If you’ll be age 65 or older by December 31, 2025, there’s a brand-new reason to celebrate besides your birthday. The recently passed One Big Beautiful Bill Act (OBBBA) created a powerful new bonus deduction designed specifically for seniors.
Starting with the 2025 tax year, qualifying taxpayers can claim an extra deduction of up to $6,000 per person and $12,000 for married couples filing jointly. Best of all, this deduction applies whether or not you itemize, making it accessible to nearly everyone.
How the Bonus Deduction Works
Here’s what makes this new deduction special:
- Individuals 65+: Claim an additional $6,000.
- Married couples (both 65+): Claim a full $12,000.
- Married couples (only one spouse 65+): The joint return rule requires filing together to benefit even if only one spouse qualifies. Filing separately disqualifies you.
And this is not a replacement it’s on top of:
- The regular standard deduction
- The existing age-based additional deduction (already available to those over 65)
That means seniors may be stacking multiple deductions, which can result in significantly lower taxable income.
Income Limits Apply
As with many tax breaks, there’s a catch: the deduction phases out as income rises.
- Singles: begins phasing out at $75,000 of Modified Adjusted Gross Income (MAGI) and disappears completely at $175,000.
- Married filing jointly: begins phasing out at $150,000 MAGI and is gone at $250,000.
👉 What is MAGI?
MAGI starts with your Adjusted Gross Income (AGI) and adds back certain rare items like tax-free foreign income. For most taxpayers, your MAGI will be very close to your AGI.
For many seniors, this new deduction represents real money back in their pockets.
Imagine a retired couple who both turn 65 in 2025 and file jointly:
- Standard deduction (2025 projected): ~$30,000
- Existing age-based add-on: ~$3,000 each = $6,000
- New OBBBA bonus deduction: $12,000
Total potential deductions: ~$48,000
That means nearly $50,000 of income completely shielded from tax before a single credit or other deduction is applied.
Planning Opportunities for Seniors
If your income is near the phaseout thresholds, a little tax planning could help you qualify for the full deduction—or at least preserve part of it. Strategies include:
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Spreading Capital Gains
Instead of selling investments all at once, consider spreading sales across multiple years to avoid a large spike in MAGI.
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Breaking Up Roth IRA Conversions
Converting too much at once could push you over the limit. Smaller, staged conversions may give you the retirement benefits without costing you this deduction.
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Making Extra Retirement Contributions
Business owners or those with part-time work may be able to make deductible contributions to retirement plans, lowering MAGI.
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Accelerating or Deferring Income
Timing matters. If you’re close to a threshold, working with a tax advisor to adjust when income is recognized can make a difference.
The OBBBA senior bonus deduction is one of the most generous tax provisions for older Americans in recent years. With up to $12,000 per couple in additional deductions, it has the potential to significantly reduce tax bills and improve retirement cash flow.
But the phaseout rules mean planning is essential. Without the right strategies, you could lose out on some or all of this benefit.
At BASC Expertise, we specialize in helping seniors and retirees maximize every tax-saving opportunity. From managing retirement distributions to coordinating deductions, we’ll guide you through the new rules so you can keep more of what you’ve earned.