Senior Tax Benefits: Moving Beyond Exemptions
For many years, the US tax code included a personal exemption. This allowed taxpayers to subtract a set amount for themselves and their dependents. Seniors received an additional exemption to account for higher costs. However, the Tax Cuts and Jobs Act of 2017 suspended personal exemptions from 2018 through 2025.
The recent passage of the One Big Beautiful Bill (OBBB) introduced significant tax benefits for taxpayers aged 65 and older for tax years 2025 through 2028. Personal exemptions are replaced by increased standard deductions and a new temporary senior bonus deduction.
The Senior Tax Benefit Landscape for 2025–2028
Taxpayers 65 and older by year-end with a work-authorized Social Security number can benefit. Both spouses in a married couple filing jointly can qualify if they meet the age criteria.
- Existing Additional Standard Deduction: This long-standing benefit adds to your standard deduction. For 2025, a single filer aged 65+ gets an extra $2,000, and a married couple (both 65+) gets $3,200. This is only available if you take the standard deduction.
- New Temporary Senior Bonus Deduction: The OBBB offers a new, separate bonus deduction for taxpayers aged 65 and over. This is available whether you itemize or take the standard deduction. For 2025–2028, it provides an additional $6,000 for qualifying individuals, or $12,000 for married couples if both qualify. This deduction has income phase-out thresholds: for single filers, it phases out between a Modified Adjusted Gross Income (MAGI) of $75,000 and $175,000. For married couples filing jointly, it phases out between $150,000 MAGI and $250,000.
How the New Rules Work in Practice
Let's look at 2025 scenarios to see how these benefits combine.
Scenario: Single Filer, Age 65+
A single taxpayer, age 65 or older, below the MAGI phase-out threshold could benefit from:
- Standard Deduction: $15,750
- Additional Standard Deduction for 65+: $2,000
- New Senior Bonus Deduction: $6,000
- Total Possible Deduction: $23,750
Scenario: Married Filing Jointly, Both 65+
A couple, both 65 or older, below the MAGI phase-out threshold, could receive:
- Standard Deduction: $31,500
- Additional Standard Deduction for 65+: $3,200
- New Senior Bonus Deduction: $12,000 ($6,000 per person)
- Total Possible Deduction: $46,700
What if you itemize?
The new temporary senior bonus deduction is available even if you itemize. While the existing additional standard deduction ($2,000/$3,200) is only for those taking the standard deduction, the new $6,000/$12,000 bonus can be claimed by itemizers. This provides significant relief for seniors with high medical expenses or charitable donations who itemize.
Comparison of Tax Benefits for Seniors in 2025
This table shows tax benefits for seniors in 2025, depending on filing status and itemization choice (assuming MAGI below phase-out limits).
| Filing Status | Standard Deduction | Additional Age 65+ Deduction (Standard) | New Senior Bonus Deduction (OBBB) | Total Potential Deduction |
|---|---|---|---|---|
| Single, 65+ (Standard) | $15,750 | $2,000 | $6,000 | $23,750 |
| Single, 65+ (Itemize) | N/A | N/A | $6,000 | $6,000 + Itemized Deductions |
| Married, 65+ (Standard) | $31,500 | $3,200 | $12,000 | $46,700 |
| Married, 65+ (Itemize) | N/A | N/A | $12,000 | $12,000 + Itemized Deductions |
Other Important Considerations
Seniors should also be aware of other tax rules.
- Social Security Taxation: The new OBBB bill does not eliminate federal income tax on Social Security benefits. A portion may still be taxable depending on your income.
- Retirement Account Contributions: For those with earned income, tax-deductible retirement contributions can reduce taxable income. Those 50+ can make catch-up contributions.
- Medical Expense Deductions: Itemizers can deduct unreimbursed medical expenses exceeding 7.5% of their Adjusted Gross Income.
- Charitable Donations: Once you are 70 ½, you can make a Qualified Charitable Distribution (QCD) from your IRA directly to a charity. This is excluded from taxable income and counts toward your Required Minimum Distribution (RMD).
Navigating Your Tax Future
While you no longer get an extra exemption for being over 65, new legislation provides substantial tax benefits through extra deductions. Understanding how the existing additional standard deduction and the new temporary senior bonus deduction work together is key to planning. These benefits offer welcome relief and can significantly impact your retirement budget.
For more details, consult an authoritative resource like the IRS website.
Conclusion
In summary, the personal exemption for those 65 and older is gone, but current tax laws offer deductions that can significantly lower your tax bill. By using both the existing additional standard deduction and the new OBBB senior bonus, taxpayers can shield more income from taxation, enhancing financial security in retirement. Being over 65 has a direct and beneficial impact on your tax return, even without the old personal exemption.
