New $6,000 Deduction for Taxpayers Over 65

The 2025 One Big Beautiful Bill Act created a new deduction aimed at seniors. Taxpayers age 65 and older are eligible for an additional $6,000 deduction, which reduces taxable income directly. This deduction is separate from, and in addition to, the standard deduction.

Here are the key points:

• If you are 65 or older at the end of the tax year, you may claim the $6,000 deduction. For married couples, each spouse age 65 or older may claim the deduction, resulting in up to $12,000 in additional deductions.
• Taxpayers do not have to itemize to take this deduction.
• This provision is temporary and, under current law, applies to tax years 2025 through 2028.
• The deduction begins to phase out at higher income levels. Once your adjusted gross income (AGI) exceeds certain thresholds, the amount of the deduction is reduced and may eventually be eliminated.
  • For single taxpayers, the phaseout starts at $75,000 of modified AGI and is completely phased out at $175,000.
  • For joint returns, the phaseout starts at $150,000 and is completely phased out at $250,000.
• The deduction does not reduce AGI, meaning that it will not affect items dependent on AGI such as the Medicare irmma calculation and phase-outs dependent on AGI.

It’s important to distinguish what this deduction does from how it has sometimes been described. Some official communications and public statements created the impression that this change eliminates the tax on Social Security benefits. That is not accurate. While the $6,000 deduction may reduce your taxable income, the rules for taxing Social Security have not changed. Depending on your income, up to 85% of your Social Security benefits may still be taxable.

This provision may provide meaningful savings, but its value depends on your overall income and tax picture. If you’d like to see how it applies in your situation, please contact your DWD CPA.