Some older adults can receive a new $6,000 tax deduction. Here’s how it works
Good news for taxpayers ages 65 or older: The 2025 tax season means a new deduction for certain older adults, giving them even more tax breaks.
Last year’s passage of the so-called One Big Beautiful Bill Act, gives seniors a $6,000 deduction, or $12,000 for married couples where both spouses qualify. And the deduction is available to filers who take the standard deduction or itemize.
The new senior deduction is also on top of the extra standard deduction of $2,000 for single filers, or $1,600 per qualifying individual for married joint filers, aged 65 or older. That extra deduction increases by $50 for the 2026 tax year, or returns due in 2027.
The senior deduction may bring some much needed relief to taxpayers grappling with inflation at the grocery store and increased health care and housing costs.
The Tax Foundation estimates that on average, each household with a qualifying senior will see a roughly $780 increase in their take-home pay.
But the nonprofit said low-income retirees will likely miss out because they already benefit from the standard and extra $2,000 deduction, and their tax liability is close to zero.
For the 2025 tax year, the standard deduction is $15,750, or $31,500 for married filing jointly.
The senior deduction phases out at a 6% rate for taxpayers with a modified adjusted gross income over $75,000, or $150,000 for joint filers. Single filers with an income above $175,000 and married filers with an income above $250,000 are ineligible for the tax deduction.
While the deduction is supposed to provide some relief for eligible seniors, it may not have an impact on deciding whether to itemize or claim the standard deduction.
“A lot of seniors are probably taking the standard deduction [versus itemizing] … just because it’s so high. For 2025, if you’re filing jointly, the standard deduction is $31,500, which is a really huge amount. On top of that, there is an additional standard deduction for senior citizens, and then, on top of that, there’s this new enhanced deduction for seniors,” Shaun Hunley, tax expert and executive editor at Thomson Reuters, said in a blog post.
“They could get up to $46,700 when combining all three deductions. That’s a huge amount, so I would say, overall, most seniors are probably taking the standard deduction, unless they have high medical expenses, because that’s an itemized deduction.”
For Illinois seniors, the deduction wouldn’t apply to their state income tax return. That’s because the senior deduction is a “below-the-line” deduction, meaning it’s reported after your adjusted gross income.
Illinois taxable income starts from the federal adjusted gross income, which means the senior deduction wouldn’t be factored into the AGI reported on your state return.
Greg Mermel, certified public accountant and partner at Chicago-based Mermel-Goldman CPAs, said many Illinois filers may not even notice the absence of the $6,000 deduction because the state doesn’t tax Social Security, pension or retirement plan income.
“It really only benefits middle-income taxpayers because people who are just scraping by on Social Security — who there are far too many in America — are not paying taxes anyway,” Mermel said.