes than a fiscal change of a few percentage points. We project our clients’ tax rates out from today until their death. Higher rates in the future mean we do one thing. Lower rates in the future mean we usually use opposite strategies. You can try a free version of the planning software we use.
Related Content
- Six Ways Trump Could Change Your Retirement
- Tax Changes are on Trump's 2025 To-Do List
- Is the EV Tax Credit Going Away? What You Need to Know
- Three Reasons Why Your Adviser Won't Talk Taxes
- Five December 31 Tax Deadlines for Retirees
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification. I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.
-
Social Security Will Continue Sending Paper Checks Sparingly, Reversing Course
The Social Security Administration has backed off from plans to eliminate paper checks. However, it will only send checks in the mail as a matter of last resort.
-
Ask the Editor — Tax Questions on Four New Tax Deductions
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on four new tax deductions in the "One Big Beautiful Bill."
-
Social Security Administration Will Continue Sending Paper Checks, Reversing Course
The Social Security Administration has backed off from plans to eliminate paper checks. However, it will only send checks in the mail as a matter of last resort.
-
The Rule of Retirement Inversion
The rule of retirement inversion says that to have a great retirement, you must ask yourself what would ruin a great retirement — and then plan to avoid it.
-
The Five Best Side Hustles for Retirees
More older people are working in retirement to boost income and stave off boredom. These gigs and hustles make the most sense for the golden years crowd.
-
Sibling Bonds May Wax and Wane: Here's How To Safeguard Them
Sibling Bonds May Wax and Wane: Here's How To Safeguard Them
-
How Divorced Retirees Can Maximize Their Social Security Benefits: A Case Study
Susan discovered several years after she filed for Social Security that she is eligible to receive benefits based on her ex-spouse's earnings record. This case study explains how her new benefits are calculated and what her steps are to claim some of the money she missed.
-
From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every Age
From toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
-
I'm an Investment Pro: Here's How Alternatives Could Inject Stability and Growth Into Your Portfolio
Alternative investments can often avoid the impact of volatility, counterbalancing the ups and downs of stocks and bonds during times of market stress.
-
Retirement in the Age of Cyber Scams: How To Protect Your Next Chapter
Retirement is meant to be a time of relaxation and living life on your terms. But for many retirees, this dream is under threat from a growing epidemic — cyber scams.