Seniors May Soon Get A Larger Income Tax Deduction

A new bill working its way through Congress could give taxpayers aged 65 and older a bigger standard deduction on their federal income taxes.

This proposed benefit, dubbed the “senior bonus,” is part of the One Big Beautiful Bill Act, which was passed by the House in late May. Its goal is to help ease financial strain on retirees—particularly those with moderate incomes.

What the Proposal Includes

The legislation would raise the standard deduction by $4,000 per senior starting with the 2025 tax year (for tax returns filed by April 2026). The increased deduction would remain in effect through 2028.

Because most retirees already claim the standard deduction rather than itemizing, this change could directly reduce taxable income for millions of seniors. Those who do itemize deductions wouldn’t be left out—the proposal includes a similar tax break for them as well.

Who Qualifies?

To receive the full amount of the increased deduction, you must:

• Be 65 or older
• Provide a Social Security number on your return
• Have an adjusted gross income (AGI) of $75,000 or less (single filers) or $150,000 or less (married couples filing jointly)

If your income exceeds these thresholds, the extra deduction would gradually phase out—and you may not qualify for it at all.

How This Works with Current Deductions

This “senior bonus” would build on the existing enhanced standard deduction available to older taxpayers.

For the 2025 tax year:

• The base standard deduction is $15,000 for single filers under 65 and $30,000 for married couples under 65 filing jointly.
• Seniors currently get an extra deduction of $2,000 (single) or $1,600 (per spouse for married couples).

The proposed law would add $4,000 more per senior, increasing their extra deduction to:

• $6,000 total for single seniors ($2,000 + $4,000)
• $5,600 per senior spouse for married couples ($1,600 + $4,000)

Example: Married Retirees

Consider a married couple, both over 65, earning under $150,000 and in the 22% tax bracket:

• Current law gives them a standard deduction of $33,200 ($30,000 + $1,600 + $1,600)
• Proposed law would raise this to $41,200 ($30,000 + $5,600 + $5,600)

That $8,000 increase would reduce their taxable income by the same amount—potentially cutting their tax bill by $1,760 (22% of $8,000).

What’s Next?

The One Big Beautiful Bill Act is still making its way through the legislative process and could see changes before it becomes law. That includes possible adjustments to the senior tax deduction provision.

Source: Money Talks News