A New Deduction for Retirees: $6,000 in Added Tax Relief

Retirement should be about enjoying life, not worrying about taxes. Thanks to the OBBBA signed in July 2025, seniors now have access to a valuable tax break designed to ease financial strain in retirement.

The legislation introduces a special “senior bonus” deduction of $6,000, available for tax years 2025 through 2028. This deduction is in addition to existing tax benefits for older Americans, giving retirees a little extra breathing room at a time when inflation is still pinching budgets.

How It Works

• Who qualifies? If you’re 65 or older by the end of the tax year, you can claim the full $6,000 deduction. Married couples filing jointly where both spouses are 65+ can claim $12,000.
• Whether you itemize or take the standard deduction, those 65 or older at the end of 2025 are eligible to claim this deduction.
• Income limits: The full deduction is available if your modified adjusted gross income (MAGI) is $75,000 or less (single) or $150,000 or less (joint). Above those levels, the deduction phases out gradually and disappears entirely at about $150,000 (single) or $300,000 (joint).
• Why it matters for Social Security: While this isn’t a repeal of taxes on Social Security benefits, it cancels out some taxes on Social Security. For example, a single senior with $24,000 in annual Social Security benefits will now likely see deductions exceed the taxable portion of those benefits.

Real Impact: More Money in Your Pocket

Here’s what it could look like in 2025:

On top of the base standard deduction and existing senior add-on, the new $6,000 bonus deduction could save single retirees about $600 each year, or married couples up to $1,200 (based on the 10% bracket). Savings may be even greater for those in higher brackets.

Why It Matters Now

This deduction honors decades of hard work without undermining the Social Security trust funds. While the program will cost about $93 billion over four years, the relief will be felt most by low- and middle-income retirees: those who need it most.

Next Steps for Seniors

• Review your expected 2025 income.
• Talk with a tax professional to ensure you qualify and file correctly.
• Keep an eye on Congress — while the deduction is set to expire in 2028, there’s a chance it could be extended.

If you’re 65 or older, this new deduction could help lower your tax bill and give you more breathing room in your budget. Every situation is unique, and the best way to make sure you benefit fully is to review your plan with a professional.

At Fairlane Investment Advisors, we’re here to help. If you have questions about how this deduction, or any other part of your retirement income strategy affects you, we invite you to schedule a complimentary meeting with our office. Together, we’ll walk through your options and create a plan that works for you.