Wednesday, November 19
Smart Money Moves
The Quiet Tax Change in 2025 That Could Save You Thousands
Two weeks ago, I was helping a friend review her end-of-year expenses when we stumbled on something unexpected, a little-known tax rule change for 2025 that quietly shifts how certain retirement distributions and deductions are calculated.
At first, I thought it was the usual IRS shuffle. But after digging deeper, it hit me:
This could save everyday retirees hundreds… or even thousands… depending on how they plan ahead this year.
If you’ve ever wondered whether tax season was stacked against us, this might feel like a small win worth grabbing. So let me break it down in plain English, what changed, who benefits, and the one step I’m taking this week because of it. 👇
🌟 Today’s Highlights
The new IRS adjustment most retirees haven’t heard about
Who stands to save big
Simple ways to take advantage before next April
📊 Stat of the Day
IRS estimates nearly 48 million Americans will see some form of tax-band or threshold change in 2025 due to inflation adjustments and retirement-related updates.
(Source: IRS Inflation Adjustments Overview)
💡 Today’s Insight: The Overlooked Rule That Matters
1️⃣ Bigger Standard Deduction for Seniors
Few people realize that the senior deduction is getting another bump next year due to inflation.
That means:
✔ Less taxable income
✔ Lower overall liability
✔ More room for strategic withdrawals
(See details: IRS Standard Deduction Updates)
Wall Street Isn’t Warning You, But This Chart Might
Vanguard just projected public markets may return only 5% annually over the next decade. In a 2024 report, Goldman Sachs forecasted the S&P 500 may return just 3% annually for the same time frame—stats that put current valuations in the 7th percentile of history.
Translation? The gains we’ve seen over the past few years might not continue for quite a while.
Meanwhile, another asset class—almost entirely uncorrelated to the S&P 500 historically—has overall outpaced it for decades (1995-2024), according to Masterworks data.
Masterworks lets everyday investors invest in shares of multimillion-dollar artworks by legends like Banksy, Basquiat, and Picasso.
And they’re not just buying. They’re exiting—with net annualized returns like 17.6%, 17.8%, and 21.5% among their 23 sales.*
Wall Street won’t talk about this. But the wealthy already are. Shares in new offerings can sell quickly but…
*Past performance is not indicative of future returns. Important Reg A disclosures: masterworks.com/cd.
2️⃣ Higher Contribution + Catch-Up Limits
Even if you’re already retired, many still fund IRAs or use spousal contributions.
In 2025, the IRS is raising several limits again, quietly.
(See breakdown: Fidelity 2025 Contribution Insights)
This helps anyone doing:
✔ Part-time work
✔ Rental income
✔ Consulting
✔ Side earnings
It means you can shelter more money from taxes than last year, with zero lifestyle change.
3️⃣ The RMD “window of advantage”
This is the part that surprised me.
For those nearing Required Minimum Distributions, the 2025 inflation shifting means the IRS’s life-expectancy tables + distribution brackets give a small but meaningful advantage in the first year of withdrawals.
In simple terms:
You may owe less than you would have under 2023–2024 rules.
(See context: Investor.gov RMD Guide)
This is one of those quiet updates no one talks about, but it matters.
4️⃣ A Strategy I’m Using This Week
I’m adjusting my planned withdrawals so that more comes out this year, before the new brackets take full effect, giving me more control next spring.
To check my math, I used Vanguard’s tax-adjusted withdrawal calculator (it’s free):
Vanguard Retirement Tax Calculator
You might be surprised how much difference the timing makes.
🔑 What You Can Do This Week
Review your estimated 2025 taxes using any major provider’s simulator.
Check whether increased deductions make Roth conversions more attractive for you.
If you still contribute to retirement accounts, adjust your contributions for the new limits.
Talk to a tax pro about the RMD adjustment window, they’re aware, but they rarely mention it unless you ask.
📬 Question for You
Have you already noticed any changes in your retirement taxes this year?
I’d love to know - your experiences help others more than you’d imagine.
Warmly,
Sarah