Core Insights - The article discusses the misconception that taxes will decrease in retirement, highlighting various factors that can lead to higher tax rates during retirement years compared to earning years [11] Group 1: Tax Implications of Retirement Income - Inherited IRAs must be fully distributed within 10 years, potentially increasing a beneficiary's taxable income significantly [1] - The RMD age will increase to 75 in 2033, allowing for more time for investments to grow, which may result in larger distributions and higher tax brackets [2] - Required Minimum Distributions (RMDs) starting at age 73 can lead to increased tax liabilities due to larger annual distributions from pre-tax accounts [2][3] Group 2: Specific Tax Scenarios - The "widow(er) tax" affects surviving spouses, who may face higher tax rates due to being taxed as single filers instead of married couples [4] - Large one-time expenses can lead to higher taxes in retirement if significant pre-tax distributions are taken to cover these costs [5] - Changes in tax codes, such as the expiration of the Tax Cuts and Jobs Act in 2026, are expected to increase tax rates, impacting retirees [6][7] Group 3: Legacy and Tax Planning - Inherited pre-tax money can lead to increased taxes for beneficiaries, especially if received during their peak earning years [9] - Tax planning strategies should consider the timing of income and potential future tax rate changes to avoid unexpected tax burdens [10] - Proactive tax planning is essential to manage retirement tax liabilities effectively, as the assumption that taxes will decrease can lead to inaction [11]

Core Points - The One Big Beautiful Bill Act (OBBBA) increased the state and local tax (SALT) cap deduction to $40,000 from $10,000, benefiting homeowners in high property tax states [1] - The Tax Cuts and Jobs Act (TCJA) of 2017 made many itemized deductions permanent, but there are still opportunities for middle-class Americans to reduce tax bills starting with their 2025 returns [3] Mortgage Interest - Homeowners can deduct mortgage interest paid on up to $750,000 of mortgage debt starting in 2025, as per IRS guidelines [4] - Taxpayers should obtain their 1098 form from lending institutions to report mortgage interest [4][5] Medical Expenses - Medical expenses can be deducted if combined with SALT payments exceed the standard deduction, but only expenses exceeding 7.5% of adjusted gross income (AGI) are eligible [6] - Qualified medical expenses include co-pays, medical bills, insurance premiums, and transportation costs to medical appointments [7]

One of the biggest decisions you have to make at tax time is whether to take the standard deduction or itemize. More than 90% of taxpayers opt for the standard deduction, according to IRS data. But itemizing might make sense in a few situations, like if you paid a lot in mortgage interest or had high unreimbursed medical expenses in 2025. Let’s look closer at the difference between the standard deduction versus itemized returns. We’ll also cover some important changes under the One Big Beautiful Bill Act ...