If you will be age 65 or older on December 31, 2025, you have a new opportunity for tax savings. The One Big Beautiful Bill Act (OBBBA) created a new bonus tax deduction available for seniors beginning this year (2025). You can claim this deduction whether or not you itemize. This deduction is temporary at this time (only applies to the 2025 through 2028 tax returns).
How Much Can You Deduct?
If you qualify, you may be eligible for a bonus deduction of up to $6,000 per person. For married couples filing jointly—where both spouses are age 65 or older—the total potential deduction is $12,000.
Important. If married, you must file a joint return to benefit from this deduction even when only one spouse qualifies; filing separately disqualifies you.
This bonus deduction is in addition to
· the regular standard deduction ($15,750 for singles, and $31,500 for married filing jointly), and
· the $1,600 existing age-based additional deduction ($3,200 for married couples both age 65 or older, and filing jointly).
Income Limits Apply
The deduction phases out at higher income levels. For married filing jointly, the phaseout is per taxpayer, meaning the phaseout amount is effectively $.12 per every dollar over the $150,000 threshold.
· For singles: phaseout begins at $75,000 modified adjusted gross income (MAGI), and it is fully phased out at $175,000. The phaseout amount is $.06 for every dollar over the beginning $75,000 threshold.
· For joint filers: phaseout begins at $150,000; it is fully phased out at $250,000. For married filing jointly, the phaseout is per taxpayer, meaning if both are 65 or older, the phaseout amount is effectively $.12 per every dollar over the $150,000 threshold.
MAGI includes AGI plus certain rarely seen tax-free foreign income.
Planning Opportunity
To maximize this deduction, consider strategies to keep MAGI below (or not far above) the phaseout thresholds:
· Spread capital gains over multiple years
· Break up Roth IRA conversions over time
· Make additional business deductions or retirement plan contributions