Luke Delorme Urges Mid-Year Money Checkup as 401(k) Limit Rises to $24,500

Q: The OBBBA tax act created new deductions. Which overlooked change could save your family the most money before year-end?

For many working households, the most overlooked OBBBA change with the biggest year-end payoff is the new deduction for qualified overtime pay. It can shelter up to $12,500 for single filers and $25,000 for married couples filing jointly, which can produce larger tax savings than many smaller new breaks if someone in the family regularly works overtime. The catch is that “no tax on overtime” is not a full exemption. It is a deduction against federal taxable income, and generally only the overtime premium portion qualifies, not every dollar earned during overtime hours. That makes it easy to misunderstand and easy to miss. Employers may also continue withholding normally, so the benefit may not show up until filing unless workers adjust withholding after reviewing expected overtime income. Families should check pay stubs now, track overtime separately, and confirm how employers are reporting it. For 2025 and 2026, transitional reporting can make the eligible amount less obvious on W-2s or payroll records. Good records before year-end matter. For older households, the senior bonus deduction may be even more valuable if both spouses are 65 or older. OBBBA added a temporary extra deduction of $6,000 per qualifying senior, or $12,000 for a qualifying couple, on top of the standard deduction and existing age-based add-ons. But for the broadest group of working families, overtime is the overlooked change most likely to save the most money before year-end.

1 articles · Updated · Center for Retirement Research · Jul 23

Delorme says mid-year is a practical point to revisit financial goals, starting with 401(k) savings before the second half of the year makes catch-up contributions harder.
The 401(k) contribution cap is $24,500 this year, and he also urges people to review beneficiaries on IRAs, insurance and bank accounts after life changes such as divorce or a death.
Tax planning is another focus: filers 65 and older can claim a new $6,000 senior bonus deduction — or $12,000 for qualifying married couples — and some tipped or overtime workers may also need withholding changes.
For retirees, he recommends handling qualified charitable distributions early; the IRA QCD limit rose to $111,000, reducing the year-end rush that can cause mistakes or missed deadlines.
He also flags portfolio rebalancing after years of stock outperformance and broader cleanup steps such as consolidating old 401(k)s, closing unused accounts and improving record-keeping.