If you’re 65 or older, there’s a brand-new tax break that could put real money back in your pocket over the next few years—thanks to the One Big Beautiful Bill.
It’s called the Senior Bonus Deduction, and starting with your 2025 tax return, it could reduce your tax bill by up to $6,000 if you file as an individual or up to $12,000 for married couples where both spouses are 65 or older.
But like many things in the tax world, the details matter. Let’s break it all down.
What Is the Senior Bonus Deduction?
The Senior Bonus Deduction is a new above-the-line deduction designed to help retirees and older Americans keep more of their income. It’s available in addition to the standard deduction and the existing age-based bump you already get if you’re 65+.
How Much Can You Deduct?
- Single filers age 65+ can deduct up to $6,000
- Married couples (both age 65+) can deduct up to $12,000
But not everyone will get the full amount. The deduction phases out based on income.
Income Phaseout Thresholds
The deduction starts shrinking as your modified adjusted gross income (MAGI) increases:
- Single filers: Phaseout begins at $75,000 and ends at $175,000
- Married filing jointly: Phaseout begins at $150,000 and ends at $250,000
For every dollar your income goes over the threshold, the deduction drops by 6 cents.
Example:
If you’re single and earn $100,000, that’s $25,000 over the $75,000 threshold. Multiply by 0.06, and your deduction is reduced by $1,500. So instead of $6,000, you’d still get to claim $4,500.
How It Stacks with Other Deductions
The Senior Bonus Deduction is not a replacement for the existing age-based standard deduction increase. It stacks on top of it and you can claim it whether you take the standard deduction or itemize.
Here’s what that looks like for a single filer age 65+ in 2025:
- Standard deduction: $15,750
- Additional age-based deduction: $2,000
- Senior Bonus Deduction: $6,000
→ Total deductions: $23,750
For qualifying married couples, total deductions could reach $46,700.
Does This Affect Social Security Taxes?
A common question: Does this mean Social Security is no longer taxed?
No, the bill does not eliminate taxes on Social Security benefits. However, the new deduction could reduce how much of your benefits are taxed, because it lowers your overall taxable income.
When Does This Apply?
The Senior Bonus Deduction is available for tax years 2025 through 2028. Unless Congress acts to extend it, it will expire after that.
Bottom Line
If you or someone you care about is 65 or older, this new tax deduction could be a meaningful way to reduce your tax bill—especially helpful for those on a fixed income.
If you have questions, contact Paragon today!
