New Age 65+ Tax Deduction Under the OBBBA: A Short Summary

Beginning in 2025, a new provision in the One Big Beautiful Bill Act (OBBBA) introduces a new tax deduction aimed at those age 65+.

This article provides a summary of the new deduction for individuals age 65 and older, including how much it’s worth, who qualifies, and how the income phase-out works.

Overview of the New Deduction

Starting with tax year 2025, taxpayers age 65+ may claim an additional tax deduction of:

• $6,000 for single filers

• $12,000 for married couples filing jointly where both spouses are age 65 or older.

Some Highlights:

• This deduction is in addition to the bonus standard deduction that already exists for those age 65+

• It applies whether you take the standard deduction or itemize your deductions.

• The deduction is subject to income-based phaseouts (detailed below).

• This new deduction is currently only available for tax years 2025 through 2028.

Total Deduction Potential

When combined with the base standard deduction and the existing age-related deduction, a 65+ taxpayer could significantly reduce their taxable income.

Here are examples based on 2025 standard deduction figures:

Single Filer (Age 65+)

Deduction Type	Amount
Base standard deduction	$15,750
Existing age-based addition	$2,000
New OBBBA deduction	$6,000
Total Deduction	$23,750

Married Filing Jointly (Both Age 65+)

Deduction Type	Amount
Base standard deduction	$31,500
Existing age-based addition	$3,200
New OBBBA deduction	$12,000
Total Deduction	$46,700

Income Phase-Out Limits

The new deduction begins to phase out at higher income levels based on Modified Adjusted Gross Income (MAGI).

Here’s how it works:

Phase-Out Thresholds

Filing Status	Phase-Out Begins	Fully Phased Out At
Single / Head of Household	$75,000	$175,000
Married Filing Jointly	$150,000	$250,000

Phase-Out Formula

The deduction is reduced by 6% of the amount that your MAGI exceeds the threshold.

For example:

• A single filer with a MAGI of $85,000 is $10,000 over the threshold.

• The reduction would be $10,000 × 6% = $600.

• The deduction allowed would be $6,000 − $600 = $5,400.

• A married filer with a MAGI of $180,000 is $30,000 over the threshold.

• The reduction would be $30,000 × 6% = $1,800 per spouse ($3,600 total).

• The deduction allowed would be $12,000 − $3,600 = $8,400.

Key Eligibility Criteria

• Taxpayer(s) must be age 65 or older as of December 31 of the tax year.

• Income must be below the income phaseout ranges stated above.

• You don't necessarily need to be retired to claim this additional deduction.

  
  

Bottom Line:

The OBBBA’s new tax deduction offers a meaningful new tax benefit for retirees, especially for those with incomes below the phaseout ranges stated above.

This could results in thousands of dollars of actual tax savings in 2025 depending on your income and tax bracket.

The maximum deduction is $6,000 per individual and $12,000 for married couples when both spouses are age 65+ and income is below the phaseout levels stated above.

It applies starting in tax year 2025 and is currently set to expire in tax year 2028.

Your tax professional should be applying this, when applicable, to save you money in taxes as soon as 2025.

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This is article is for informational purposes only and should not be considered as tax or legal advice. Advice is only provided after entering into an Advisory Agreement with the Advisor. See other disclosure here: Disclosures