Two Households, One New Tax Law: How Julie and Drew Benefit in 2025
A lot of tax updates get lost in the headlines—until they start showing up on your return. The recently passed tax legislation, nicknamed the “Big Beautiful Bill,” made two critical changes that are especially relevant to our clients in the next phase of their financial lives:
Let’s look at how this affects two typical situations—Julie, a high-income earner in New Jersey, and Drew, a recently retired client in California—by comparing their projected taxes under 2024 and 2025 rules.
Julie (Married, Age 52): High-Tax State, High Impact
2024 Tax Year:
2025 Tax Year:
Julie’s savings from the expanded SALT deduction isn’t just a windfall—it’s a planning opportunity. At her income level, she’s already maxing out her retirement accounts and saving aggressively.
This extra cash can be used strategically, not just saved. We’re modeling ways to redirect those dollars into longer-term tax and estate strategies like executing partial Roth conversions, adding to her taxable investment account, increasing charitable giving, or funding 529s for future generations.
In Julie’s case, the tax code is finally catching up to the real cost of living in a high-tax state. The expanded deduction not only reduces this year’s bill – it creates space to do more with the wealth she’s already earned and over the next 10 years, these choices could save her exponentially more in lifetime taxes.
Drew (Married, Age 67): Retired, Not Done Planning
2024 Tax Year:
2025 Tax Year:
For Drew, who holds millions in tax-deferred accounts, the increased standard deduction ($46,700 vs. $32,200) creates an unexpected bonus: more breathing room for Roth conversions. He is in the ideal “gap years” between retirement and required distributions (which start at age 73). Every dollar he converts from IRA to Roth now is taxed at today’s lower rates, reduces future taxable RMDs, lowers the risk of Medicare IRMAA surcharges and builds a tax-free inheritance for his heirs.
With the higher standard deduction, Drew can now convert slightly more each year without pushing into a higher tax bracket. It’s not a game-changing amount but in long-term planning, every marginal dollar counts.
Why This Matters
For clients like Julie, who live in high-tax states and fall just under the SALT deduction phaseout threshold, this law creates meaningful new planning opportunities. She’ll get more value for her $40,000+ in state and local tax payments, which can unlock thousands in federal tax savings.
For clients like Drew, who are retired and not itemizing, the enhanced standard deduction—especially the senior bonus—quietly reduces their taxable income every year. It’s not flashy, but it adds up.
The Bigger Picture: RITE Alignment
These aren’t just tax quirks. They’re opportunities to integrate planning across the RITE framework:
Next Phase, New Rules
Whether you’re a Julie or a Drew—or somewhere in between—this is a moment to revisit your plan. Don’t assume the same tax strategy from 2024 will work in 2025. These changes are real. The dollars add up!
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.
These examples are for illustrative purposes only and do not represent actual client experiences. Individual results will vary based on personal financial circumstances and tax laws.
Stu Caplan is Senior Wealth Strategist at Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions.
The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of industry experience, Stu and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations.
Stu received his MBA from The Robert H. Smith School of Business at the University of Maryland and his bachelor’s degree from the Eller College of Management at the University of Arizona. Stu resides in Bucks County, PA with his wife and two sons. He’s an avid golfer and is thrilled that his boys have embraced the game. He also volunteers his time as a board member of the PKD Foundation and Abrams Hebrew Academy.
To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453.
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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.
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