Tax Breaks for Retirees: What to Know About New Deductions, Income Limits in 2026
Retiring doesn’t necessarily make filing taxes any simpler. But a new (albeit temporary) “senior bonus” deduction set in motion by the One Big Beautiful Bill Act, or OBBA, could trim tax bills for some older Americans in 2026.
Most of these changes apply to the 2025 tax year, returns for which are due April 15. From a new $6,000 deduction to updated income limits that affect Medicare and retirement withdrawals, here’s what retirees need to know.
The new $6,000 'senior bonus' deduction
Beginning with the 2025 tax year, millions of taxpayers 65 and older can claim a new deduction worth up to $6,000 per person — or $12,000 for married couples when both spouses qualify — commonly referred to as the “senior bonus.”
The deduction is available whether a taxpayer takes the standard deduction or itemizes, making it accessible to a wide range of retirees.
To qualify, taxpayers must be 65 or older, with the benefit phasing out at $75,000 in modified adjusted gross income, or MAGI, for single filers and $150,000 MAGI for married couples filing jointly.
For most retirees, who typically take the standard deduction, this bonus can meaningfully increase total write-offs.
“The vast majority of taxpayers do not itemize, and the extension of higher standard deductions combined with the senior bonus deduction should be welcome news for retirees,” says Ashley Weeks, a wealth strategist at TD Wealth.
Eligible single filers taking the standard deduction could see aggregate deductions of $23,750 for 2025 (this includes the base standard deduction of $17,750 for single filers age 65 and over, combined with the new $6,000 senior deduction), while married couples filing jointly where both spouses are 65 or older could see total deductions of $46,700 (taking the standard deduction, combined with two senior deductions), Weeks says.
Still, the size of a retiree's deduction is only one factor shaping their overall tax bill.
Key income thresholds retirees should watch
Retirees’ tax bills in 2026 are shaped not just by new deductions, but also by changes to income limits and thresholds that affect Social Security, retirement accounts and Medicare premiums.
Standard deduction
For the 2025 tax year, the base standard deduction — the amount taxpayers can subtract from their income if they don’t itemize — is $15,750 for single filers and $31,500 for married couples. (For single taxpayers and married individuals filing separately, the standard deduction rises to $16,100 for tax year 2026, and for married couples filing jointly, it’s $32,200).
Taxpayers who are blind or age 65 or over — or who have a spouse who falls into one of those categories — can claim an additional standard deduction. If you’re single or file as head of household, the additional standard deduction is $2,000. If you’re married and filing jointly or separately, the extra amount is $1,600 per qualifying taxpayer.
If you’re both 65 or older and blind, the additional standard deduction doubles: $4,000 for single or head-of-household filers and $3,200 per qualifying taxpayer for married couples filing jointly or separately.
Required Minimum Distributions (RMDs)
Under current law, retirees must begin taking required minimum distributions, or RMDs, from most retirement accounts at age 73. (An RMD is the minimum amount you must withdraw from your retirement accounts each year.)
If you have a workplace retirement plan, such as a 401(k), you may be able to delay taking RMDs until the year you retire, unless you own 5% or more of the business sponsoring the plan. Your first RMD must be taken by April 1 of the year following your 73rd birthday.
These withdrawals are taxable and can affect a retiree’s overall tax picture.
“In some cases, taxpayers may find that RMDs provide more income than they need, which may push them into a higher tax bracket, impact the taxation of their social security benefits or increase their Medicare premiums,” says Stephanie Searles Vogel, partner in the Tax, Employee Benefits and Trusts & Estates departments at Dilworth Paxson LLP.
To mitigate this, Vogel explains, some retirees may consider making charitable donations directly from their RMDs — known as a qualified charitable distribution. Others may explore Roth conversions, but beware, because Roth conversions can temporarily increase your taxable income in the year they’re executed.
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Income-Related Monthly Adjustment Amount (IRMAA)
Higher-income retirees may owe income-related surcharges on Medicare Part B and D premiums, known as IRMAA.
In 2025, IRMAA brackets increased by roughly 3% due to inflation. Medicare beneficiaries with income above $106,000 (for single tax filers) and $212,000 for joint filers will pay the surcharge. Medicare calculates surcharges based on income from two years prior, so 2025 premiums reflect 2023 income.
“For seniors looking to avoid IRMAA, there may be some planning opportunities,” Vogel says. For example, a properly timed ROTH conversion may help to avoid IRMAA.
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Common tax mistakes retirees make — and how to avoid them
Mistakes happen, but knowing what to look out for can save you from making an error that can trigger penalties or cost you money.
Vogel emphasizes that retirees should take full advantage of the “senior bonus” deduction if they qualify, even if the deduction is partially phased down due to income limits. But before claiming deductions, the first step is ensuring you’re filing a tax return if required and using the proper filing status.
“In general, filing a joint return provides the most tax benefit,” Vogel says. For surviving spouses, the year a spouse dies is the last for joint filing, but they may qualify as heads of household if they are unmarried, pay more than half the cost of keeping up a home and have a qualifying dependent living with them for more than half the year.
“It’s important to keep in mind also that your filing obligations may change when your filing status changes,” Vogel says. For example, a married filer with $30,000 of gross income may not need to file, but if they are single with the same income the following year, they do.
Even small filing errors can trigger penalties, although most taxpayers are eligible for a first-time abatement. Vogel also warns that retirees should remain vigilant against scams, which often target older adults.
“The IRS will never call you without sending you multiple notices before, and they will never take payment over the phone,” she says.
If you need to make an electronic payment, use IRS.gov directly. Fraudulent notices can look authentic, so retirees should always verify any correspondence before sending money and never provide payment information over the phone.
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