Roth conversion tax traps under OBBBA can sneak up on even the smartest business owners. Lisa is 59, runs a successful dental practice, earns around $220K a year, and just did what her financial advisor called a “smart Roth conversion.”
She moved $100,000 from her traditional IRA into a Roth. She was excited—this meant tax-free withdrawals later and no RMDs down the line. (See IRS Roth IRA rules.)
But here’s what nobody told her:
That move bumped her total taxable income up to $320K.
And because of a little-known deduction called the senior deduction (which kicks in at age 65), she just lost $12,000 in future tax savings.
All because she unknowingly crossed an income threshold the IRS doesn’t advertise.
What should’ve been a $22,000 tax bill turned into $24,640.
The difference? A vanished deduction and no warning.
We see this exact scenario play out with business owners every year.
And now that the new One Big Beautiful Bill Act (OBBBA) just went into effect, there are even more traps like this:
For the broader 2025 landscape and timing issues, see OBBBA 2025 Tax Planning: Why You Can’t Wait Until December. For standard deduction changes baked in by OBBBA, see OBBBA Makes Standard Deduction Increases Permanent (and Bigger).
None of this means you shouldn’t do a Roth conversion. It just means you need to do it strategically. The key is to structure your conversion so you avoid the common Roth conversion tax traps under OBBBA while still getting the long-term tax-free benefits.
Key questions to ask:
✅ Bottom line:
The tax code gives you plenty of tools. But it won’t stop you from accidentally stepping on a landmine.
Let’s make sure your next Roth conversion doesn’t backfire like Lisa’s did.
Schedule a Free Tax Strategy Session
We’ll run the numbers, chart the income cliffs, and give you the clarity your CPA probably isn’t talking about. Book a session before you make your next move—so Roth conversion tax traps under OBBBA don’t cost you thousands.