New tax deduction could put more money back in seniors’ pockets this year

Tax season is fast approaching and several tax policy changes impacting older Americans will be in effect when seniors go to file their returns.

The enactment of Republicans' One Big Beautiful Bill Act (OBBBA) last year revised a number of tax policies, including some provisions that the IRS is implementing for the 2025 tax year, for which Americans will begin filing their tax returns beginning on Jan. 26.

Among the new tax provisions that will impact seniors is a bonus deduction for seniors age 65 and older that can be claimed in addition to the standard deduction. 

"In addition to the existing standard deduction, filers who are age 65 and older can qualify for a new senior bonus deduction of up to $6,000 for individuals and $12,000 for married couples," said Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer. "This deduction is targeted to lower- and middle-income retirees and will help tens of millions keep more of their income."

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"With ongoing anxiety around cost of living and kitchen table budget issues, this kind of relief can make a critical difference for folks trying to make ends meet," LeaMond added.

The extra deduction for seniors phases out for taxpayers with a modified adjusted gross income (MAGI) of over $75,000 for single filers and $150,000 for joint filers.

For seniors whose incomes are above those thresholds, the tax break phases out gradually and reduces the deduction by 6 cents for every dollar over that amount.

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AARP offered an example for a single 70-year-old with a MAGI of $80,000 – which is $5,000 above the $75,000 phaseout threshold – who would see their deduction reduced by $300 to a total of $5,700.

The new, extra deduction for seniors phases out entirely for taxpayers whose MAGI is $175,000 or more as an individual or $250,000 or more for joint filers.

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Senior citizens can claim the new, extra deduction regardless of whether they itemize their tax return or claim the standard deduction.

While the One Big Beautiful Bill Act's extra deduction for seniors takes effect this year, it isn't a permanent provision of the tax code and, under current law, is scheduled to expire after the 2028 tax year.

Congress could take action to extend the policy beyond that year, though it's unclear at this time if lawmakers intend to do so. 

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As with some of the other new tax provisions in the OBBBA, lawmakers made the extra deduction for seniors temporary to help the bill comply with Congress' reconciliation rules that constrain how much the legislation can increase budget deficits. 

Reconciliation allows bills to move through the Senate without being subject to the 60-vote filibuster threshold, with passage requiring only a simple majority.