A New Tax Break for Seniors: The OBBBA Senior Deduction
Beginning in 2025 and lasting through 2028, individuals age 65 and older can claim a new “senior deduction” of up to $6,000 under the One Big Beautiful Bill Act (OBBBA). For married couples filing jointly, that’s up to $12,000 in additional deductions — a welcome boost for retirees on fixed incomes.
However, this benefit phases out at higher income levels. If your modified adjusted gross income (MAGI) is above certain thresholds, you could lose part or all of the deduction. The good news? With some smart year-end planning, you can take steps to preserve your full benefit.
Who Qualifies for the Senior Deduction
You don’t need to be receiving Social Security to qualify. You simply must be age 65 or older by December 31 of the tax year.
- Single filers: Eligible for up to $6,000.
- Married couples filing jointly: Each spouse age 65+ can claim $6,000, for a combined total of $12,000.
- Married filing separately: Not eligible for the new senior deduction.
How the Senior Deduction Combines With the Standard Deduction
The OBBBA deduction stacks with the standard deduction and the additional senior standard deduction you may already qualify for.
Here’s what that looks like in 2025:
- Single filer age 65 or older:
- Basic standard deduction: $15,750
- Additional senior standard deduction: $2,000
- New senior deduction: $6,000
- Total potential deductions: $23,750
- Married filing jointly (both age 65+):
- Basic standard deduction: $31,500
- Additional senior deductions: $3,200 total ($1,600 × 2)
- New senior deductions: $12,000 total ($6,000 × 2)
- Total potential deductions: $46,700
Senior Deduction Phaseout Rules
The OBBBA senior deduction begins to phase out at higher income levels:
- Single filers: Phaseout begins at $75,000 MAGI and ends at $175,000.
- Joint filers: Phaseout begins at $150,000 MAGI and ends at $250,000.
The deduction is reduced by 6% of the excess MAGI over the threshold.
Example 1:
A single filer age 65 with a MAGI of $130,000 will see the deduction reduced by $3,300 66% × ($130,000 − $75,000)6. The remaining senior deduction: $2,700.
Example 2:
A married couple (both age 65+) with a MAGI of $220,000 will see each deduction reduced by $4,200 66% × ($220,000 − $150,000)6. Each spouse’s remaining deduction: $1,800, or $3,600 combined.
Year-End Tax Planning Tips to Preserve Your Deduction
If your income is close to the phaseout threshold, you can use these year-end strategies to reduce MAGI and maximize your deduction:
- Harvest capital losses to offset capital gains in your taxable accounts.
- Defer selling appreciated assets until next year to avoid triggering additional taxable gains.
- Max out pre-tax retirement contributions (401(k), 403(b), or traditional IRA) if you’re still working.
- Spread out Roth IRA conversions across multiple years to control your annual MAGI.
- Make Qualified Charitable Distributions (QCDs) from your IRA if you’re age 73 or older. QCDs count toward your required minimum distribution (RMD) but don’t increase your MAGI.
These moves can help you stay below the income limits and keep the full senior deduction.
Make the Most of the New Senior Tax Deduction
The OBBBA senior deduction offers a valuable new opportunity for taxpayers age 65 and older to reduce taxable income. But due to the income phaseout, smart timing and year-end tax planning are key to maximizing your savings.
Contact our office today for personalized tax planning guidance — we’ll help you calculate your eligibility and implement strategies to preserve your deduction and minimize your 2025 tax bill.